On May 28, 2009, in this space, we published a well-researched article entitled, “Who Stole Your Social Security and Why?” The idea was to clarify the concept and the true status of Social Security. Because of the huge Republican propaganda campaign against Social Security, it is time to review the facts.
In recent years, citizens have contributed about a trillion dollars a year to Social Security. From its inception in 1935 until 2010, Social Security had always taken in more than it paid out. As a result, Social Security has a surplus in the trillions. The recent baby-boomer-caused deficits in annual Social Security budgets are relatively minor, an annual shortfall of about 4% or about four dollars of every thousand. Republicans have tried to create the image that the Social Security fund will soon go “bankrupt.” That’s a lie.
Reactionaries, now Conservative Republicans, (or more frequently identified as Fascist/Republicans) have tried to hi-jack Social Security from the very beginning. But it is not sustained by general tax revenue funds. It is supported with a separate, dedicated, payroll allocation. Since the Bush Administration, however, Fascist Republicans have come up with a more comprehensive way to end Social Security. They have created huge debt with which to bankrupt the entire government. And they are coming closer.
In the 2009 article, Populist Daily laid out the facts as determined by the Social Security Trustees themselves. There is no better source for that information. (https://www.ssa.gov/oact/trsum/ ) That is not to say that the Cato Institute, or the Heritage Foundation or the other literally dozens of so-called “think tanks” established by Right Wing billionaires will not present alterative data which they hope you will not be able to challenge. Just as they have done with climate change. These greedy, unnatural, hideous human beings are solidly behind the attempted privatization or dissolution of Social Security. What logical reason would motivate a person who has so much wealth that wealth itself has no context? It is cruelty on a national scale.
Our 2009 article made crystal clear the fact that Social Security had—and still has–a huge surplus. If you can imagine the Treasury as a huge safe left unlocked, Bush and Cheney and their all-Republican Congress, from 2001 to 2009, removed from that safe not merely the $2.6 trillion or more of surplus Social Security funds, but another $10 trillion at least during their 8 years in office. It is very accurate to say that Bush and Cheney stole your Social Security funds at the same time that they looted the government of other funds. This was an enormous and deliberate crime. Bush and Cheney, may, yes, have been somewhat legally elected, and even in 2004 may have been re-elected legally (certainly there is controversy over both elections) but they were not elected to run up huge deficits and a gigantic national debt.
In 2001 the Congressional Budget Office projected that the Clinton surpluses would completely eliminate the national debt—if we so desired—by 2011. Here is the exact quote from the CBO report: “Under current policies, budget projections show that publicly held government debt, which is currently a little more than $3.5 trillion, will be eliminated by around 2010—perhaps earlier if the economy continues to grow faster than anticipated.” Now, there is a footnote to that comment. And that footnote says that subsequent CBO estimates a year later actually pushed the aggregate surplus number higher from $3 trillion to $5.6 trillion. (See https://research.stlouisfed.org/publications/review/01/03/0103kk.pdf , page 24, paragraph 1.)
Bush and Cheney may be criminals but they are not fools. They had the best, if the most devious, minds in finance at their disposal. There is little doubt now that the Bush Administration lied to the American public, may have known of plots to bring down the World Trade Center Towers, was planning a war against Iraq from the beginning and had no intention of allowing budget surpluses to continue. This was a deliberate plan to loot the U.S. Treasury and deliver the money to private corporations and billionaire backers of the Republican Party by privatizing large segments of government work and offering it at no-bid contracts with huge profits. Money went to military contractors, to oil companies and into political funds to rearrange the political landscape, which they have done.
This was excellently portrayed by a chart from “Business Insider in 2013–and the results are clear http://www.businessinsider.com/how-clinton-surplus-became-a-6t-deficit-2013-1. At a quick glance you can see where your surpluses went and where the extra debt was added. Tax cuts for the rich, special programs for political cronies and unnecessary wars.
So where does this leave us on Social Security and Medicare? Social Security has continued to bring in more revenue that it sends out until the last few years. The differential, the deficit, each year remains small enough so that it barely touches the reserves. But of course Congress needs to raise revenues to return the reserves that it took, along with the other trillions in general revenue funds. The surpluses in the Social Security funds, several trillions, are still there. But Bush and Cheney made sure the overall government spending increased the debt to $12 trillion rather than what would have been zero by 2011 and, according to the CBO, an enormous government surplus by now.
So the Republicans say that—oops—we spent too much. Now we have to cut back and balance the budget somewhere. But Republicans also say that we can’t raise taxes on corporations who send your jobs abroad or on billionaires willing to spend hundreds and hundreds of millions to eliminate Social Security and impoverish hundreds of millions of Americans. We cannot afford more taxes on the wealthy, according to recent Republican candidates for President, one of whom had 9 homes around the country or another who leased a full sized jet airplane to ship a thoroughbred horse across the Atlantic for a horse show.
