Repeat after me: There is nothing wrong with Social Security, it is perfectly sustainable for a century and beyond if we simply lift the earnings cap.
Right now, high income earners only pay Social Security taxes on the first $106,800 of their income. Anything over that is not taxed for Social Security purposes. That simple tweak, one line of legislation, would put the program on a solvent path for at least a century. Maybe the fact that people are gradually waking up to that fact has something to do with the White House dropping Social Security “reform” from the grand budget proposal that will be rolled out next week.
President Barack Obama will not include reforms to the Social Security retirement program in his deficits proposals to Congress next week, the White House said Thursday.
Obama upset many fellow Democrats during this summer’s bitter negotiations with Republicans on raising the U.S. debt ceiling when he expressed a willingness to change the way government benefits are linked to inflation.
He saw the move as a way to ensure the federal pension program remains viable in the long-term, but liberal supporters who champion entitlement programs for the elderly felt he was giving up too much ground to Republicans.
White House spokesman Amy Brundage said Obama’s long-awaited deficit reduction plan, to be unveiled Monday, “will not include any changes to Social Security.”
“As the president has consistently said, he does not believe that Social Security is a driver of our near and medium term deficits,” she said.
With Obama’s shift in stance, the six Democratic members of a congressional “super committee” charged with tackling the federal deficit would not have to make immediate concessions, giving them more negotiating room with their Republican counterparts. The super committee is trying to find more than $1.2 trillion in budget savings over 10 years by Nov. 23.
Since Social Security became the law of he land in 1935, it has been the most successful anti-poverty program ever conceived of by the American government. It truly is “We, the People” taking care of one another, putting the words that start our owner’s manual into action. It has been especially successful at lifting elderly WOMEN out of poverty.
Here are some facts about women and Social Security that you may not know, but should.
- 26% of women aged 65-69 are reliant upon Social Security for virtually all of their income (90% or more) and that number climbs as women age.
- Although women are more reliant on Social Security to provide their basic needs in retirement, men receive benefits that are about 25% more than those of women. The average benefit for a woman is around $12,000 per year, while for men it is about $16,000 per year.
- This is especially important for women, because far more American women than men — 11% versus 7% — lived in poverty in 2009 (the last year for which complete numbers are available.)
- It becomes even more important for people who live alone. When older people live alone, the likelihood that they live in poverty jumps dramatically, to 17% for women and to 12% for men.
- Minority women are hit especially hard, with more than 20% of African-American, Hispanic and Native American women 65 and over living in poverty. The poverty rate is 8% for non-Hispanic white females in this age group, and 15% for Asian women.
- Without Social Security, one half of all women over 65 and two-thirds of women over 65 who live alone would live in poverty.
- 3.1. million children received Social Security survivors benefits after losing the support of a parent to death or disability, and those benefits lifted 1.1 million of those children out of poverty.
Not only does Social Security do all that, it does it without adding a single dime to the deficit. The fact of the matter is, Social Security is not only not responsible for our deficit woes, it is independent of the deficit and it is solvent for decades. Period. Full stop.
That CBO report finds that the Social Security trustfund, without changing a thing, will be able to make full payouts through 2039 — it should also be noted that the full payout projections have been pushed downward by the economic downturn of the last couple of years, and those numbers should start moving the other way as the economy recovers. And if that isn’t the case, we have a lot bigger problems than Social Security coming down the pike.
And even if the trust fund were to run out, Social Security would still be in pretty good shape. First of all, the trust fund is a relatively recent creation. It was establisned in 1983, three years before the baby boomers started turning forty, to deal with the demographic bulge headed Social Security’s way in 2011. The last boomers will retire in 2029, ten years before the trust fund is currently projected to be depleted. Essentially, when the trust fund runs dry, it will coincide with the fact that it’s mission will be, for the most part, complete. It will have eased the strain caused by the retirement of the baby boom.
The depletion of the Social Security trust fund is not a pending disaster, it’s by design. The fact of the matter is, in case you are one of the people in this country to whom facts matter, Social Security is a self funding entity, independent of the general fund. It funds itself entirely through payroll taxes, and so long as payroll taxes are collected, retirees will get their checks. The only way that changes is if Congress acts to stop collecting payroll taxes or to outright abolish the program.
There has been a concerted effort to keep Social Security from being one of the lambs that is led to the slaughter. I know. I was one of the Blogging Fellows who received a stipend from the Strenghen Social Security project for the Social Security Works think-tank for writing a series of posts to that end.
I’m going to tentatively pencil in a hashmark in the “win” column because I trust that we made our point and Social Security is still the “Third Rail” of American politics that it’s always been. But if anyone thinks I’m going to turn off the juice based on one measley win, I have a bridge to sell you.