Protecting Social Security: It's a Flat Tax, Stupid!
Let me make a postulate: In a democracy, if there is a legislative proposal that would significantly benefit 80 percent of the population and cost them nothing, and that would be paid for by a insignificant tax on the richest 20 percent of the population, who themselves would receive some benefit from the added tax, that proposal would be overwhelmingly approved.
If you accept that postulate, you would have to conclude that the US is no longer a functioning democracy.
Look at the latest study out of the Senate Special Committee on Aging titled: “Social Security Modernization: Options to Address Solvency and Benefit Adequacy.”
That just-released report, prepared by committee staff with the help of the nonpartisan Congressional Research Service, lays out the shortfall facing Social Security as America’s Baby Boomer population begins to retire. It concludes that the alternative to raising the retirement age to 70 from the current 66, increasing the already onerous Social Security payroll tax by another 1% of income for both employees and employers, and reducing the annual cost-of-living adjustment for benefits by 1% (meaning retirees would fall further and further behind the cost of living each year), would simply be to eliminate the cap on the income that is subject to the Social Security tax.
Let me make that clear by putting it another way.
The committee report states that if the Social Security tax applied to all income instead of just the first $106,000, as things stand now, then Social Security would be completely funded as least through 2075. In fact, instead of a $5.3 trillion shortfall, there would be a 16% surplus! The report states that even if those wealthy folks who had their higher incomes taxed were able to collect higher benefits--as much as $6000 a month in current dollars--the added tax dollars raised would still ensure that the system would remain funded through 2075 and beyond.
Yet despite this obvious solution, we are continually warned in grave tones by the corporate media, by members of Congress, by President Obama and by Wall Street hucksters like Peter Peterson, that Social Security faces a crisis. We are continually told that benefits will have to be reduced, especially for current workers. We are continually told that the retirement age will have to be raised, so that people who work at strenuous, stressful, mind-numbing jobs will have to wait until they are 70 to slow down and spend time with their families.
How in hell would you explain this in a high school civics class?
Social Security, surely the single most popular program to come out of the New Deal in the 1930s, is currently the only thing keeping 44 percent of America’s elderly out of poverty. Nearly a third of its benefits are paid to poor children who have lost the wage earner in their family, to widows, to the permanently disabled and to the extreme elderly. Twenty-five percent of beneficiaries depend upon Social Security payments for 90% of their incomes, thanks to the failure of most employers to offer any kind of a pension to their workers. This is, in short, a critical program that protects our elderly, our disabled and our poor. And it ensures everyone a basic income in their old age--an average of $1300 per month for life--and with very little overhead.
Yet this program, currently underfunded, is in danger now.