Let’s examine that issue…can we or can we not afford more taxes? This is really several issues. The first is this: are those paying the most in taxes, and therefore paying the lion’s share of support for government really taxed too much? On the surface, it would seem that, no, they are not taxed too much but should not, as a group, have their tax rates increased. While it may seem unfair to some that a man earning $20 million a year should only pay a net 14% of income, it may be quite reasonable to say that this man, who now pays nearly $3 million a year in taxes pays enough. The top 2% pay about half of all personal income taxes. The government recently raised top brackets from 35% to 39% (roughly). So an additional 4% on a millionaire’s taxes (a million in earnings) is $40,000 more. That may be livable, no millionaires will go hungry but do we need to go higher? Bill Clinton balanced the budgets with a good strong economy and a 39.4% top personal income rate. The middle class, many of whom will need both Social Security and Medicare at the time they retire because of high college debt and high tuition costs for their children when they reach college age, pay about 40% of all personal income taxes. And they pay a higher share of their income because of a fixed cost up to about $100,000 for payroll deductions. Still the higher the income goes, the greater share of the economy, that group is supporting.
But the answer is not exclusively in setting personal income tax rates. Income retention, or wealth, is another factor. Certain segments of the economy are finding ways to aggregate what would have been considered vast amounts of wealth in earlier decades. For example, according to IRS data and analysis by the Center for Budget and Policy Priorities (http://www.cbpp.org/sites/default/files/atoms/files/11-28-11pov.pdf ) income inequality is growing. If the goal of taxation or revenue generation for government is to balance budgets, meet national security needs, maintain common infrastructure and create jobs, then simple reorganization of personal or even corporate income tax codes may not the only or even the best solution.
The following may be an oversimplification but it makes the point. For every job society creates for a millionaire, we must create 20 jobs for a person making $50,000. So, if one man earns one billion dollars, we must create 20,000 jobs at $50,000. We could tax them all at 20% or 30%. It makes no difference. The fact is, however, that an individual making one million dollars a year these days does not necessarily, nor in fact rarely creates 20 jobs for people making fifty thousand dollars a year. With Wall Street as our largest industry, trading stocks and bonds, a small percentage of jobs are created compared to the wealth accumulated by financial executives. This isn’t Henry Ford’s economy. It is Warren Buffett’s economy. Higher income no longer equates with the creation of jobs.
Back to Social Security. Right now, according to the Right-Wing, billionaire founded and supported Heritage Foundation, Social Security has a whopping $39 billion shortfall—more going out than coming in. But Social Security generates $1,080 billion per year. This means that the shortfall is about 4%, four dollars on a thousand. The Heritage Foundation also says that the fund will be “bankrupt” by 2035. (That is, of course, if the Republican Congress does not act—and they have no intention of acting—to restore the $2.6 or far more by now—of funds stolen by Bush and Cheney. Four percent is hardly a challenge. Social Security recipients we denied a cost-of-living increase of something like 4% in 2016 and hardly a word was spoken of it.
Let’s just take the worst case scenario. Let’s say that you are 55 or younger, that you have little savings and a tenuous job with expensive health care costs, even with Obamacare. And no pension. Only a 401k, basically a tax-free savings account. If Republicans stay in office, even with a Democratic President, the likelihood is that the average income household ($50,000 per year) will have very little in a 401K, will have mortgaged a good share of the equity out of its home and will not be able to retire until age 70.
On the other hand, the downside is not as bad as Republicans would like to paint it. Social Security will not really be bankrupt. The republicans would like you to think so, in order to return to what they tried before, under George W. and Tricky Dick Cheney—privatize your funds and place them in the hands of Wall Street. If the Republicans have their way and Social Security does go “bankrupt,” here is what will happen. Instead of a $1,000 per month payment, as an example, the retiree will get about $780 per month. That is what the system will pay, approximately, as a default based on revenues and costs after 2035. Not zero. But only about 75% of what current recipients receive.
Right now, retired citizens pay about 25% of their health care costs. Medicare is not free unless you simply have no money, at which point it is called Medicaid. In Republican states, hundreds of thousands of citizens who have worked hard but were not able to save money or get a pension, still have no medical attention unless they go to the emergency room. So these heartless Republican governors have done their best to continue support of the horrific system for many working poor that existed before Obamacare.
So here is the bottom line. The United States is like a company with a lot of costs of operation that are greater than revenues. There are two solutions. Cut costs. Or increase revenues. There is no really good reason to cut costs. These are costs that the government has obligated itself to support for almost a century. Who wants to do away with them? Giant corporations and billionaires, both of which groups have always objected to costs of government, but only recently have they wanted to send jobs abroad, impoverish our citizens, pay less in less in taxes, and basically abolish any chance of a decent life for those in the lower two-thirds of society. Not only do they want to impoverish them with no decent jobs and no health care and no retirement, but they want to control their lives, their reproductive habits and eliminate any semblance of personal safety. Guns everywhere is their mantra.
It always comes back to the same thing. We have huge amounts of money, hundreds of billionaires and tens of thousands of multi-millionaires. Our largest corporations hold over $2.1 trillion in untaxed foreign bank accounts rather than investing it in the United States. (BloombergBusiness, March 4, 2015)
Our retirement support systems are solvent until 2035, at which point, if we do nothing, they will drop to 75% of current payment capacity. But if we take any one of several simple steps, like raising the payroll deduction income cap from one hundred thousand dollars per year to two hundred thousand dollars per year, the system will be solvent for another 50 years, or perhaps, depending on demography, all the way to the year 2100.
Is your retirement somewhat secure? Absolutely not. Not while Republicans control Congress. As long as Republicans run Washington as if they are an arm of the Chamber of Commerce, the military-industrial complex and every giant monopolistic corporation from oil to media to finance, no citizen is safe.