Social Security in an Election Year
This election season offers an opportunity to reframe the debate over Social Security. It is necessary, of course, to ensure the program’s long-term health beyond 2034, when the system is projected to come up short. But this can’t be done by broadly cutting benefits. In fact, there’s mounting evidence that Social Security, which has become ever more important in retirement, needs to be expanded.
Currently, 36 percent of retirees rely on Social Security for 90 percent or more of their income; over all, 65 percent of retirees rely on it for more than half of their income. The average monthly benefit hovers around $1,300. Retirement security won’t be any better for those now in their 50s. The Government Accountability Officerecently found that 52 percent of American households with someone 55 or older have nothing saved for retirement and that only half of that 52 percent will get anything from a company pension. For those ages 55 to 64 with retirement savings, the median amount is barely in the six figures.
Younger workers are arguably worse off, because saving has become increasingly difficult, or impossible, in the face of stagnating wages, high debt, high rents and the lack of employer-provided retirement benefits. In 2013, 44 percent of workers on the lower half of the income scale had a retirement plan at work, down from 54 percent in 1995, according to datafrom the Federal Reserve.
Despite these facts, nearly all Republican candidates have called for cuts to Social Security benefits.
Jeb Bush, Chris Christie, Ted Cruz and Marco Rubio all favor cutting benefits by delaying the age for full benefits; the retirement age is already set to rise to 67 for people born in 1960 or later. They say a higher retirement age is needed to keep up with longer lives. But data show that life expectancy is growing faster among the wealthy than among the poor, and poor women are seeing life expectancy decline. So raising the retirement age across the board would hit lower-income workers the hardest.
Mr. Bush, Mr. Christie and Mr. Cruz have also endorsed reducing future cost-of-living adjustments in Social Security, even though there is no compelling evidence that the current adjustment is too high.
Mr. Bush and Mr. Cruz have said that Social Security payroll taxes should be diverted into new private accounts for employees, a reprise of President George W. Bush’s failed privatization attempt in 2005. Private accounts do not enhance retirement security. They divert money that would otherwise finance Social Security to Wall Street and shift the risk from government to individuals.
Donald Trump opposes benefit cuts, including a higher retirement age, but he has offered no meaningful ideas for reform.
The Democratic candidates have played defense and offense. They have opposed benefit cuts and privatization. They have proposed increasing the system’s revenues by raising the ceiling on the amount of wages, currently $118,500, that are subject to payroll taxes. That reform is overdue. If the wage ceiling had kept pace with the income gains of high earners over the decades, it would be about $250,000 today.
More important, they have stressed that an aim of reform is to bolster the system, not shrink it. Hillary Clinton would raise benefits for widows and for retirees who had long absences from the work force to care for relatives. Bernie Sanders and Martin O’Malley would increase benefits more broadly, especially for low-income recipients.
Ultimately, strengthening Social Security requires a growing and healthy economy. The Democratic candidates have credible ideas for creating jobs and raising wages that would revitalize the tax base for Social Security. Those and other sensible fixes, not deep and broad cutbacks, will ensure that the system continues to provide a basic level of guaranteed retirement income for all workers.
http://www.nytimes.com/2016/01/03/opinion/social-security-in-an-election-year.html?mwrsm
We are being heard! The New York Times just endorsed Social Security expansion with this editorial Please read and share widely and keep the momentum building.
Jan Rossmann If you want to get or keep those Social Security benefits you worked so hard for and paid for, arm yourself with the following facts and pass this along to everyone on your email list:
The lies being told about Social Security by politicians and pundits who are owned-and-operated by Wall Street have a single goal: To convince voters to allow converting Social Security's mammoth $3 trillion surplus and huge ongoing revenue streams into 401(k) accounts from which Wall Street banks can reap billions in various types of "service charges."
There are four key false claims that Wall Street wants to convince voters about: 1. "Social Security adds greatly to the federal deficit." 2. "Social Security is spending more than it takes in." 3. "Social Security's surplus is nothing but IOUs." 4. "Social Security is just another wasteful government bureaucracy."
