Here are the facts about our Social Security system including the Social Security Trust Fund and the COLA controversy: 1) We pay benefits to the Social Security Administration – not into the budget of the US Government. taxes.about/od/payroll/a/Social-Security-Taxes.htm 2) These taxes, paid with our other payroll taxes, go on to pay benefits for Americans already retired through the Social Security Administration.ssa.gov/pubs/EN-05-10024.pdf 3) If more taxes are paid into the SSA then paid out, there is a surplus of taxes. For 30 years, there was a surplus and this surplus, turned over to the Social Security Trust Fund and invested in US Treasury Bonds, was to be held until it was needed to make up any shortfall between taxes and benefits. ssa.gov/oact/progdata/fundFAQ.html#a0=-1 4) Due to the Social Security Wage Base (SSWB is the maximum earned gross income or upper threshold on which a wage earners Social Security tax may be imposed) cap on income being set at $118,500 for 2015, the most affluent members of American society are not paying taxes on their entire income as the rest of us are. This is one contributing factor to the shortfall between taxes and benefits. en.wikipedia.org/wiki/Social_Security_Wage_Base and ssa.gov/oact/cola/cbb.html 5) Another reason for shortfall in taxes to benefits is that we are experiencing a “bump” in the retirement population (called the “baby-boomers” who were born after WWII) but we have been watching this demographic for 60-70 years – it is no surprise. That is where the surplus came from, coincidentally. investopedia/terms/b/baby_boomer.asp 6) So for the past few years, we have been making up the shortfall between taxes collected and benefits paid out paying this amount from the Social Security Trust Fund (which, remember, was set up only to hold these funds for just such an occurance). fas.org/sgp/crs/misc/RL33028.pdf 7) Since US Treasury Bonds are actually loans to the US government, the Social Security Trust Fund is not sitting around in an account as liquid cash. The bonds need to be cashed in. That means that the US government has to come up with the cash. That is the contract. It is a fiduciary duty to do so. Otherwise the US government is in default. Here is a good explanation of US Treasury Bonds and what the investment means to US credit and stability: “For the ultimate safety with your bond investments, you can turn to the U.S. government, the most reliable borrower in the world. The U.S. government has never defaulted on a loan, and it would take a mighty big catastrophe before the U.S. Treasury could collapse. To put it simply, youll never have to worry about the U.S. not paying you back if you buy some of its bonds.” finance.yahoo/education/bond/article/101185/How_U.S._Treasury_Bonds_Work 8) To come up with the money to pay the bond investor (the creditor of the US government), the US government must get it from the “budget” (what we do with the money that comes in – taxes, etc.) because we already spent what we borrowed. Now here is a dicey situation – Social Security is NOT a line item on the budget – it is a US Treasury Bond debt. Pure and simple. But the simple minded view it as being paid from the budget rather than as a solid, contractual debt of the US government that must be paid. Viewing it in this erroneous manner, some claim Social Security is a big part of our budget deficit. They confuse the Social Security deficit with the US government budget dificit. Or perhaps are not remembering that the Social Security Trust Fund holds the money to pay shortfalls between taxes collected and benefits paid. In other words, to pay the Social Security deficit, the Social Security Trust Fund cashes in some of its investments in US Treasury Bonds, which the US government, having been loaned the money, must now pay. Problem comes from Republicans who, not liking the Social Security Administration in the first place, do not want to honor their debt to a bondholder (the Social Security Trust Fund) and, in turn, do not care if they burn the actual bond holders – the workers who paid those surplus benefits. This is tantamount to defaulting, but they play games with this money because it is owed to citizens, not a bank, a corporation, or another country. huffingtonpost/2013/10/20/democrats-social-security-cuts_n_4132087.html 9) There doesnt have to be a shortfall, even through the “baby-boomer” era by removing the $118,500 cap on income susceptible to Social Security Taxes. We can even return to the days of those 30 years we were paying into the Social Security Trust Fund and building it for the future of those working now. Why not do this? Republicans oppose it. dailykos/story/2013/10/10/1246063/-Republicans-While-we-re-at-it-lets-just-throw-Social-Security-into-the-ransom-note talkingpointsmemo/cafe/stop-the-social-security-stupidity-a-q-a 10) With the cap removed, the Social Security Administration can not only continue to pay Cost of Living Allowances (COLA) but can even improve on the CPI formula by using the more appropriate CPI-E. Under no circumstances should the Chained CPI be implemented.bls.gov/news.release/cpi.br12396.a06.htm 11) What is meant by the statement that Social Security will run out in 25-60 years? It is not a factual statement, and is referring to the Social Security Trust Fund. Since shortfalls are being paid out, different algorithms are being used to calculate when the Social Security Trust Fund will run out and not be able to make up the shortfalls each year. This is an erroneous way of looking at this for two main reasons: 1) SS taxes will still be collected, so if their algorithms are correct (even with their wide variance) if all else fails, we are looking at benefit cuts of 25% in 25-60 years and 2) the reason for these algorithms (which are dependent on many widely variable factors and so are almost useless) is to show that we need to dismantle Social Security because it will “run out” anyway at some point in next 2.5-6 decades.bloomberg/news/2012-04-23/social-security-fund-to-run-out-in-2035-trustees-say.html 12) Senator Bernie Sanders (I-VT) bill: “U.S. Sen. Bernie Sanders has introduced legislation to strengthen and preserve Social Security. To keep Social Security strong for another 75 years, Sanders legislation would apply the same payroll tax already paid by more than nine out of 10 Americans to those with incomes over $250,000 a year. Social Security is the most successful government program in our nations history. It has not contributed one dime to the federal deficit. It has a $2.5 trillion surplus, and it can pay out every nickel owed to every eligible American until 2038, according to a recent report from the non-partisan Congressional Budget Office. Under Sanders legislation, Social Security benefits would be untouched. The system would be fully funded by making the wealthiest Americans pay the same payroll tax already assessed on those with incomes up to $106,800 a year. The idea follows through on a proposal that President Obama made when he was running for office in 2008.” strengthensocialsecurity.org/media/news/senator-bernie-sanders-proposes-bill-aimed-at-keeping-our-social-security-promises talkingpointsmemo/cafe/stop-the-social-security-stupidity-a-q-a 13) Here are some links for further reading: socialsecurity.gov/OACT/COLA/AWI.html socialsecurity.gov/OACT/COLA/colasummary.html talkingpointsmemo/cafe/stop-the-social-security-stupidity-a-q-a 14) Here are links to the lies: (Heritage foundation – Koch Brothers) heritage.org/research/reports/2013/05/2013-social-security-trust-fund-reports-massive-deficits-benefit-cut video.foxbusiness/v/2838996189001/raise-the-eligibility-age-for-social-security/ Copyright Victoria Carson 2015 All rights reserved
Posted on: Thu, 08 Jan 2015 19:40:49 +0000
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