Social Security

Let’s begin with the number fact surrounding Social Security: 

Social security is not a problem. 

The problems have been contrived as the system is solvent. 

Like all the other issues in the American political arena, lies deceit and stubbornness born of polarization and intransigence

prevent any meaningful and necessary support and action from occurring. 

 The fund currently has cash assets of around $3 trillion.  It is forecasted that assets will be depleted by 2035.  Between 2035 and 2093 it is estimated the fund will be short by $13.9 trillion.

 The reason the upcoming shortage is forecasted is just basic financial common sense.  The fund is not generating enough to keep up with demand.  Just that simple. 

Some believe and continue to argue, that the shortage is due to commingling Social Security with the federal government's General Fund.  That has never been the case.  As a budgetary item and solely for accounting purposes the fund has been classified and reclassified.  None of these changes in classification has ever resulted in any change to the fund or how it is managed. 

What is true and continues to be true today, is that the US government borrows from Social Security funds to meet government expenses by financing its deficit spending.  This money, by law must be repaid to the fund with interest.  Like all loan payments, the interest must be paid on the outstanding balance.  In 2018 alone the federal government paid the Social Security fund $83 billion in interest.  As such the outstanding loans actually generate additional funds for Social Security.  So, demanding that all loans be paid back becomes a double-edged sword. 

Another common fix proposed to the future shortfalls is that the program be means tested.  On the surface this seems rational.  The program was established to secure and provide for the needs of elderly Americans.  That remains its purpose.  The logic here is that there is no reason why Bill Gates, Warren Buffet, Donald Trump and others who are wealthy enough to live very comfortably without this benefit should be receiving it.    This proposal is always challenged with the argument that we would then be punishing people for their success.  They paid into the fund and as such are entitled to benefit payments.  The counter is that we all pay into insurance programs and other programs to help those in need, from which, we never retrieve a direct nickel in the form of a cash return.  Yes - Social Security benefits received by upper income Americans are taxed, yet those taxes only recoup a small portion of the total amount paid out in benefits to the wealthy.  

The most common proposal and the one the Democrats want enacted is to raise and/or eliminate the payroll tax earnings cap. It is ridiculous that those who are in the best position to contribute based upon higher levels of earning are exempt from doing so, especially when we know the fund will be facing insolvency in the future.  

The Republicans also have a plan that will address the problem.   They favor a gradual increase to the full retirement age, which would lead to a reduction in long-term outlays from Social Security.  While this would work, it would force Americans to work longer and later in life, which, like all Republican proposals, favors the wealthy and diminishes the quality of life for millions of others.  

Both plans would work and both are on the table for consideration.  The Senate has refused to compromise or act on either of them. 

What must also be considered is how to increase benefit amounts.  This is crucial in that Social Security is NO longer a supplemental retirement benefit.  Three out every Five Americans now need Social Security for their financial survival. 

Social security is not a problem.   Beware of the charlatans who say otherwise.