Experts: Contrary to Mainstream Myth, 'Social Security is Strong' and Could Be Made Stronger

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    Apr 24, 2012 10:17 PM GMT

    Lifting the payroll tax cap and better coverage by journalists would help build sustainable future for essential program

    - Common Dreams staff



    The Social Security trust fund is in strong financial standing and the overall program could be further strengthened, say experts and lawmakers, with a simple increase of the current payroll tax cap which is currently set at $110,000. The trustee's annual financial report was released on Monday.

    "The most effective way to strengthen Social Security for the next 75 years is to eliminate the cap on the payroll tax on income above $250,000," says Senator Bernie Sanders. (Image: Care2.org) Most mainstream news and media outlets reported the trustee's report as a 'doomsday' scenario for the benefit program, which was created in 1935 and today supports 55 million Americans, including 38 million retired workers, 6 million widows, widowers and orphans, and 11 million disabled workers. But those reports belie a simple solution to improve the longevity and solvency of the program, and speak to a trend of poor-quality reporting when it comes to the issue of Social Security
    The most effective way to strengthen Social Security for the next 75 years is to eliminate the cap on the payroll tax on income above $250,000. Right now, someone who earns $110,100 pays the same amount of money into Social Security as a billionaire. That makes no sense,” said Vermont Senator Bernie Sanders, the chairman of the Defending Social Security Caucus. He also chairs the Senate aging subcommittee.

    Robert Greenstein, founder and President of the Center on Budget and Policy Priorities, responded to the report by noting that although the program does warrant some adjustments, Social Security "faces no imminent crisis." In fact, he argues, the revenue loss from a permanent extension of the Bush tax cuts (already extended by President Obama) for people making over $250,000 — the top 2 percent of Americans — would itself be nearly as large as the entire Social Security shortfall over the upcoming 75-year period. "Members of Congress cannot simultaneously claim that the tax cuts are affordable while the Social Security shortfall constitutes a dire fiscal threat," he said.

    "Projections in the 2012 Trustees Reports come as no surprise to anyone who understands how Social Security and Medicare work," Max Richtman, president of the National Committee to Preserve Social Security and Medicare, said in a statement. "The trust fund solvency date for Social Security has seen fluctuations many times in recent decades, from a depletion date as distant as 2048 in the 1988 report to as soon as 2029 in the 1994 and 1997 reports. This year's report is well within that range. Contrary to the crisis myths perpetuated by fiscal conservatives and many in the media, the prevailing facts show once again that Social Security remains among the nation's most successful and stable programs. The Trustees report there is now $2.7 trillion in the Social Security trust fund, which is $69 billion more than last year, and continues to grow. Payroll contributions and interest will fully cover benefits for decades to come."
    Dean Baker, co-director of the Center for Economic and Policy Research, writes today, "The main reason that the program's finances have deteriorated relative to the projected path is that wage growth has not kept pace with the path projected. This is in part due to the fact that productivity growth slowed in the 80s, before accelerating again in the mid-90s and in part due to the fact that much more wage income now goes to people earning above the taxable cap. In 1983 only 10 percent of wage income fell above the cap and escaped taxation. Now more than 18 percent of wage income is above the cap."

    And Trudy Lieberman of the Columbia Journalism Review, writing recently on the continued failure to present -- much less advocate for -- the payroll tax cap solution, lamented, "that option is not on Washington’s table, nor has it been discussed much in the press. Why not? Because it doesn’t fit into the doom-and-gloom narrative that has proved politically expedient to tell."


    More to come from this very important topic found on CommonDreams.org
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    Apr 25, 2012 2:45 AM GMT
    These facts about social security never seem to get aired and I cannot understand why, Any Ideas ? Is it that in 'vogue' to kill probably the most successful Government safety net program for the country's elderly ?
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    Apr 25, 2012 12:40 PM GMT
    Hmmmmm. Let me point out a few things that you and you sources either didn't understand or failed to point out.

