Senator Marco Rubio's recent Reagan Center speech praised President Reagan and condemned the present provisions of Social Security. He omitted to say that President Reagan's 1983 Social Security agreement with Democratic Speaker Tip O'Neill bolstered and shaped today's Social Security, the system he attacks.
Senator Rubio darts from, "I believe in America's retirement programs," to declaring Social Security not "sustainable." He argues that "When Social Security first started [he should have said 1950], 16 people were at work for each beneficiary," while "Today there are only three for every retiree and soon [he means the 2020s] there will be only two." This is a set piece for Social Security critics like Fiscal Commission co-chairs Erskine Bowles and Alan Simpson and Gang of Six leader Senator Mark Warner. The claimed conclusion -- too few people at work to support too many benefit recipients -- wilts under examination.
Since 1950 an avalanche of technological advances have enabled employees to progressively make more, sell more, bill more, ship and deliver more goods and services more quickly and in new ways. The computer revolution did not happen just once; it did so repeatedly. For example, since the early 1980s, chip capacity doubled every two years. The internet, jet planes and the interstate highway system helped make commerce faster and vaster. Computer-assisted devices unknown in 1950 revolutionized the economy. With nanotechnology in only its natal phase, the end is not in sight. Recent experience demonstrates the growth potential of a technologically advancing economy. Between 1990 and 2000, non-farm employee hourly output increased by more than 20 %, manufacturing hourly output expanded by 45 % and per hour compensation (after subtracting inflation) grew by 5%.
Senator Rubio credited President Reagan with "defining the proper role of government ... better than any American has done before." Presumably that refers to what he said ("government is not the solution, it is the problem") rather than what he did (accepted and signed the 1983 Social Security amendments). But many Americans embrace Abraham Lincoln's precept that "The legitimate role of government is to do for a community of people, whatever they need to have done but cannot do, at all, or cannot do as well for themselves." Social Security fits that bill. And it is designed to be self sustaining. As the Social Security trustees reported in 2011, Social Security is fully funded for another quarter of a century. Modest measures that enjoy wide public support would assure Social Security's funding for an additional 50 years.
Higher wages should mean higher program income. In recent times, the greater portion of improved income has unexpectedly flowed to those with earnings above the FICA cap - currently $106,800 a year. As a result, FICA (Federal Insurance Contributions Act) revenue has not grown in step with the economy. Raising the cap on earnings subject to FICA would come close to cancelling the funding shortfall that is projected to begin in about 2037. Or raising FICA rates by one and one tenth percentage point for both employers and employees also would do that job even better. Meanwhile, wages are projected to grow faster than that, boosting average pay.
The Rubio/Bowles-Simpson/Warner pitch ignores the fact that, despite the worsening worker/beneficiary ratio they cite, since 1983 Social Security resources exceeded its payout. That has built a huge trust fund invested in U.S. Treasury obligations; the trust fund already totals $2.6 trillion and is projected to grow beyond $4 trillion. Some pooh-pooh that reserve as composed of "worthless IOUs." But investors worldwide regard such U.S. Treasury IOUs as among the world's most reliable and desirable securities. That became clear yet again when, after the federal debt ceiling battle shook confidence in private company stocks, investors flocked anew to purchase just such U.S. IOUs.
Of course, they must be redeemed. If we extend the two Bush tax cuts, continue vast subsidies for corporations and the wealthy, spend more trillions on war and armaments (including those we give other nations), the U.S. may have to borrow. But that would not be to pay Social Security benefits; program participants have already done that. We would be paying for the billions borrowed by the Treasury from the trust fund to pay for non-Social Security outlays and tax cuts.
Senator Marco condemns entitlement programs that help meet the hazards to income and health we all face, claiming that "these programs weakened us as a people." We strayed, he says, from a former better time when " If someone was sick in your family [or]a neighbor met misfortune, you took care of them. You saved for your retirement ...because you had to..." But, he notes regretfully, " it [became] no longer necessary to worry about savings for security because that was government's job."
Senator Rubio, caring for a family member takes more than tender loving care. A premature infant needs more than affectionate swaddling. Cancer requires more than hot or cold compresses lovingly administered. Saving for retirement, illness or disablement takes more than a New Year's resolution. Social Security and Medicare are not "government" doing that "for" us; they are Americans using the political process as Lincoln envisaged to meet common unmet needs. Such prudent measures do not sap our character. They make the private enterprise system work better.
Senator Rubio extols "compassion" but doesn't describe how it would work or how he proposes to pay for it. His prescription is as gauzy and ill defined as that supposedly golden time when, he says, "we" took responsibility. But, Social Security and Medicare are exemplars of responsibility, requiring everyone to contribute to their funding.
After the widespread failure of private retirement plans and the shriveling of private savings plans, Social Security has become more vital than ever to American families, not just seniors.
