Social Security Has Tons Of Money
The Republicans So-Called Social Security Reform Is Just Another Scheme To Rip Off Working Americans
By David Grace (www.DavidGraceAuthor.com)
Social Security Has Always Operated At A Profit
Social Security is funded solely by payroll taxes (FICA). Over the years, payroll taxes collected have exceeded Social Security payments by trillions of dollars.
Instead of putting the surplus of payroll tax receipts over and above Social Security pay outs into escrow accounts, the U.S. Government instead spent that extra money and in exchange gave the Social Security Administration IOUs in the form of U.S. Treasury bonds.
Almost every year since the program began FICA tax receipts have exceeded Social Security payments and the surplus has grown and grown.
Over the years the government has collected approximately $2.8 TRILLION dollars MORE in payroll taxes than it has paid out in Social Security benefits.
Around 2020 Social Security Will Need To Dip Into Its Savings
Economists don’t expect Social Security to run a surplus much longer. The government thinks that 2019 will be the last year when FICA tax receipts will equal or exceed the benefits being paid out. They predict that in 2020 the Social Security Administration will need to cash in some of those $2.8 Trillion dollars in Treasury bonds in order to make the pension payments.
Because the government has already spent that Social Security tax surplus it’s going to have to take money from the general fund in order to honor those bonds.
The Republicans Don’t Want To Honor The Bonds Issued To Social Security
Paul Ryan and the Republicans in Congress want to cut retirement benefits so that the Treasury will never have to honor those bonds. Essentially, they want to tear up the Government’s IOUs so that the government never has to pay back the retirement money it took from American workers and spent on other things.
Let’s think about this for a moment.
The Government Has Spent The Payroll Taxes Meant To Fund Social Security
Working people paid money to the government to fund their pensions. The government collected lots more in pension contributions than it needed to pay the benefits, and it spent the excess pension contributions on things that had nothing to do with retirement pensions.
For example, Politifact estimates that George Bush’s Republican Congress spent about $708 Billion of the FICA payroll tax surplus to fund the Iraq war and the famous Bush tax cuts for the rich.
Now, when that pension-contribution fund will finally be needed to pay earned and paid-for retirement checks, the Republicans want to reduce Social Security benefits, benefits that American workers have already worked for and paid for.
Tax cuts for rich people were funded in part with workers’ Social Security tax money and now the Republicans’ plan is to let the rich keep their tax cuts and instead reduce Social Security benefits to the people who paid for and earned those pensions.
In what universe is that right?
What If The Treasury Was Allowed To Cancel Its Bonds?
If Social Security were converted into strictly a pay-as-you-go system where payroll taxes were annually balanced against pension obligations wouldn’t that mean that instead of just keeping any extra money, that any excess of contributions over benefits would have to be annually refunded to workers? Do the Republicans plan to do that? Of course not.
There Is Still No Need To Decrease Social Security Benefits
Even on a pay-as-you-go basis, there’s an easy alternative to cutting retirement pensions.
- FICA is only collected on wages. FICA is not collected on stock dividends, capital gains, interest income, rental income, or any income at all except actual wages and salaries.
If FICA was collected on all adjusted gross income up to the Cap Amount billions of additional dollars would be paid into the fund.
- FICA is only collected on wages up to $118,500 per year, the Cap Amount. All wages and salaries in excess of that amount are exempt from the payroll tax.
If the Cap Amount was increased from $118,500 to $250,000 that would bring in more than $250 Billion dollars a year in additional contributions.
Beyond using the surplus that was specifically built up for this very purpose, the simple act of increasing the Cap Amount and/or collecting FICA on all adjusted gross income instead of just wages and salaries would easily bring in enough additional money to continue to fund the Social Security system on a pay-as-you-go basis.
Social Security Is Not Welfare — American Workers Have Paid For Every Penny Of It
The thing is, Social Security benefits are not a gift. They are not welfare. They are benefits that people have worked for and paid for.
American workers have “banked” almost three trillion dollars with the U.S. Treasury to fund their retirement benefits, and the Republicans’ notion that they should not get those pensions because the government has already spent their retirement contributions on other stuff and doesn’t want to give it back is outrageous.
Ryan’s Plan Is Like An Embezzler Who Doesn’t Want To Give Back What He “Borrowed”
It’s as if you owned an apartment house and instead of putting in the bank what was left over after making the mortgage payments your building manager took the excess rent, spent it on gambling junkets to Las Vegas, and then put IOUs in the cash box instead of a bank book and deposit slips.
Now, years later, the building needs a new roof and he (Mr. Ryan) has the gall to tell you that you need to dig into your savings to fund the roof repairs because he doesn’t want to pay back any of your money that he “borrowed” from you for his gambling trips.
That’s exactly what the Republicans are trying to do with Social Security and it’s just plain wrong.
–David Grace (www.DavidGraceAuthor.com)