    1) While the Social Security may show assets in the Trust funds of more than $2.5 trillion, it's only on paper and has no actual value. In the simplest terms, what that means is that the Social Security Trust finds are essentially investments in the Federal Government, it's money owed to the Social Security Admin because the government borrowed that money and spent it.So, unless the government drastically cuts it's spending (because it will never be able to raise taxes high enough to cover what it is spending, let alone pay any of it's current debt), the government will have to borrow funds to finance its obligations to the trust funds.

    Oh, sorry we've already reached that point.

    1) The CBO said that Social Security has already passed a tipping point where it generates more revenue than it consumes and it is now projected to add to the deficit each and every year from now on.

    2) In 2010 $37 billion was transferred from the general fund to cover it's shortfall payout (this money we don't have, but money borrowed from sources such as China). The payout shortfalls are projected to be well over $1 trillion in coming decades.

    3) In 2011 the the payout imbalance was even bigger as a result of the "payroll tax holiday". The lost payroll tax revenues and the expected shortfall were made up with funds, again, from the general fund. The result of the now permanent shortfall and the loss of payroll taxes had the combined effect of adding $130 billion to the deficit for fiscal year 2011.

    4) Currently, under the law, scheduled benefits are to be paid out until 2037. However, keeping those commitments is already requiring the use of borrowed funds.

    5) Due to the "payroll tax holiday" Social Security needed $85 billion from the general fund in fiscal year 2011 and $29 billion in fiscal year 2012. Because each dollar of this is borrowed,and the result of the annual short fall and the tax holiday is the addition of $130 billion to the federal deficit in fiscal year 2011 and $59 billion in fiscal year 2012.

    6) Even though the trust funds are projected to accrue interest for several more years, it's because the Treasury has to credit interest payments to the funds on borrowings from previous years (the trust funds and interest only exist on paper be3cause the government doesn't have any means of paying back what it has borrowed from the trust funds).

    7) Ten years ago there were 3.4 people paying in to the system for each person drawing benefits, now there are 2.8 people paying in for each person drawing out and that number is will drop with the current rate of retirement at 10,000/day and rising. Already we don't have enough people paying in to cover benefits being paid out.

    icon_cool.gif I'm aware that for people like you the answer is always to make someone else pay for what you want, but do you have any idea of how many households make $250,000/year? Roughly 1 in 50 households make $250,000/year or more. That's 2% of all U.S. households.

    What exactly do you think is going to happen when you actually get to strip the wealth from those people you hate and envy so much?

    "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy. Elmer T. Peterson









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    Apr 25, 2012 2:36 PM GMT
    What about my backing the raising of the limits so the wealthy pay more into a program even they will benefit from is showing hate toward them ?


    Why is the far right so hell bent on bending facts against such an important and historically successful program that they will benefit from ? Remember the numbers of TBaggers protesting who were receiving SS ? Some of this makes no sense because many of them are going against their own collective interests.
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    Apr 25, 2012 2:42 PM GMT
    realifedad said What about my backing the raising of the limits so the wealthy pay more into a program even they will benefit from is showing hate toward them ?


    Why is the far right so hell bent on bending facts against such an important and historically successful program that they will benefit from ? Remember the numbers of TBaggers protesting who were receiving SS ? Some of this makes no sense because many of them are going against their own collective interests.


    Raising the limits without paying for the benefits? This still doesn't resolve the fact there is no fund and it's already unfunded (and that it went cash flow negative this past year).

    Regardless of how you cut the numbers by 2027, you have 2.2 people paying into the fund while one person is taking the benefits - these 2.2 people who are paying in aren't necessarily only wealthy. Are you ok with accepting that social security is just another entitlement scheme and that what you pay in means nothing in terms of what you get back?

    This is what your'e saying if you want the rich to pay more - but this also opens up the possibility for the benefits of those who paid in to be slashed dramatically. Gone are the days that nearly no one lives long past 65 - and also gone are the days that people beyond the age 65 aren't able to work.
  • GQjock

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    Apr 25, 2012 3:10 PM GMT
    But Riddler .... You JUST aren't getting it are you?

