Senate Democrats Mislead on Social Security
September 26, 2012 at 1:00 pm in News, Senate by Dustin Siggins 4 Comments
For decades, Americans have been asking Congress to deal with Social Security in an honest, forthright manner. Unfortunately, last week 28 Senate Democrats signed a letter that does the complete opposite.
What did this letter consist of? The Hill reports that the signers do not want Social Security cuts of any kind – whether they be direct cuts or raises in the retirement age – included in budget discussions later this year. This is an irresponsible position, and is the first problem with the letter. Social Security has massive financial difficulties that are quickly getting worse, and ignoring them will almost certainly bankrupt the program or cause major financial problems for multiple generations of Americans.
Here is the second problem with the letter – from the article:
“To be sure, Social Security has its own long-term challenges that will need to be addressed in the decades ahead. But the budget and Social Security are separate, and should be considered separately,” the letter states.
This is a complete fallacy, and these Senators know it. In 2011 and 2012, the payroll tax holiday eliminated one-sixth of Social Security’s tax revenues for each of those years. For 2012, the total impact on the program’s deficits was $125 billion. In order to cover this shortfall, $125 billion was shifted from the general fund of the Treasury Department to the Social Security Trust Fund. Thus, approximately 10% of the 2012 federal deficit can be blamed on shifting funds from the Treasury to Social Security, meaning that particular Social Security shortfall is directly related to the health of the rest of the federal budget.
Related, Social Security Trustee Charles Blahous testified to Congress in June of this year that while massive shortfalls in Social Security funding can be covered by benefit cuts or tax increases, there may be a temptation for Congress to simply take dollars from the general fund. To paraphrase Blahous, this would show the idea that Social Security is a stand-alone program to be a complete farce.
To be fair, the program was originally designed to finance itself, as Blahous pointed out. And legally, it has a separate budget from the rest of the federal government. However, to claim that Social Security and the budget are entirely unrelated is completely false and a lie to the millions of people these Senators purportedly represent.
My fellow Americans: I would like you to know that President Johnson was the first President to take social Security off budget. He used the Social Security surplus to cover up the real costs of the Vietnam war! President Clinton also used Social Security surpluses to balance his budgets. This practice is dshonest and a violation of the principal of pay as you go. In my opinion, the best way to save social Security for future generations is to pass an iron clad statute that prohibits congress from borrowing from Social Security under any circumstances. The retirement age for citizens born on January 2nd forward should be increased to age 70, since people are living longer. Citizens born on January 2nd forward will have a choice to allow the government invest their share of the payroll tax or they can invest it themselves. Option 2 would encourage more personal responsibility. It is our money, we earned it. We the people of America are in charge of our own destiny, not the government. The payroll tax used to fund social Security is currently aT 12.4% of the first 110,000 of income. The payroll tax used to partially fund Medicare is 2.9% with no salary cap. The combined payroll tax amounts to 15.3%. This tax is too high and will discourage hiring. What must be considered is that the payroll tax is a tax on labor! I would also like to point out that some states also tax payroll. I believe in supply side economics. Supply side economics is based on the tried and true principal that the lower the tax rates, the more revenue the government receives. This is due to the fact that businesses will have more disposable income to invest. We should reduce the payroll tax that funds Social Security to 9.4% of the first 110,000. As more jobs are created, more people will be off food stamps and working! Finally, in Europe, their payroll tax is approximately 25%. So instead of hiring employees, businesses hire consultants and they are paid a flat fee. This is a good example of a high tax rate encouraging avoidance. Avoidance equals less revenue for governments. The people who were born prior to January 2 1964 will receive current benefits as promised. The cola’s should be based on an honest calculation of the CPI. In calculating the CPI, the cost of energy should be in the basket of goods used to calculate CPI. Inflation couinting energy is approximately 5%, not the 2% that the government alleges that it is. I used 1964 as a cutoff because that was the end of the baby boomer generation. Regards Robert Calabro.
This is a swell plan, but, what part of the Constitution authorizes this, any more than the plan we have now?
By the way, there are no “iron clad laws”. What Congress enacts, it can repeal.
And have you noticed, they don’t even pay much attention to our supreme law, the Constitution.
Thank you for saying what I have not. We don’t even need congress we have a President that just signs executive orders contrary to our constitution. Kind of like the King of England back in 1600′s
I just researched Romney’s position on this issue, his position no.3 in his economic plan. Here it is: Your Third Point: “Reform Entitlement Programs To Ensure Their Viability.
Gradually reduce growth in Social Security and Medicare benefits for more affluent seniors. Give more choice in Medicare to improve value in health care spending.
Block grant the Medicaid program to states, enabling experimentation to better fit local situations.
First of all, Social Security is a fully funded retirement program for US citizens 65 and older. This program does not contribute to federal spending at all. At the present time, the US Government OWES US Retirees the sum of $2.3 TRILLION which the government borrowed from the Trust fund, issuing bonds to the Trust Fund to be redeemed as necessary to keep the program 100% funded. In 2035, the Trust Fund will need an influx of money to continue as a 100% funded by the taxpayer program that costs the4 Government $0.00. The CBO has advised Congress and the President, and, for that matter, any person who wants to read the public document, notice that if a 1.6% increase in the Social Security “PAYMENT” by individuals is authorized by Congress, the Trust Fund will not need another influx of money until 2085. Congress haws bandied about the notion of stopping the COLAs for Social Security as a way to “protect” the fund, however, if Congress simply authorizes the 1.6% increase in future beneficiary payments, the COLA can continue as is, helping Senior Citizens meet the demands of inflation. You need to STOP this nonsense about Social Security being an entitlement. It is NOT an entitlement. It is a FULLY SELF FUNDED RETIREMENT PROGRAM for US Citizens. As for Medicare, it has never been an entitlement either. It HAS been A FULLY SELF FUNDED INSURANCE PROGRAM for US Senior Citizens. Under current law, it will continue to be a fully self funded insurance program until 2025. However, if you repeal The Affordable Care Act as you sometimes promise to do, Medicare BECOMES INSOLVENT in 2016. TODATE, with a little over a month until the election, YOU HAVE PROVIDED NO PLANS FOR EXTENDING THE LIFE OF MEDICARE. If you DO NOT REPEAL the Affordable Care Act, IT WILL BE SOLVENT UNTIL 2025. You need to address this issue IMMEDIATELY if you expect Senior Citizens to vote for you. Granted the President has not proposed a plan for extending it beyond 2025, but he has some time to accomplish any plan to extend it. However, a plan that is adopted ASAP will carry less of a financial hardship for Seniors. If you Block Grant Medicaid, with a 20% of GDP reduction in funding, you make it the responsibility of the States to provide Medical Insurance for the poor, and long term care options for Seniors. This will necessitate that the States raise taxes, and since medicaid stops being a national program, all cost savings by virtue of volume of numbers will disappear, raising the cost of health care for the poor and seniors. Thus, the resultant increase in taxes at the State level will wipe out any tax savings generated by the reduction in federal taxes, and the tax payer will most likely see another increase in its tax burden, leaving less disposable income for the middle class.