But without raising taxes on anyone earning more than $118,500 a year. The only thing that was not said at the Senate Hearing on Social Security disability today was: "Read my lips."
Because the Social Security disability trust fund is projected to pay 19% less in monthly benefits to recipients sometime in 2016, and because the old age trust fund is projected to pay only 75% of benefits to retirees by the year 2033, the current debate is two-fold: shoring up the disability trust fund with revenues from the old-age trust fund (as it's been done 11 times before); and shoring up the old-age trust fund for retirees by raising the $118,500 income cap for Social Security payroll taxes.
Senator Bernie Sanders has proposed legislation for raising the income cap on those earning $250,000 a year to guarantee that Social Security can pay 100% of promised benefits for the next 75 years. But at the budget hearing today, it was established that a $250,000 cap would make Social Security solvent for the next 45 years, until at least 2060. (Still, better than naught. Some at the hearing proposed raising the cap to millions of dollars — which would be better still — and why not?)
For Generation X (those born from the early 1960s to the early 1980s), that should be encouraging — if Senator Sanders' bill could ever get passed. For those born in 1960 or later, full retirement age is 67. And for the Millennials (those born around 2000), Sanders' bill would also go a long way towards shoring up Social Security for them as well. But instead, as one solution, the Republicans would rather raise their retirement age (and then have them blame the Baby Boomers for being born when they were.)
Rupert Murdoch's Wall Street Journal has an article titled Safeguarding Social Security and Other Retirement Policy Fixes. While advocating for private retirement plans (to benefit Wall Street bankers), the WSJ had used the GOP strategy of "generational warfare" when they wrote: "The Employee Benefit Research Institute projects that 42% of Generation X is at risk of running short of money in retirement. Prospects of the Millennials coming behind them might not be much better."
If you'll notice, in their title they used the word "safeguarding" and "fix" — which is just GOP doublespeak for "privatize" and "cut".
But then the WSJ also writes: "As the Social Security trustees have repeatedly written, the system needs legislative changes that ensure long-term sustainability and benefits must be protected for those who most rely on the program. There is bipartisan support for what such a package should look like: It would somewhat reduce spending by phasing in progressive changes that more effectively target Social Security’s benefits, while bringing in some additional revenues to sustain the program as the baby-boom generation moves through retirement, reducing uncertainty for boomers’ children and grandchildren." In this particular article, the WSJ left out "great-grandchildren and great-great-grandchildren" — which for Republicans, usually means trust fund babies.
The WSJ's term "phasing in progressive changes" probably means: cuts to monthly benefits, and using chained-CPI to lower cost-of-living-adjustments for Social Security recipients. And their term "additional revenues" probably means: raising the payroll tax on workers, but not raising or eliminating the income cap for higher income earners — because the GOP is always adamantly opposed to ever raising taxes on those who are the most able to afford any tax hike.
The Washington Post notes: "The nation’s old-age pension and disability insurance program is funded by a payroll tax that this year applies to wages of $118,500 [the cap] and below. But the amount of revenue coming in is not as large as it could be, now that an increasing share of wage growth is going to people who make more than that, and the wages of many Americans are stagnant, or even in decline." But of course, it's a long establish fact that the GOP would never consider raising any tax on millionaires or billionaires — let alone taxing capital gains for Social Security.
Instead, the Republicans would rather use their "divide and conquer" strategy of pitting younger Americans against those dang Baby Boomers, by waging generational warfare (sons against fathers, etc.)
But then The Washington Post also makes the claim that, "Overall, some 17 percent of the nation’s wages escaped the tax." First of all, there's much more than just regular "wages" that goes untaxed (which is earned as personal income every year), and it's usually in the form of capital gains — which are not taxed at all for Social Security. Second, about 93% of all wage earners paid this payroll tax on 100% of their earnings; whereas the multi-billionaires, whose only earnings might be derived just from capital gains, paid ZERO in Social Security payroll taxes.
The Center for American Progress reports: "Much of the leap made by the very rich is attributable to nonwage forms of income such as capital gains, but huge disparities also persist when looking only at wages, which form the basis for Social Security tax revenues because payroll taxes only apply to wage income. In 2013, for example, the top 1 percent of earners took home about 12.9 percent of the nation’s total wage income in 2013—nearly as much as the share received by the entire bottom half of workers, who captured approximately 13.7 percent of wage income. This growing divide in wages—combined with the fact that wages in excess of the taxable maximum are exempt from payroll taxes—means that millionaire and billionaire earners stop contributing to Social Security early in the year, while the average worker contributes all year long. In 2015, individuals with wage incomes of $1,000,000 stop contributing on February 12 [as of this post]."
In another recent article, The Star Tribune (also using the word "fix") posted a piece titled: Senate Republicans press to fix Social Security disability program, which says: "Republicans got some support from Maine Independent [Senator] Angus King, who typically sides with Democrats. King said a funding shift [from the old age fund to the disability fund] would simply avoid dealing with the finances of Social Security, which need to be shored up because of the ongoing retirement of the baby boom generation."
But most of the people on disability are already into their 50s and 60s, and they are already nearing their retirement ages — in which case, disability benefits then convert to regular retirement benefits. If Senator King (and the Republicans) were really so worried about the retirements of Baby Boomers, then why not be just as concerned about the Baby Boomers who are currently on disability?
