- Get Rready kids. It's time for more scare stories about
Social Security.
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- The corporate press is weighing in with dire warnings
that this year, six years ahead of what had been predicted only a
few years ago, the Social Security system would be paying out more
in benefits than it takes in from the payroll tax. The reason for this
earlier-than-anticipated event is the Great Recession, the paper explained.
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- Well yeah. If you were 62, or 65, and you had lost your
job, with no likelihood of it's coming back, wouldn't you, once your unemployment
checks ran out, opt to start your retirement earlier than planned, so you'd
at least have some money coming in each month? Oh, and with 10 percent
of the work force currently unemployed (actually close to 21 percent if
you count the people who have given up looking for a nonexistent job, and
those who have taken some low-paid part-time work out of desperation),
there is a lot less money being paid into the Social Security Trust Fund.
So with beneficiaries rising faster than anticipated, and the total national
payroll in sharp decline, of course things have gone negative for Social
Security earlier than originally anticipated.
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- So what to do about it?
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- Hank Paulson and Pete Peterson are both calling for benefit
cutbacks, an older retirement age and other attacks on the system. Paulson
of course is the the guy who as Treasury Secretary under President George
W. Bush, helped engineer the real estate bubble that brought the economy
to its knees, and who then engineered the sweet deal that helped his former
company, Goldman Sachs, come out of the crisis as the nation's biggest
bank, fattened by tens of billions of taxpayer bailout dollars. Pete Peterson,
the former ad exec turned self-described economic guru has been a perpetual
doomsayer about Social Security, calling for its privatization.
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- But really, what's the crisis?
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- A wave of Baby Boomers is about to start retiring next
year (actually for those born first, in 1946, who decided to retire early
at age 62, Baby Boomer retirement began in 2008), but that's a demographic
wave that will eventually pass. In the meantime, financing the benefits
for Baby Boomer retirees simply means that current workers--the Baby Boomers'
children and grandchildren--will have to pay more in payroll taxes. Or--and
this is what has people like Paulson and Peterson scared--Baby Boomers
and their allies among younger workers, may decide to use their unprecedented
electoral clout to take those extra tax payments not out of younger workers,
but out of their employers. There is, after all, no legal, theoretical
or even mystical reason why the Social Security payroll tax should be split
50/50, with half being paid by the worker, and half by the employer. It
could easily be a 40/60 split, with the employer paying 50 per cent more
than the worker, or even a 30/70 split. That is a political question. Likewise,
there is no reason on earth why the payroll tax should be set at the same
percentage rate for all income levels, as it is now, instead of progressively
calculated, so that high-income workers would pay a higher percentage of
income into the fund than low-income workers. And finally, there is no
reason why the income subject to the payroll tax (the FICA tax on your
W-2 statement) should be capped (currently at $106,800), or why investment
income should be exempt.
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- The so-called Social Security funding "crisis,"
which has Republicans and many Democrats warning of the system's looming
"insolvency" as though Social Security were just another AIG,
could be solved simply by just eliminating the income cap, and taxing investment
income.
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- Oh, but the conservatives wail, if we raise the payroll
tax, America will become uncompetitive, and our economy will collapse.
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- How then to explain Germany, where social security as
a percentage of GDP is much greater than in the US (40 per cent of Germany's
adult population receive some form of government income, whether in the
form of retirement payments, unemployment compensation or disability payments--far
higher than in the US)? Despite its high social welfare budget, and its
high wages, Germany is the second-largest exporter in the world
after China, and despite Germany's being a huge importer of goods and
services, second only to the US, overall, Germany is a net exporter.
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- Clearly, the problem with America's economy is not high
social security costs, and the "crisis" facing Social Security
is not that it is going to "go bankrupt." It is simply that the
corporate interests in America, and the wealthy, don't want to have to
pay for the system. They want the lion's share of the funding to be paid
by ordinary workers and the poor.
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- The political game being played by corporate interests,
Republicans, conservative Democrats, and by the corporate media, is to
pretend that Social Security is just another pension system--underfunded,
overburdened, and in need of downsizing. They insist the only solution
is cutting benefits, raising the retirement age, and privatizing--taking
away the guarantee of a monthly benefit check, and replacing it with the
"miracle" of the financial markets.
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- American workers need to reject this campaign of misrepresentation.
They need to realize that Social Security is a government income-support
program, and that its benefits are not just for the elderly, but are also
for the current workers, who are relieved of having to personally care
for their parents and grandparents. They need to realize that Social Security
is a government program, and that it will be there for them when they want
to retire, just as it is available now for today's retirees. And they need
to realize that there are many ways to finance those current and future
benefits besides just raising their own and their employers' payroll tax
payments from the current 7.65 per cent each and/or raising the retirement
age beyond the current 66/67 level. We need to demand that all Americans
pay the payroll tax on all income, with no caps and no exemption
for investment income.
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- At that point, the fake "crisis" will be over,
and we can focus on the real crises facing us: the endless wars that our
government keeps dragging us into (one advantage Germany has is that it
spends only 1 per cent of GDP on its military, compared to 5 per cent
for the US), and health care (yeah, they sure didn't solve that one with
the so-called Health Care Reform Act just passed, which will still leave
us spending 20 per cent of GDP on health care by 2016, up from 17.5 percent
this year!).
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- Dave Lindorff is a Philadelphia-based journalist
and columnist. His latest book is "The Case for Impeachment"
(St. Martin's Press, 2006 and now available in paperback). He can be reached
at dlindorff@mindspring.com
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