THE BLOG

Rich Guy Discounts -- 2011

02/11/2011 06:14 pm ET | Updated May 25, 2011

Last year John Boehner was running his mouth saying that younger American workers are going to need to work longer and harder to get to Social Security.

This year Senator Richard Shelby is running with the same theme.

These guys are wrong!

Congress is setting up a battle between generations, young vs. old. The real battle should be those who can pay and are getting away with this vs. those who cannot pay and do not have a voice in government.

In order to make the Social Security solvent, before asking one worker to toil one more day, the government needs to remove the wage cap on Social Security. Congress has made the situation worse by LOWERING the Social Security tax rate for 2011.

Below are some tables that describe how Social Security worked last year with a 6.2% rate and a $106,800 wage cap. This is essentially a copy of what I placed here last year (Link). The line item for $174, 000 represents what a member of Congress makes serving us.

2011-02-10-SocialSecurity2010.jpg

For 2011 the Employee Rate went down to 4.2%. Just so we are talking apples and apples, here is a copy of last year's table with the updated rate.

2011-02-10-SocialSecurity2011.jpg

As you can see the Rich Guy Discount is still the same. That 89% discount for a millionaire is still just as appalling as last year. The discount grows if you are pulling down more than a million...

What does this data mean?

Congress is cynical. (Like that is news.)

Yes, they lowered the tax rate! Big whoop! The purpose of this tax is to fund social security. You get out of something what you put into it.

If you haven't noticed there is a large tidal wave bearing down on us. It is the retirement of the Baby Boomer Generation. Lower the taxes going into that system, there will be less going out of it when it is needed.

Let's look at the difference from last year to this year...

2011-02-10-SocialSecurity2011Diff.jpg

Those last two columns are the monies we need to fund social security that are being taken out of the system. No wonder the post Baby-Boomers are being asked to work longer -- they are de-funding Social Security right before our eyes at the same exact time it will be needed most.

I realize advocating for multiple things at the same time is difficult.

Here is where we should be going:

  1. Remove the Cap (Have I said that enough?)
  2. Make a uniform retirement date. It is not right to ask younger people to work longer while allowing older people to check out earlier. Everyone plays by the same rules. Are we Americans or are we communists?
  3. Make the funding rates target to the retirement date. Lowering this rate at this time is insanity.

When I see stuff like this, my paranoid mind shifts into the Mencken Cynical Mode.

It is almost as though Congress has a plan:

  • We'll get the younger people to work longer so the boomers can retire !!!
  • The older people vote in higher numbers than younger people -- so we will get to keep our jobs.
  • Anyone younger than the Boomer generation is too stressed out taking care of their kids or aging boomer parents to really do anything about this.
  • Kids in school or recent graduates have had science and math resources diminished so they won't be able to size up the situation here to see what is happening to them.
Congress is still asking for younger people to work longer without removing the wage cap.

It is wrong on soooo many levels.