Thursday, July 28, 2016
Our Social Security is at Risk!
The Lock Box is Open and they Will Take It
How politicians view our Social Security system!
Just opened the UCO Reporter and glanced through the political ads, commercials and columns. In Bobbi Levin’s column “Now You see it! she laments the fact that the current Social Security Cost of Living increase will quickly get lost before any of the recipients get a chance to spend it. More importantly, will the system survive the greedy fingers of the politicians who make it a habit of raiding the fund when they want to fund some of their pet projects.
One of the first reform acts that was put in place as the result of the collapse of our economy in 1929 was the Social Security Act. This act provided for unemployed, aged dependent and handicapped. Financed by FICA taxes paid by employee, matched by employer and Federal government.
Good idea at the time. Retirement age for SS payout would be 65. You could tap into the fund at age 62 but would get a lesser amount. The premise of the plan was based on the statistics that the average American mortality rate would be 75 with women living a bit longer. No one figured on the advances of medical science and thus our elderly population began to expand. As a result of this miscalculation, the system had to pay out more money to more people over a longer period of time. However, as long as our population was expanding, the people paying into the system would certainly be able to keep the pot full of cash.
Time and greed changed the equation. Politicians of both parties looked at the Social Security fund the way a kid licks his lips when entering a candy shop. Money, Money and more Money to fuel pet projects. Thus the reserves to fund the retirement of thousands began to fly out a so called locked box. Each political party offered solutions to this problem. There is no question that politics has insinuated itself in this equation. The Social Security issue has gone through many transformations. The first phase lasted from the early years of the program until the beginning of the 1990s, and featured a consensus about the program’s legitimacy. Benefits increased incrementally during this period, mostly propelled by robust economic growth after WWII as well as the dominance of center-right Republicans and center-left Democrats on Capital Hill. Any disputes between conservatives and liberals revolved around the degree and speed of benefits expansion.
A letter written by Dwight Eisenhower in 1956 to his brother sums up the feeling about Social Security during this era. “Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things.” Eisenhower mentions H.L.Hunt and other billionaires and business men who were small in number and were quite stupid about Social Security issues.
In the 1970s and 80s our economy suffered from high unemployment and inflation especially during the term of Jimmy Carter. Conservative critics gained an audience forcefully raising alarms about the system’s future soundness with the aging of the population. Some conservative think tanks along with financial services groups proposed the case for privatizing, or at least partially privatizing, Social Security. “Privatizing” essentially means transforming Social Security into a private pension plan reminiscent of a 401(k), where savers direct all or part of their Social Security contributions into their own accounts and are responsible for investing the money.“Wall Street saw privatization as a golden egg,”
The second phase of the Social Security problem began in the mid-1990s when Newt Gingrich was Speaker of the House of Representatives. During President Clinton’s and George W. Bush’s tenure, the push for privatization and cutting benefits moved from the fringes into the mainstream. Clinton flirted with partial privatization and Bush spent considerable political capital in 2005 pushing his own partial privatization plan. President Bush’s efforts failed mainly because most people did not believe that the Social Security system was in trouble. Conservatives has continued to support some sort of privatization plan. Paul Ryan, the current House Speaker, supports privatization and one staple of modern conservative commentary has been that the swelling ranks of boomers is pushing the U.S. toward an inevitable fiscal crisis unless benefits are cut.
Possible phase three has arrived. During the Republican debate in Miami that night, CNN’s Jake Tapper asked (March 10, 2016) “What you candidates intend to do to keep Social Security going for future generations?” Sen. Marco Rubio focused on raising the retirement age; Sen. Ted Cruz and Gov. John Kasich mentioned private accounts. This was the standard rhetoric of phase two Social Security conservatism. Then, Donald Trump weighed in, saying “and it’s my absolute intention to leave Social Security the way it is. Not increase the age and to leave it as is.” Trump has the support of the “Tea Party and seniors” on this issue. According to a recent Pew Survey: , 73% of Trump supporters were against reducing Social Security benefits. Similarly, 66% of Cruz supporters and 62% of Kasich supporters felt that way as did 72% of Sanders supporters and 71% of Clinton supporters.
Bobbi Levin is correct in stating that Republicans wanted to raise the retirement age to become eligible for Social Security. This was a very good idea. Our work force was expanding and more and more people were paying into the system and, over time, Americans would accept this change in the Social Security program. So far, this has not happened. My research has not provided any evidence that the Republicans ever proposed cutting Social Security payments.
With the rise of Donald Trump, and the aging of the Baby Boomers along with wage stagnation of those closing in on retirement that the politics of the Social Security system is taking a different course.
When voters were asked about the long-term future of Social Security, 71% of registered voters recently surveyed by the Pew Research Center said that benefits shouldn’t be reduced in any way. And this has become a bipartisan sentiment. Clear majorities of Democrats (72%) and Republicans (68%) opposed Social Security benefit cuts, according to the Pew study published in March of 2016.
If Social Security is in trouble what are some of the suggestions in fixing the problem. There’s solid support for raising or even eliminating the cap on earnings that are subject to the payroll tax (now $118,500), something both Democratic candidates said they favored in the debates they had last year. A poll by the National Academy of Social Insurance found that 71% of Republicans and 92% of Democrats agreed that top earners should pay more into Social Security.
There is no question that extreme right wing thinkers will oppose any large-scale government programs. Tea Party conservatives strongly believe they have “earned” their Social Security benefits through years of hard work, Many Tea Party conservatives would support new revenues rather than having their benefits cut. Sanders has called for, among other things, raising the minimum benefit and an across-the-board increase for most recipients. Clinton’s approach is more targeted, aimed largely at boosting benefits for widows and those who’ve taken time out of the paid labor force to raise a child or care for aging parents. Sanders says he will raise the cap for those who will pay into the program to $250,000. Clinton supports this view but as yet, has not provided any figures. It seems that many Republicans will go along with some cap increase and begin to back off their desire to have benefits begin at 68 or 70. More importantly, “the enthusiasm for raising the retirement age will fade with disturbing evidence that life expectancy is declining among lower income, less educated middle-aged, whites in the U.S.” according to a recent analysis made by Forbes Business. I think that the Republicans will attempt to keep the status quo and step away from increasing benefit cuts and privatization. Hillary Clinton will probably ask for an increase on the cap for those who fall under the $118,500 cap.
The big problem is the fact that so many Americans are unemployed and that they are not contributing to the Social Security tax fund. Job creation and expanding the economy is the real key to providing the funds necessary to keep the Social Security system functioning. As Trump stated in an interview, cracking down on waste and corruption will really help. Finally, the Social System cash box must be closed to the grubby fingers of the politicians of both parties. I think that Donald Trump would be a better protector of the SS system than the Democrats.
Please feel free to respond to my comments at phyllisrichland.blogspot.com or on the forum that you find it posted.
Much of the research that went into this article is found with the Google search engine, Forbes magazine and sites that provide analysis on the history of the Social Security system. Authors Note: Since my last two articles that were written for publication in the UCO Reporter were deemed inappropriate, I will now use other forums that welcome controversial opinions to present my side of current issues.