Because the government has already spent the surplus elsewhere. It owes that money to Social Security, but can't afford to pay it back.
Who's going to pay the price? Babyboomers, who have paid into the system for their entire working lives.
In a recent NYT editorial Paul Krugman said, "Social Security’s attackers claim that they’re concerned about the program’s financial future. But their math doesn’t add up, and their hostility isn’t really about dollars and cents. Instead, it’s about ideology and posturing. And underneath it all is ignorance of or indifference to the realities of life for many Americans."
Krugman is right. Many Americans, some who have lost retirement funds in 401 K plans; or, others who lost everything they had worked 30 to 40 years for, (including their house), during the great recession, will need social security in order to survive.
How did we get in this situation?
The facts about Social Security: from Mark Miller
"Social Security made headlines earlier this year when it became known that the program will -- for the first time -- take in less cash this year than it pays out on a current-year basis. It's basically a pay-as-you go program with current benefits funded by today's workers. Unfortunately, recession-induced unemployment has cut into collections of the payroll tax that funds the program (the FICA tax) and the number of older unemployed workers filing for benefits has soared.
But Social Security also has that big surplus, which has been accumulating since the last "fix" to the program was implemented during the Reagan years. At the time, payroll taxes dedicated to Social Security were raised substantially to create a cushion for the future retirement of all those boomers. The money sits in something called the Social Security Trust Fund.
But as boomers start to retire in greater numbers, there won't be enough current workers coming along behind them to keep the program solvent on a pay-go basis. That means the surplus funds will be drained.
And, the surplus funds exist only in an accounting sense, because over the years, the government chose to spend it all for other purposes, creating the illusion of a smaller overall deficit. The Trust Fund's assets are Treasury bonds and other U.S. securities, representing the government's obligation to pay back the Trust Fund to pay for future benefits."And who are the ideologes calling for the dismantling of Social Security? Republicans, who are married to a warped notion that Americans should suffer, because Congress and past Presidents have spent our Social Security funds.
In an essay published in the March 2, 2009 edition of "The Nation" William Grieder writes:
"To understand the mechanics of this attempted swindle, you have to roll back twenty-five years, to the time the game of bait and switch began, under Ronald Reagan. The Gipper's great legislative victory in 1981--enacting massive tax cuts for corporations and upper-income ranks--launched the era of swollen federal budget deficits. But their economic impact was offset by the huge tax increase that Congress imposed on working people in 1983: the payroll tax rate supporting Social Security--the weekly FICA deduction--was raised substantially, supposedly to create a nest egg for when the baby boom generation reached retirement age. A blue-ribbon commission chaired by Alan Greenspan worked out the terms, then both parties signed on. Since there was no partisan fight, the press portrayed the massive tax increase as a noncontroversial "good government" reform. Ever since, working Americans have paid higher taxes on their labor wages--12.4 percent, split between employees and employers. As a result, the Social Security system has accumulated a vast surplus--now around $2.5 trillion and growing. This is the money pot the establishment wants to grab, claiming the government can no longer afford to keep the promise it made to workers twenty-five years ago."I wonder if Americans will get angry once they realize that they have been robbed of a decent retirement by elected officials, who couldn't keep their hands out of the taxpayer's pockets.
It will be interesting to observe how Republican or Tea Party candidates tackle this issue during the General Election.
Additional Background Information
Paul Krugman's Full post can be read here.
William Grieder's essay "Looting Social Security" can be read here.
The theft of social security funds has been going on most of my life, it is one of the best examples of why I would prefer to invest my own money rather than allow polititions of both parties to pillage my/our trust fund. No doubt in my mind that the SS program could be huge success if we kept our fingers out of the cookie jar, but we are too spoiled to resist.
ReplyDeleteAnd ,as it is, we have it fully covered until 2037 and after that we have it 75% FULLY COVERED INDEFINITELY. So the broke social security system is a myth. But you're right that we need to stop raiding it to pay for war.
ReplyDeleteIt amazes me that just months after the biggest corporate welfare raid in U.S. history, where billions were stripped from the retirement accounts of pensioners to finance the blowing of same billions into the pockets of billionaire banksters, a massive transfer of wealth from the middle class to the wealthiest 1%, we're right back into a discussion of doing the same thing with Social Security trust funds.
ReplyDeleteCannot anyone imagine what might have happened if the trust had been raided, as Bush desired in 2005, and thrown into the housing/bank infernos?
Americans: The stupidest, stupidest, most gullible people who have ever lived.