Here’s the Ugly Truth for the Wealthy on Social Security Corrections

What motivates Republicans to continue promoting the myth that Social Security is a major source of the deficit problem?  The general public’s ignorance?

Governor of New Jersey Chris Christie

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New Jersey Governor Chris Christie was recently praised by conservatives at the CPAC convention for his comments regarding Social Security and deficit reduction.  Washington Post writer Dana Milbank touted Chrsitie’s efforts to do “what must be done to solve the debt crisis” by raising the Social Security age to 70.  Milbank went on to inform his readers that following the obese governor’s self effacing remarks about his weight how “his physique also works to his advantage by reinforcing Christie’s appeal as something other than the blow-dried politician who says whatever the voters want to hear. Christie isn’t pretty, and he tells ugly truths.”  Milbank’s comments seem out of place considering that Christie was in fact telling his CPAC crowd what they wanted to hear.

Naturally conservatives would go ga-ga over such a suggestion that misleads people about social security benefits.  Even Ann Coulter was demanding that Christie reconsider his position that he won’t run for President.  “Your country needs you” she declared on Sean Hannity’s FOX news program the other day.

Right,we need someone who is unafraid to say things to people who expect to hear such things.  Let’s get Christie into an open debate and ask him why he thinks a big part of the solution for solving our deficit problem is raising the age of seniors to 70 before collecting full Social Security benefits.

The idea is bad if for no other reason than the statistics that show most low and middle-income people don’t live as long as wealthier people do who have better health care coverage, so the likelihood that most people would be unable to collect their benefits is increased by raising the age limit.  The other reason this is a bad idea is that it plays into the false belief that Social Security benefits are part of the general federal budget.  Among other reputable economist, Paul Krugman debunked this notion last summer in an Op-Ed piece here, where in part he said:

“Legally, Social Security has its own, dedicated funding, via the payroll tax (“FICA” on your pay statement). But it’s also part of the broader federal budget. This dual accounting means that there are two ways Social Security could face financial problems. First, that dedicated funding could prove inadequate, forcing the program either to cut benefits or to turn to Congress for aid. Second, Social Security costs could prove unsupportable for the federal budget as a whole.

But neither of these potential problems is a clear and present danger. Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund. The program won’t have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the program’s actuaries don’t expect to happen until 2037 — and there’s a significant chance, according to their estimates, that day will never come.”

Robert Reich of the Roosevelt National Advisor...

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Former Secretary of Labor Robert Reich and current Professor at Berkley University states it in even stronger terms,  “Social Security isn’t responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government.  Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.” (Budget Baloney: Why Social Security Isn’t a Problem for 26 Years, and the Best Way to Fix It Permanently,  by Robert Reich, Huffington Post, 2/16/11)

So Christie and conservatives are merely playing that worn out red-herring card about Social Security failing and being a drag on the national debt.  Clearly something needs to be done to offset the increase of beneficiaries that the baby boom generation will affect in the coming years but raising the age limit is the least of our solutions for this.  As Matthew Yglesias points out, Christie’s solution appeals to his wealthier New Jersey constituents.

“Closing the projected actuarial gap in Social Security requires some combination of more immigration, higher taxes, and lower benefits”,  Yglesias notes.  “Relative to higher taxes, lower benefits tend to be preferred by richer people. And of all the different ways to reduce benefits, raising the retirement age is the one that does the most to punish the poor and demands the least sacrifice from the rich. Christie, it’s true, isn’t saying “whatever the voters want to hear” but he’s not telling the truth either. What he’s doing is saying what rich people want middle class people to believe.”

Tapping the resources of the rich is indeed a realistic proposal to end our “social security crisis” as Robert Reich, who himself was a former Social Security trustee, pointed out by simply raising the cap on income subject to the Social Security tax.  The government, under a plan initiated by then Fed Chairman Alan Greenspan back in 1983  established a fix to keep social security solvent for all time.

Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission’s fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 84 percent of total income.  It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.  Presto. Social Security’s long-term (beyond 26 years from now) problem would be solved.”

So unlike the “ugly truth” that Dana Milbank and all others who are fawning over their new Messiah to wrest the Presidency back for them in 2012, Christie’s suggestion is just an overt proclamation that many conservatives politicians haven’t the courage to express as openly to their constituents.  Why would they?  Unless they have a death wish the idea to tamper with most people’s only source of revenue in their retirement years is not a position they want to take if they seek to get re-elected.

Recent polls show that most people feel that the cap on the amount people have to pay in Social Security taxes each year should be increased while a strong majority oppose raising the age at which people can retire and receive their full benefits from Social Security; even if such a plan were phased in over a 65 year period.  Clearly the tone-deaf GOP are only able to hear that small minority at events like the CPAC convention where even there they fight amongst themselves to find footing in order to demonstrate they have any leadership capabilities to take back over the reins of power in 2012.

3 responses to “Here’s the Ugly Truth for the Wealthy on Social Security Corrections

  1. I saw Christie’s speech and I thought exactly what you said: the poor and lower middle class have a lower life expectancy. How discriminatory to raise the social security age when these people might not make it to collect. I guess we could pass a bill that would allow everyone to have more than adequate insurance plan, so their life expectancy increases, but oh, wait, the GOP is against that too.

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