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Top 5 Social Security Myths; Randy Shannon; Progressive Democrats of America – PA 4th CD Chapter; August 8, 2010.
The leadership of Progressive Democrats of America – PA 4th CD Chapter consists of Tina Shannon (chairperson), Randy Shannon (treasurer), Robert Schmetzer (vice president), and Carl Davidson (webmaster), a self-described Marxist who once “tr[ied] to create a new communist party.” They also appear to be the leaders of Beaver County Peace Links. The Shannons were also leaders of the apparently-defunct Beaver County Coalition for Social Justice. In the Committees of Correspondence for Democracy and Socialism (CCDS) [originally a splinter group of the Communist Party USA (CPUSA)], Mr. Davidson is a co-chair and the Shannons are members of the CCDS national coordinating committee. Robert Schmetzer is Democrat party local town chair for South Heights.
Apparently the lefties are desperate to convince us Socialist Security is fine. This is the second Shannon piece on this topic in less than a week. Let’s look at what Mr. Shannon calls myths.
“Myth: Social Security is going broke.
“Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.3 trillion surplus (yes, trillion with a ‘T’). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever. After 2037, it’ll still be able to pay out 75% of scheduled benefits–and again, that’s without any changes. The program started preparing for the Baby Boomers retirement decades ago. Anyone who insists Social Security is broke probably wants to break it themselves.”
[RWC] According to the Social Security Trustees in their 2010 report to Congress, SS is now in deficit (benefits paid exceed SS taxes collected), the Disability Insurance portion of SS will be bankrupt in 2018, and the overall SS “trust fund” (the equivalent of a stack of federal government “IOUs” for revenue already spent by the feds for other programs) will be exhausted by 2037. At that point SS will be unable to deliver promised benefits. Despite Mr. Shannon’s spin on SS “pay[ing] out 75% of scheduled benefits,” when a business can’t meet its obligations, it’s called bankruptcy.
“Myth: We have to raise the retirement age because people are living longer.
“Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than did 70 years ago. What’s more, what gains there have been are distributed very unevenly–since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half. But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.”
[RWC] “Retirees are living about the same amount of time as they were in the 1930s.” Not exactly. According to the CDC, from about 1930 to 2006, life expectancy at age 65 increased from 12.2 years to 18.5 years. This additional 6.3 years of life expectancy represents an increase of 52%.
“Myth: Benefit cuts are the only way to fix Social Security.
“Reality: Social Security doesn’t need to be fixed. But if we want to strengthen it, here’s a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come. Right now, high earners only pay Social Security taxes on the first $106,000 of their income. But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.”
[RWC] I don’t know which is the left’s favorite, calling the right racists or incessantly saying “Make the rich pay their fair share.”
SS isn’t intended to be a wealth redistribution program. Mr. Shannon ignored or doesn’t know Socialist Security benefits are determined in large part by how much we as individuals pay in taxes over our working life. That is, the more taxes you pay, the greater your benefits check. Therefore, increasing the tax on those persons earning more than $106,800 (and this increases every year by law) would also increase the benefits (increasing SS future obligations) that must be paid to those employees. Increasing the tax on “the super-rich” might add some short-term revenue, but the “chickens would come home to roost” with higher payouts down the road. Given that fact of life, does anyone doubt Mr. Shannon also wants to change how benefits are calculated in order to turn SS into a full-out wealth redistribution program? That’s the only way for his suggestion to “help” SS in the long term.
“Myth: The Social Security Trust Fund has been raided and is full of IOUs
“Reality: Not even close to true. The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States. The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market–which would have been disastrous–but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.”
[RWC] “The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds.” Not exactly. According to the SSA, “The trust funds now hold only special issues, but they have held public issues in the past.” Treasury bonds are “public issues.” In any case, I don’t know if Mr. Shannon noticed, but we’re now running annual deficits in excess of $1 trillion (“yes, trillion with a ‘T’”) and our current federal debt is in excess of $13 trillion (“yes, trillion with a ‘T’”), or about $120,000/taxpayer and increasing. Local and state government debt adds about another $3 trillion (“yes, trillion with a ‘T’”). On top of that we have in excess of $109 trillion (“yes, trillion with a ‘T’”) in unfunded liabilities [SS + Medicare (including Part D)], or over $354,000 per citizen.
“The reason Social Security holds only treasury bonds …” Not true. By law, SS tax receipts in excess of benefit payments must be used to purchase federal debt. The SSA has no options in this area.
“President Bush wanted to put Social Security funds in the stock market.” Liar, liar, pants on fire! On the recommendation of the bipartisan “President’s Commission to Strengthen Social Security” in 2001, President Bush merely proposed SS taxpayers be given the option to invest a portion (only up to 4%) of their taxes in personal accounts, but still under the oversight of the SSA. Taxpayers could have selected from a number of investment options (the same as federal employees have in their voluntary Thrift Savings Plan), including Treasury bonds. Democrats themselves originally made this proposal in the 1990s.
“Myth: Social Security adds to the deficit
“Reality: It’s not just wrong — it’s impossible! By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security can’t add one penny to the deficit.”
[RWC] Not exactly. SS “must pay its own way,” but the masquerade of a “trust fund” ended during the last year of the LBJ administration; that’s when “unified budget reporting” began. That is, SS revenue and payments count toward the federal deficit/surplus. In 1982, Congress had to rescue SS by borrowing funds from other accounts.
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