I’m posting very late today, as I had to finish my paper for the American Political Science Association next week (comparing the Tea Party to the labor insurgencies in Wisconsin, Ohio, and elsewhere). I could skip it, but I want to make just a few points about social security.
- It’s not in crisis! There is a minor imbalance, between incoming revenue and outgoing benefit payments in about 30 years, but it’s easy to fix. Senator Bernie Sanders introduced a bill yesterday that would fix the imbalance completely, by one simple device: lifting the income cap. Right now, you only pay the social security tax on your income up to a limit – about $90,000. After that, you don’t pay it. I benefit from this myself- my pay goes up in December each year, because I am over the limit – but it’s no big deal. Bernie’s proposal is simply that everyone should pay. It’s already a fixed rate – i.e., not progressive – but with the income cap, it’s actually a regressive tax! That’s crazy. More important, Sanders’s proposal would fix the problem completely – we don’t have to do anything else! That’s how small the problem is.
- The idea that young people today will never get social security is nonsense. The people who might have a problem are not young people, but the baby boomers. Social security taxes people who are working to provid benefits to those who are over 65 (more or less). The problem with the boomers is that there are too many of them – sometime around 2050 there will be one person collecting for every 2 people working. But that problem goes away, it’s just a demographic bulge. By the time young people are old, there will be 5 or 6 people working for everyone collecting. The only problem is getting through the boomer-benefit years without ending the program.
- Finally, I’m kind of dismayed that progressives, including President Obama, now want to extend the cut in social security taxes that was enacted as part of the budget compromise made in the 2009 lame-duck session of Congress. While it would be nice to have more money – who wouldn’t like that – social security benefits are financed by what people pay into the fund. It’s not in crisis now – but it WILL be in crisis if we keep cutting what people pay in social security taxes (FICA on your paystub). Congress could always appropriate more money for the program – but the strength of social security has always been that Congress doesn’t have to do that. You saw what it was like a couple weeks ago when they needed to raise the debt ceiling – do we want them using that kind of gamesmanship on our social security payments? The President likes to call this the “payroll tax,” but it’s social security – we should be happy to pay it to keep the program healthy. (In case that didn’t convince you, imagine your boss coming to you and saying, “Good news! We’re not going to take out as much money for your pension fund from now on!” That’s just another way of saying they’re cutting your pension!).
Congress is not going to pass the Sanders bill, though they should – but I hope it gets talked up enough to add to our understanding of the issue.
For more information about social security and Medicare, see the National Committee to Preserve Social Security and Medicare.