‘Scrap the cap’ — Warren has right idea on Social Security
— November 26, 2013
The way Republicans and an increasing number of Democrats in Congress tell it, the only way to fix problems in the Social Security system is to cut benefits and/or increase the full retirement age.
But those ill-advised “solutions” would only exacerbate the worries of our senior citizens, who are already struggling to survive in a national economy that has seen their ability to save for retirement plummet, and the dissolution of many defined benefit pension plans. Both are the result of decisions made by the same politicians who have drilled it into our collective consciousness that the Social Security system is broken.
It isn’t. Even if Congress did absolutely nothing to it, the Social Security Trust Fund is projected to be solvent through 2033, which was precisely the goal of the last changes to the system lawmakers made under Ronald Reagan in 1983. After that point, the system will still be able to pay retirees 77 percent of their benefits.
Of course, we shouldn’t wait 20 years to make up the remaining 23 percent. But there is time to develop a rational solution that would make the system solvent through the end of the century and actually increase benefits instead of cut them. The key to doing it – dropping the cap on Social Security payroll taxes, which is now $113,800 – was articulated by freshman Sen. Elizabeth Warren (D-Mass.) in a brilliant speech on the Senate floor last week. She addressed why her alternative is necessary in a way most people should understand.
“There is a $6.6 trillion gap between what Americans under 65 are currently saving and what they will need to maintain their current standard of living when they hit retirement … and that assumes Social Security benefits aren’t cut,” she said. “Make no mistake: This is a crisis.”
It’s actually a fairly simple solution. This “Scrap the Cap” movement isn’t new, and there are several proposals by Democrats to either raise the limit on payroll taxes or eliminate it completely. All would generate additional revenue by making people who earn more than $113,800 a year to pay into the Social Security system at the same rate Americans with lower incomes do.
Passing such changes, though, would require a huge educational push to rid the population of the misrepresentations, distortions and outright lies that politicians have told us about Social Security for years. Unfortunately, some of those attempts to convince Americans that Social Security has to be gutted to save it originated right here in Wyoming.
In 2011, Sen. Mike Enzi (R-Wyo.) told National Public Radio that Social Security is “broke.” It’s a false claim many Republicans make, but not one you’d expect from a senator who’s also an accountant.
“It’s one of those amazing trust funds that the United States has that has no money in it, it has IOUs in it and that should worry everybody,” said Enzi, in reference to the U.S. Treasury bonds that make up the Social Security Trust Fund.
But Enzi knows that far from being worthless, the U.S. Treasury bonds are regarded as the safest investment in the world. Our government has never missed a payment, and it won’t as long as Republicans are kept from using the debt ceiling limit as a hostage in budget negotiations. Far from being broke, the Social Security Trust Fund now has a surplus of $2.7 trillion. Its reserves are still growing and will continue to do so until 2020.
On his campaign website Enzi argues that the federal government spent the money in the trust fund on other things, and that if it continues to run budget deficits, the government will have to raise taxes or cut other spending to finance promised Social Security benefits. “This is gross financial mismanagement,” Enzi charged. Yes it is, senator, and you should admit your responsibility for helping create the situation. Take, for example, the two wars you voted for that were funded off the books, until President Barack Obama insisted that both military operations be included in the federal budget.
Enzi also insists in his statement on Social Security that “a little bit of pain now to shore up the Trust Fund will prevent a lot of pain in the future for those depending on Social Security.”
Why is it that when Republicans talk about the pain Americans must endure for the wasteful and stupid decisions Congress makes, the first people they always target are seniors and children who are living in poverty? Where is the pain for the wealthiest Americans who continue to enjoy special tax breaks while our most vulnerable citizens needlessly suffer?
Let’s not forget some of the whoppers former Wyoming GOP Sen. Alan Simpson has told about Social Security over the years. He’s called Social Security recipients “greedy geezers” and infamously compared the program to “a cow with 310 million tits.” Simpson has described the whole program as a “Ponzi scheme” and claimed Social Security was never intended as a retirement program.
What Wyoming’s elder statesman ignores is that Social Security is an entitlement only in the sense that under the law the federal government is required to pay benefits to working Americans who paid into the program throughout their lives. It’s a promise our nation made to its citizens, and in no way is it a welfare program, despite Simpson’s derogatory declarations.
As co-chairman of Obama’s Commission on Fiscal Responsibility and Reform, Simpson couldn’t wait to get his hands around Social Security’s neck and squeeze. The Simpson-Bowles report that came out of that failed effort recommended cutting benefits by changing the way cost-of-living adjustments are calculated and raising the full retirement age to 69.
Unfortunately, Enzi, Sen. John Barrasso and Rep. Cynthia Lummis have rushed to embrace those proposals, which Republican leaders will try to make part of the upcoming budget negotiations. Sadly, it’s a game that the president seems all too willing to play, even though he campaigned for re-election promising to sustain and strengthen Social Security. Cutting benefits is a completely wrong-headed approach, but Obama and other Democrats seem to think it’s OK if they can work out a budget deal with Republicans.
Warren and the other progressive members of her party know how foolhardy and dangerous it is to reduce benefits when nearly two-thirds of seniors depend on their Social Security checks each month just to remain above the poverty line. “At its core, this is a conversation about our values. It is a conversation about who we are as a country and who we are as a people,” Warren said. “I believe we honor our promises, we make good on a system that millions of people paid into faithfully throughout their working years, and we support the right of every person to retire with dignity.”
Social Security can be preserved and even expanded, but it will only happen if the public insists on it. We can count on current recipients to kick and scream, but they’re going to need a lot of help from the future generations of retirees who – because of the blatant way Social Security has been lied about – are already convinced they will never see any benefits.
Here in Wyoming, we need to be vigilant about telling our congressional delegation not to use the need to revise a few elements of Social Security as an excuse to cut benefits. If they tell you the trust fund is “broke,” don’t let them get away with it. Demand that they scrap the cap instead of treating seniors as second-class citizens who don’t deserve to get what we promised them.
— Veteran Wyoming journalist Kerry Drake is the editor-in-chief of The Casper Citizen, a nonprofit, online community newspaper. It can be viewed at www.caspercitizen.com.
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