Each of these claims is outright untrue as shown below:
1. CLAIM: "Social Security adds greatly to the federal deficit." FACT: AARP reports that "Social Security operates at a surplus and has not contributed one dime to our nation's budget deficit." The facts are that Social Security is self-funding from three income streams: 1. Huge amounts of interest earned on Social Security's $3 trillion surplus that's safely invested in United States Treasury Bonds; 2. Huge amounts of income tax that's paid on Social Security benefits and that goes directly back into the Social Security fund; and, 3. Huge amounts of income from payroll deductions.
2. CLAIM: "Social Security is spending more than it takes in." FACT: The Los Angeles Times reported in "The myth of the Social Security system's financial shortfall" that even when Social Security income from payroll deductions dipped during the depth of the recession, the interest from investment earnings on the Social Security surplus not only paid all the temporary shortfall, but even added another $122 million to the surplus. Enemies of Social Security ignore that fact that Social Security has three sources of income: 1. Huge amounts of interest earned on its $3 trillion surplus that's safely invested in United States Treasury Bonds; 2. Huge amounts of income tax that's paid on Social Security benefits and that goes directly back into the Social Security fund; and, 3. Huge amounts of income from payroll deductions.
3. CLAIM: "Social Security's surplus is nothing but IOUs." The Los Angeles Times pointed out in the article entitled "Social Security isn't broken, so don't 'fix' it" that Social Security's nearly $3 trillion surplus is invested in United States Treasury bonds, the most secure security in the world and the security in which all the governments of the world, including China, put their surpluses. If United States Treasury bonds are "IOUs," then the entire world is bankrupt. Calling United States Treasury bonds "IOUs" is nothing but pure deception.
4. CLAIM: "Social Security is just another wasteful government bureaucracy." In its above-cited article The myth of the Social Security system's financial shortfall, The Los Angeles Times reported that Social Security's administrative costs are less that 1% of expenditures, which is more efficient than the administrative and other charges that banks collect from people who have 401(k) plans and is well below the management costs of corporations.
It's simple: Powerful Wall Street interests want to "privatize/personalize" everyone's Social Security account by converting them into 401(k) accounts so that the banks can reap a windfall of profits from the management and other charges that banks drain from people's 401(k) accounts.
PUBLIC PENSION PLANS
The same Wall Street strategy is behind the lies being told about how public employee pension plans are "bankrupting" states and therefore should be converted into 401(k) plans: There's also about $3 trillion in public pension plans, and Wall Street banks would reap billions in so-called "management" and other fees that they drain from worker's 401(k) plans if the public employee pension plans were converted into 401(k) plans.
The truth is that nearly all of most states' public employee pension benefits are paid from (1) the investment earnings on the pension's trust fund, plus (2) payroll contributions from the pension plan's active members, leaving only a very small percentage to be paid out of tax dollars. In fact, the non-political Boston College Center for Retirement Research reports that the national average state contribution to public employee pension plans is only about 5% of the typical state's annual budget. That's just 5 cents out of a state budget dollar, and that's never going to "bankrupt" a state.
The figure that Wall Street's owned-and-operated politicians and pundits use to shock voters into thinking that their state is deeply in debt to a public pension plan is something called an "unfunded liability." The banks get away with this scare tactic because no one but an actuarial accountant knows what an "unfunded liability" really is. Here's what it really is in simplified terms: To actuarially calculate an "unfunded liability" you take that small 5-cents-on-the-budget-dollar annual contribution to the pension plan and add it up for the next 30 years, increasing each year's contribution to allow for inflation and other economic factors. The sum total of that 30 future years of small annual contributions is the "unfunded liability." It's typically a large amount --- large enough to panic voters who think it's an actual current debt, when in fact it's only the 30-year sum of small annual contributions that are easily afforded, like a mortgage or a car payment.
No comments:
Post a Comment