Social Security, as a system, is funded by taxes collected from employees with an equal match paid above and beyond salaries paid by employers. It is tough to find, sometimes hiding with Medicare taxes under the designation FICA on your paystub.
That tax, which directly pays Social Security benefits, is what US Senator Bob Casey and President Obama are trying to cut.
Social Security is in serious trouble. The most recent downward spiral began in 2010 when the Social Security Trust Fund began collecting less than it was paying out. Obviously, if you pay out more than you bring in, it is unsustainable. In August of this year, it was widely reported that new projections could have the Social Security Trust Fund begin to be insolvent by 2017.
A big part of the problem is the ratio of workers to recipients of Social Security. If you look at the ratios maintained by the Social Security Administration, you see in 1940, there were 159.4 workers for every one recipient. In 1960, there were 5.1 workers to every one recipient. In 1980, 3.2 workers to every one recipient. And, in 2010, there were only 2.9 workers paying into the fund for every one recipient.
Again, it is unsustainable. It will completely collapse when the ratio approaches 1:1.
Unemployment is also wrecking Social Security. If Americans aren’t working, they aren’t paying into the system. If Americans aren’t paying into the system, the ratio falls lower.
But, to listen to the Democrats over the years, you would never believe this to be true. Al Gore famously spoke about the “lock box” for Social Security during his failed presidential run. Others have said there was a $2.6 trillion dollar surplus that can cover us. Well, it’s time for a reality check. Democratic assertions that the funds were in an inviolate “lock box” and that there was a multi-trillion-dollar surplus are a complete fraud.
There is no surplus. This was proven during the debt ceiling debate. As you should recall, President Obama would said that if the debt ceiling was not extended, he could not guarantee Social Security checks would be sent. But, how could that be if there is a $2.6 trillion surplus? Yes, Social Security alone eats up about 20% of the budget, but our federal budget is around $3.5 trillion. In FY 2010, we spent $707 billion on Social Security. For Obama to suggest that we couldn’t pay a $700 billion bill with $2.6 trillion in the account, something doesn’t add up. And that something is the surplus. There isn’t one.
For decades, Social Security collected more than what it paid out. It was easy for that to happen when the worker to recipient ratio was higher as demonstrated above. Congress, being Congress, would take the surplus money each year from the “lock box” and leave meaningless IOUs in their place. Now that the ratio is smaller and deficits are being produced, Congress has to pay the money back. That is why Bob Casey’s bill also transfers $185 billion from the general fund into Social Security – to pay back some of the money the politicians like him raided from it. Again, why would we have to transfer money from the General Fund into the Social Security Trust Fund if, in fact, there was a surplus?
The Social Security Trust Fund is broke. Casey’s bill will make it worse.
By lowering the contribution rate, Casey’s bill will give American workers more money in their paychecks. That much is true. But at the expense of driving the final nail in the coffin of Social Security.
Casey and the Washington crowd know that. It is the reason Casey and Obama are only talking about this Social Security tax rate reduction in terms of a payroll tax reduction. They want people to believe it is merely a tax cut. They fear the blue-haired furry it will stir up if people catch on to what Casey is taking money from.
So why go forward with killing social security? These guys love a crisis.
The crisis of Social Security’s collapse would allow them to do things they would not otherwise be able to do politically. Rahm just said as much above. For instance, a serious threat to Social Security’s solvency could cause Democrats to initiate a massive increase in taxes or impose an entirely new VAT-like tax. If Social Security was held in the balance, wouldn’t the largest voting demographic (elderly voters) support saving it?
If Casey is going to continue his crusade to defund Social Security, he should begin to describe it accurately and fairly so that the American people can make a fully informed decision on this bill. If the Democrats persist in inaccurately describing what they are cutting, the Republicans should do it for them.
Democrats have used the issue of Social Security as a wedge to drive normally conservative elderly voters to their side for decades. Democrats, year after year, claimed that Republicans would destroy the program. That Republicans would leave the elderly only enough money for a steady supply of cold cans of cat food to live on. Republicans would then recoil in fear at being labeled as anti-social security or pro-privatization and run from the issue.
No more. This is the perfect opportunity for Republicans to engage the American people in a serious conversation about Social Security and what can be done with it. Republicans finally have an opportunity to talk about Social Security in a way that won’t drive the elderly away because they can talk about it in terms of what can be done to make it healthy again and all within the context of the cuts the Democrats want to make to its funding.
Republicans need to man up, have the courage to take advantage of this opportunity, and start to lead on the issue. The alternative is to be complicit in the further erosion of the program by capitulating to Casey’s crusade against Social Security. The Republicans must go on the offense and lead.