In an interview (The Washington Post: Republicans planning stealth attack on Social Security), Senator Bernie Sanders says: "Republicans have made it clear that they intend to pursue ‘entitlement reform,’ which is code for cutting Social Security and Medicare. This is their first step forward. Whether they will focus on disability, or cuts in the retirement program, I don’t know. But there’s no question that they intend to push forward and try to cut Social Security. Republicans are creating a phony crisis. They are saying the disability insurance program will be running out of money, and therefore one of two things has to happen: Either we cut disability or we have to look at the solvency of the whole program, to protect disability benefits, which means we’re going to have to cut benefits either through Chained CPI, or raising the retirement age, or through privatization.” (Read more here at Bloomberg)
This morning the GOP-controlled Senate Budget Committee held a hearing that they ominously named: The Coming Crisis: Social Security Disability Trust Fund Insolvency. In the last several minutes of this video (which is only 14 minutes of the 3-hour hearing — posted at YouYube) it sounds as though Republican Senator Lindsey Graham believes we should be able to fund Social Security for the next 75 years without raising taxes on anyone: "As we try to accomplish that goal, I just want to make sure that I understand what we can't do ... I just don't want America to believe that we can tax our way into solvency. Do you believe that to get a 75-year solvent program we can do it with revenue alone?" (Simple answer: Yes.)
Think Progress noted a similar "manufactured crisis" with U.S. Postal workers: "Almost all of the postal service’s losses can be traced back to a single, artificial restriction forced onto the Post Office by the Republican-led Congress in 2006 ... USPS was forced to prefund its future health care benefit payments to retirees for the next 75 years in an astonishing ten-year time span — meaning that it had to put aside billions of dollars to pay for the health benefits of employees it hasn’t even hired yet, something that no other government or private corporation is required to do."
So, by the GOP's logic, should we also fund the defense budget for the next 75 years within the next ten? (It's kind of a waste, isn't it? Especially if an Asteroid strikes us before then.)
It seems that, rather than compromise on a quick fix for the disability trust fund today, the GOP is thinking long-term --- 75 years into the future --- supposedly because of their great "concern" for our great-grandchildren and our great-great-grandchildren (Oh, and for Generation X and the Millennials too.)
But it's a crying shame that the Republicans aren't just as concerned for those who are living, disabled and retired today. Even President Ronald Reagan said Social Security has nothing to do with the debt or deficit — so the GOP can't use that as their "one-size-fits-all" excuse. (And also why Millennials should stop voting for Republicans in Congress.)
Senator Bernie Sanders, as many others have also suggested, favors raising the cap on maximum income for the Social Security payroll tax (IMHO, we should also tax capital gains for Social Security as well). But obviously, with a GOP Congress, the chances of getting real long-term "reforms" (especially if it involves taxing the rich one more penny) are nonexistent — because the GOP is literally trying to starve "the beasts" — which includes disabled and elderly Americans.
As a member of Congress, the Honorable Senator Lindsey Graham makes $174,000 a year. He probably doesn't want the $118,500 cap raised because he too would also have to pay a little more in Social Security taxes. But maybe if he (and the GOP Congress) can put more people to work (with jobs that pay living wages) with all their
proposed jobs bills rhetoric, maybe more workers will be able to contribute more to the Social Security trust fund. And then maybe, all those sympathetic and empathetic Republican politicians could finally get a good night's sleep after doing all that needless worrying.
Or maybe, just maybe, the GOP can do the same thing with Social Security that they had planned for Obamacare — repeal and replace it with something much better! If you believe that, the bridge is that way —>
Good point about why the pols insist on funding retirement 75 years in advance but not other programs.
FDR's advisors opposed the regressive payroll tax and urged him to fund SS from the general budget instead, like any other government program. That makes more sense to me than the "raise the cap" proposal. Raising the cap would make FICA less regressive, but still regressive nonetheless. And we'd still be stuck with the imaginary actuarial insurance fund concept and all its limitations.
If not raise the cap...
If not raise the income cap, then tax capital gains -- but NOT fund from the general budget (Wouldn't sequester battles and budget cuts by Congress threaten SS benefits?)
PBS has an article -- America’s Ponzi scheme: Why Social Security Needs to Retire -- "Resolving Social Security’s insolvency requires either an immediate and permanent 32 percent increase in payroll taxes or an immediate and permanent 22 percent cut in all Social Security benefits."
I'm not sure if those numbers aren't grossly inflated, but that's why Senators such as Bernie Sanders proposes raising the income cap on payroll taxes.
(* As an aside: If PBS is publicly funded, how can I post a rebuttal to their article on their website?)
Editing in a news article
Within the article are newsworthy facts, worth noting.
Why must the author attempt to qualify or comment on their appropriateness?
His/her comments appear more like a 'word snipers' attempt to discredit.
Hooray for the factual content!
I'm an "economic populist" offering opinions and making arguments. I'm not a research scientist just presenting raw "facts" ---- But like you said, "hurray for the factual content." I'll take that as a compliment.
And speaking of Lindsey Graham....
Sen. Lindsey Graham (Sen. Rand Paul's likely rival for the Republican presidential nomination in 2016) is getting some encouragement from Sheldon Adelson (the c@sino owner who backed Mitt Romney in 2012).