    The 1983 Greenspan changes to Social Security CHANGED it from a pay as you go system
    Where the money it received went right out to the beneficiaries to a FUND that needed to have cash on hand..... And he upped the payroll taxes to fund it

    BUT ..... That fund has been pilfered OVER AND OVER AND OVER again

    So the money that was SUPPOSED to go to beneficiaries went to gthings like Shock and Awe .... And Abu Graibe

    I do hope that puts things in better perspective because it's a. Shame to hear you spout numbers when you don't know the meaning of where they are coming from
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    Apr 26, 2012 2:34 AM GMT
    GQjock saidBut Riddler .... You JUST aren't getting it are you?

    The 1983 Greenspan changes to Social Security CHANGED it from a pay as you go system
    Where the money it received went right out to the beneficiaries to a FUND that needed to have cash on hand..... And he upped the payroll taxes to fund it

    BUT ..... That fund has been pilfered OVER AND OVER AND OVER again

    So the money that was SUPPOSED to go to beneficiaries went to gthings like Shock and Awe .... And Abu Graibe

    I do hope that puts things in better perspective because it's a. Shame to hear you spout numbers when you don't know the meaning of where they are coming from

    ----------------------------------------------------------------------


    You got it right GQjock, Plus there have been plenty of studies as revealing in the article above that show the easy method to fix the problem, this is afterall a program that has worked so well that it is imperative that it be 'tweeked' to work properly again. To many listen to all this hype that is put out by extreme righties who have an agenda against any social programs at all, they want to make things look as bad as they can make them to wipe the US free of any and all such programs.

    Why is that so hard to understand for the far right, don't they want answers for a program that has been so successful and helped every one of our elderly grandparents in the entire US ? My grandparents, my father and my generation very soon will benefit from it.

    Sometimes I think the far right just wants a problem to rant, rave and complain about and that if the fix is too easy, they're disappointed.because they miss the problem. LOL
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    Apr 26, 2012 5:40 PM GMT
    I notice on the other Social Security doom and gloom forum there is an ignoring of the facts brought out in the above article. This love to hate SS fest from the far right makes no sense, unless the voters who cave to fear mongering want to support those who would do away with the program to their own demise.
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    Apr 26, 2012 8:05 PM GMT
    JPtheBITCH saidAccording to Krugman, Social Security is sufficiently funded through 2030, and at that point it will still have enough money to fund 75% of its obligations. As he has said, all that will be required to make it fully funded is some minor tweaking.

    The reason why right-wingers like shybuffguy and the Ridiot repeat dishonest and debunked claims about SS's "insolvency" is that they are trying to lay the groundwork for privatization, hoping that if they stamp their feet and bellow loud enough people will believe them.

    Sadly, the tactic has worked before. That's why it's imperative to debunk this shit over and over again. And read Krugman, the only economist who has been right about 96% of the time during the past decade. About everything.









    AGREED !! I've read Krugman on this subject several times, and will do some searching and get back with more facts that are not all doom and gloom.

    Many of these folks among the far right elite that are so against this program have the income to finance their own retirements very comfortably, but there is no way for the masses all to be in that same position, it is utterly an impossibility. Hense joining together in a mass government non profit program like SS to insure a reasonably comfortable living standard for our elderly.

    Repubs don't mind for profit Insurance Company's, they tweek their figures from time to time to make a profit, so whats the big problem with SS doing it for the sake of the public good, not just for profits ?
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    Apr 27, 2012 3:58 PM GMT
    JPtheBITCH saidAccording to Krugman, Social Security is sufficiently funded through 2030, and at that point it will still have enough money to fund 75% of its obligations. As he has said, all that will be required to make it fully funded is some minor tweaking.

    The reason why right-wingers like shybuffguy and the Ridiot repeat dishonest and debunked claims about SS's "insolvency" is that they are trying to lay the groundwork for privatization, hoping that if they stamp their feet and bellow loud enough people will believe them.







    Sadly, the tactic has worked before.



    >>>>That's why it's imperative to debunk this shit over and over again. <<<<




    And read Krugman, the only economist who has been right about 96% of the time during the past decade. About everything.




    Just as JP says, repeating the positive facts again. READ THE ARTICLE ABOVE these are the facts that overide all the hype and misinformation the far right is trying to spread.