It might surprise many in Washington, but if you ask hardworking Americans what their greatest economic concern is they don't say budget deficits or the national debt. No, what I hear most often from Americans is that they are frightened at the prospect of being financially insecure in retirement.
By some estimates, the gap between what Americans have saved for retirement and what they need to maintain their standard of living in retirement stands at $6.6 trillion. Despite this, every spring when the Social Security Trustees' annual report is published, the usual suspects take to the airwaves to blame Social Security for our budget problems and urge deep cuts to the program, something that would make the retirement crisis even worse.
While not surprising, it is disappointing to see Social Security come under unwarranted attack, year after year. Here are the facts:
• The Social Security Trust Fund can pay full benefits until 2033. That's another 20 years.
• Social Security is financed by its own revenue stream, the payroll tax and, by law, it cannot add to the deficit. Since the payroll tax will still be collected, even after 2033, Social Security will be able to pay 75 percent of scheduled benefits going forward, assuming that Congress would take no action to address this problem.
Rather than take this as a signal to slash Social Security benefits, it tells me that we need to make the program stronger so that it provides tens of millions of Americans assurance that their golden years will be financially secure. That's why, as part of the Rebuild America Act, comprehensive legislation I recently introduced to help restore the American middle class, I included an ambitious Social Security proposal that stands in stark contrast to those who claim that the only way to save Social Security is by cutting benefits.
To strengthen America's retirement system, my proposal would increase Social Security benefits and greatly improve the financial stability of the program. It does so by:
• Increasing the amount of earnings covered by higher replacement rates in order to increase benefits by approximately $60-70 per month
• Changing the way the COLA is calculated so that it better corresponds to the typical expenses of seniors
• Removing the cap, currently $110,100, that unfairly protects the highest earning Americans from paying into Social Security like the majority of hardworking Americans.
All told, according to the Social Security Actuary, this proposal would extend the life of the Social Security Trust Fund to 2052 while cutting the long term funding deficit in half.
Quite simply, we don't have to slash benefits to make the program financially stronger.
Social Security is the most successful program in our nation's history. It is not in crisis. With sensible steps, like those in my legislation, we can make the program stronger and ensure greater financial security in retirement for generations to come.
Richard (RJ) Eskow: Social Security and Medicare: Six Common Myths, Debunked
Chris Weigant: Friday Talking Points -- A 4/20 Column
Frank Koller: Paid Work -- Long Past 65 -- Can Benefit Everyone
Ed Schultz: The War on the Poor: The Potential Impact of the Proposed Budget Cuts by Republicans
1-Remove the "cap". Social Security should be paid regardless. Make a million, you continue to contribute.
2-Add one cent to a gallon of fuel and this one cent goes directly into the "box".
Oh, btw, lock the box so the thieves in D.C. will keep their hands away.
While everyone agrees that the federal government can improve all entitlement programs and make the best use of taxpayer dollars, turning our backs on Americans with disabilities is not the place to start. Inadequate funding of Social Security Disability Insurance only pushes the problem to the states and local communities.
As far as the income cap, here are some fun facts. When SS was started, the max income subject to SS "contributions" was 5.8 times the minimum wage ($3000, annual minimum wage salary was $520). Today, the max income subject to SS "contributions" is 7.3 times the minimum wage ($110,100 versus $15,080). Frankly, they are in the same ballpark, but slightly higher. Meaning "rich folk" are paying just as much, or more, in SS tax as they were when the program was first desinged.
But for the entirety of the time from 1950 to 1965 (inclusive) the max income subject to SS tax was less than twice the minimum wage. Also during that same time, rates were significantly lower. It started out in 1938 as 1% of income. In 1950 it was still only 1.5% of income, and even in 1965 it was only 3.625% of income. Today it is 6.2%.
Theres really a simple answer here, people are living longer, and therefore MORE people are actually drawing the benefit for a longer amount of time. There are numerous ways to deal with that. But simply stating that SS is in trouble because the "well off" of today are not paying their fair share is patently untrue.
That's quite the logical leap, especially considering that the "well off" are also taking home an exponential amount of the economic gains, and the rest of the workforce is faced with stagnating wages to the point that they can't even contribute a feasible percentage of their incomes into a retirement plan, if they are even offered one anymore.
Higher life expectancy may be a contributing factor to the shortfalls projected for 2033, but it is likely that were tax contributions increased on the "well off" at even a linear rate over the past 3 decades, the point would be moot.
As far as the rise in SS tax for the "well off", it has gone up AT LEAST linearly over the past 30 years. In 1982 the rate was 5.4% of the first $32,400 in income, for a maximum contribution of $1749.60 ($3,499.20 if you count the employer match). Today it is 6.2% of the first 110,100, for a maximum contribution of $6,826.20 ($13,652.40).
Also take into consideration that minimum wage in 1938 ($510 annual), when inflated to 2010 (best calculator I could find on the web) is $7,961.72. The max subject to SS was $3000, in 2010 that equals $45,932.98. The minimum wage earner, and the top earner (for SS purposes) are both getting taxed on double the income they werer in 1938.
Point being, the shortfall is not due to some malfeasance on anyones part. Its just a fact of life of the program.
A much bigger problem is medicare and instead of fixing the system, this same approach was taken and your medicare contribution was uncapped. It was later increased and now under obamacare, a new tax level was created that almost doubles the medicare tax on incomes over $200K.
Given a chance, government will always add taxes rather than fix the system. This is why the total size of government as a % of GDP has almost doubled in a single generation
You can't exactly soak more SS taxes out of those who are already increasingly unable to save for retirement. It would seem to be counterproductive.
• Increase the amount of earnings covered by higher replacement rates in order to increase benefits by approximately $60-70 per month
• Change the way the COLA is calculated so that it better corresponds to the typical expenses of seniors
• REMOVE THE CAP, currently $110,100, that unfairly protects the highest earning Americans from paying into Social Security like the majority of hardworking Americans.
"unfairly protects". How so? Does someone making $1,000,000 get the EXACT SAME SS benefits as someone making $110,100? Simple answer... YES, YES, YES. So why do you propose to change SS from an insurance program to a wealth transfer program to the poor?
$1,220 for income of $40,000 by one person.
$1,664 for income of $40,000 by two people each earning $20,000.
The benefit of $832 per month is not 1/2 of the $1220 because benefits are not proportional to income or SS taxes paid.
http://www.ssa.gov/OACT/quickcalc/index.html
Born in 1950, retiring at 66 in 2016.
Since income inequality has been increasing the revenue needed to extend SS viability exists above the $110K mark. Bring income inequality down and the cap can be maintained, or even lowered.
With all do respect Mr. Harkin for 2 years Congress has defunded SS to buy votes.
Just last summer you, Your Party and the President told Seniors that if the Budget Deficit ceiling were not raised the Government would be unable to pay SS benefits. Were you lying then or now?
Are you familiar with 31 USC § 1103 - BUDGET CEILING
Congress reaffirms its commitment that budget outlays of the United States Government for a fiscal year may be not more than the receipts of the Government for that year.
Unless we are involved in willing suspension of disbelief of the land slide loss to Democrats in 2010 over the US Debt and over spending by Congress then your article might actually have credence. Since we are not then it appears you underestimate the intelligence of the American people.
and save $44 billion per year (no exceptions) end both wars save $150 billion per year (and bring all troops home) close all military bases outside the U.S. and bring all troops home. What loyal american could be aganist?