Moral Outrage
Whew! God help us!

America writing off Social Security for the elderly

When neoconservatives, politicians, and high ranking military officers speak of a 30-year war against terrorism, there is no discussion about its affordability or whether the one significant attack (September 11, 2001) that is attributed, perhaps incorrectly, to Muslim terrorists justifies an open-ended war against a dozen countries.

There is no discussion of the burden on future generations of the massive increase in the public debt in order to finance today’s wars. Meanwhile conservatives constantly assert that Social Security is unaffordable and decry the intergenerational basis for Social Security retirement.

Since the 1980s Congress has been cutting back Social Security benefits in a number of ways. For example, the retirement age is being extended from 65 to 67, and the switch from a real cost of living adjustment to a substitution-based consumer price index results in the erosion of the real value of Social Security benefits, which was the reason for the switch.

Up to 85% of Social Security benefits are now subject to income tax if the recipient has earnings or other retirement income above a minimum amount. The taxation of Social Security was another way that the political system reneged on the promised benefits.

In addition, during the 1980s Alan Greenspan and David Stockman accelerated the phase-in of payroll tax increases that the Carter administration had enacted. By causing the payroll tax to rise before it was needed to finance benefits, more than $2 trillion has been collected than was paid out in benefits. The government spent the earmarked payroll tax revenues (leaving non-marketable IOUs in their place) on other things, such as the wars of the 21st century. As none of this $2 trillion reached retirees, the real “theft” from those of working age was committed by Greenspan and Stockman for the benefit of other spending programs.

None of this is to say that there are not legitimate criticisms of Social Security. One is that Social Security does not provide a personal nest egg that a retiree can either spend down or manage carefully, living off the investment income and passing on any remainder to heirs, thus building wealth in society.

What we have witnessed in the 21st century is a clear decision by political elites and the private interests that control them that gratuitous wars are more important than the elderly. In the budget deliberations it is not the trillion dollar annual budgets of the military/security complex that are seen as excessive. Instead, the focus is on cutting the sparse benefits for the elderly.

[Excerpt of article by Paul Craig Roberts, former Assistant Secretary of the Treasury for Economic Policy]

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2 Responses to “America writing off Social Security for the elderly”

  1. Many young people, and even some older ones, are convinced the retirement system’s coffers will run dry before they get a chance to claim benefits.

    However, even if Congress does nothing to fix the troubled system, and its trust fund is exhausted in about two decades, the truth is that Social Security will still collect enough in payroll taxes to pay out 75% of promised benefits at that point.

    Seventy-five percent isn’t ideal, but it’s sure better than nothing.

    Having said this, the system does have problems though! The surplus that Social Security has built up over the years is invested in $2.7 trillion of special Treasury bonds. As payouts exceed tax revenue, Social Security will have to start cashing in those securities. The federal government will have to find the money to make good on the bonds, and that’s going to put more pressure on the federal budget.


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