Senator Rubio's Reagan Center speech recycles his Senate campaign themes. Partisan audiences hardly notice or care about his contradictions, fact-free fantasies, faulty logic or gauzy prescriptions. Senator Rubio's speech was political fun and games. If we take it as serious analysis and policy prescription, millions of Americans and the economy would pay a terrible price.
...' As the Social Security trustees reported in 2011, Social Security is fully funded for another quarter of a century....' My what a clever lie by omission the lawyer presents to the jury. Notice that he does not say that the report is true; he simply states what was reported. He some how neglects to mention the trustees statement that the IOU's held by the SS trust fund do not hold any value.
The barrister takes an obvious statement of truth ...' "When Social Security first started [he should have said 1950], 16 people were at work for each beneficiary," while "Today there are only three for every retiree and soon [he means the 2020s] there will be only two." This is a set piece for Social Security critics like Fiscal Commission co-chairs Erskine Bowles and Alan Simpson and Gang of Six leader Senator Mark Warner. The claimed conclusion -- too few people at work to support too many benefit recipients -- wilts under examination. ...'
and then proceeds to do present anything that refutes that SS is unsustainable.
I am not convinced that we will not have enough surplus to take care of the younger workers too, especially if interest goes up. Only a third of the boomers plan to retire.
1. Tell both Republicans and Democrats they are equally to blame for the shape social Security is in. For decades both parties used the Social Security money you paid in and left a stack of IOUs for the taxpayer to pay back.
2. The retirees and future retirees of Social Security are made up of liberals, conservatives, Republicans, Democrats, Independents, and people who are pro and anti every red meat issue.
3. Make an issue out of the Blue Chip pension system that Congress gives themselves when they say we are broke. Argue we can't afford such benefits when we are going broke.
4. If the politicians had to live with whatever they come up with for the rest of us, they would suddenly come up with creative solutions.
5.Demand an increase in the benefits. Argue this is not a handout. For many decades your tax money has financed the revolutionary improvements that fueled the spinoffs and massive growth and profits for business and industry -The taxing power of government has been used to make the taxpayers capitalists, a critical source of capital for business.
6. Start demanding a share of the profits generated by your taxpayer investments.
The best thing to do for Medicare is everyone should have the same good basic health insurance policy, then if some want cadilac insurance for plastic surgery, etc, they could get it on their own.. If they are poor the government could subsidize them instead of subsidizing the health insurance companies. Or we could all have the exact same insurance and all of us pay for it with taxes. The more you earn the more you pay.
LIE 1. Social Security has no financial problems. With no government action of any kind, Social Security can pay full benefits until 2036.
LIE 2. Social Security in its current form is unsustainable. It is going broke or it will go broke.
THE TRUTH: All of the $2.6 trillion in surplus Social Security revenue generated by the 1983 payroll tax hike that was supposed to be saved and invested in public-issue marketable U.S. Treasury bonds was instead spent by the government, as it came in, for tax cuts, wars, and other government programs. The year 2009 was the last year in which the Social Security budget ran a surplus. Beginning in 2010, Social Security began running annual budget deficits. In 2011, and all future years, the cost of Social Security benefits will exceed the payroll tax revenue, and the government will have to dig into the general fund in order to pay full benefits
If the $2.6 trillion had not been spent on other things, or if it is repaid, Social Security could pay full benefits until 2036. If the cap on earnings subject to the payroll tax, which is currently $106,800, were removed, so that all taxpayers would pay payroll taxes on 100 percent of their earnings, just as they already do with the income tax, Social Security would be fully solvent for at least another 75 years.
Allen W. Smith, Ph.D.
www.thebiglie.net
Fundementaly, that is the problem with Social Security, most people have differing opinions about what it is and how it is funded.
More than 2/3rds of boomers are still working. They pay a contribution to FICA (federal Insurance contributiuon act).
As those who have paid the money in were building up credits for our retirement. The more we earned and the more we paid in, the higher benefits we get when we retire.
Social Security is similar to life insurance. You pay in and don't draw it until you die. Those who die before you will get some of your premiums that you pay in, but you don't worry about it because you know there will be others to pay yours when you die.
Social Security is a combination of an annuity,surviors benefits and disability.
Only those that work pay into Social Security .their family and them are the only ones who can get benefits.
We all pay federal land state taxes for the elected government's pensions and everyone elses, but no one but us pay for Social Security benefits.
The fund is strong, and can be made even stronger with a few minor tweaks that most citizens agree with.
There is no reason to assume that you "won't get a dime", and that sentiment only generates resentment towards those that are getting benefits, and also indirectly gives Republicans a green light to try to dismantle a program that has saved millions.
Wise up. Words matter.
I'm also hoping Rick Perry runs on the same platform: his comment was that Social Security was a 'vicious lie', and a 'ponzi scheme'.
By all means, all Republicans, please run on that.
Can't wait to see the results.