The Security of the Social Security Program   Leave a comment

 The GOP Has Plans to Save Social Security: Win the lottery or die before your first check arrives.

August 1, 2015

Let’s dispense with some myths. First, while an “old age pension” was clearly a priority of President Franklin Delano Roosevelt’s administration, the 1935 vote creating the Social Security program was overwhelmingly bipartisan in both houses of congress—i.e., 95% of House Democrats voted “yes” and 84% of House Republicans voted “yes”. At the end of the day, both the Roosevelt administration and congress were of one mind on whether Roosevelt’s priority should become law. Maybe the GOP believed, then, that this was a good idea and supported it. Or perhaps they were simply cowering in the face of Roosevelt’s popularity. Oh, the conflicted politician.

SSACT VoteNevertheless, since that historic vote 80 years ago, it seems fair to say that Republicans have not liked the Social Security program. They’ve attempted to kill it, dismantle it, privatize it, all to no avail. Where they have been successful is limiting it. When the act was originally envisioned, age 65 was Roosevelt’s demarcation line:

“. . . old-age assistance shall mean financial assistance assuring a reasonable subsistence compatible with decency and health to persons not less than sixty-five years of age . . . .”

One can appreciate, in 1935, opting for age 65 as the qualifier. First, eighty years ago barely half of the male population lived to age 65 (in 1940 it was 54%.) No need to call an actuary to understand that—using the 1940 statistics—46% of the male population would work and pay into the system but die before they received retirement benefits. You can see an immediate offset as the contributions of that 46% of the male workforce (and males dominated the workforce prior to 1941) would help pay for the 54% who managed to live to age 65 and beyond. Second, when the Social Security Act became law, the nation was in the midst of the Great Depression. One could say it was the wrong time to write this law as the nation was in the financial toilet. The other side of that coin is that the law was enacted at a time when America needed something to bring hope to the discourse instead of just the despair.

Regardless, there are two regularly discussed changes to Social Security, touted as ways to assure long-term solvency to the program. The GOP usually finds itself saying “yes” to one and “no” to the other. They often say “yes” to raising the eligible age to receive benefits. Since the population is living longer, it appears logical to them to raise the retirement age. In fact, raising the age became reality in 1983 (can you say “Reaganomics?”). “Under current law (enacted in 1983), the increase in the normal retirement age started in 2000 and will proceed in 2-month increments to age 66 in 2005. The retirement age will remain 66 until 2017, when it will increase in 2-month increments to 67 in 2022.” When viewed from those residing at the loftier heights of personal income, this seems a no-brainer. The wealthy, by far, wish to delay retirement as they continue to amass wealth, often in non-physical jobs.  But those individuals at the lower ranges of income generally work in more physically demanding jobs—sometimes two or more such jobs—performing tasks which become more difficult to maintain beyond age 50 or 60. In essence, raising the retirement age becomes a regressive tax on those with lower incomes.

Then there is the GOP’s “no”. The FICA payroll tax is currently capped at incomes of $117,000. Ironically (and clearly unintended) the conservative Heritage Foundation actually makes the case for raising or eliminating the cap by stating that “. . . eliminating the payroll tax cap . . . would impose economically damaging marginal tax rates on middle-income and upper-income earners.” Think about it. Heritage Foundation is worried about people earning in excess of $117,000, as if that truly represents “middle-income” in America. Both the average and the median income in the United States are less than half that number. (Median income in Mendocino County is $43,000.)

It is no secret that we have lived through 30 years of growing income inequality, growth which continues unabated. At the very least, congress should [1] eliminate the cap, [2], restrict any/all funds derived from the increased revenue to the Social Security Trust Fund; [3] leave the eligibility age where it is (or return it to its original level: age 65); [4] stop thinking of Social Security as welfare, and accept it as a part of American life, and a reasonable part of any civilized society.

David Steffen

© 2015 David Steffen

Note: A shorter version of this article appears in the August 2015 edition of the Lighthouse Peddler.

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