June 22nd, 2012, 12:30 PM #1
The 90% Solution: Why Social Security is Underwater Now.
The stuff you have been told about the sudden unexpected Baby Boomer crush is sheer balderdash. This was known when the Baby Boomers were born and could be planned for. In fact, the Greenspan Commision in 1982-3 supposedly did plan for it. That's why it raised the taxes on the Social Security Payroll Tax (FICA) to a level that exceeded what was needed to pay current Old Age Insurance beneficiaries and set aside the surplus for when around 2012-14 the Baby Boomers hit the system en masse.
Errr...wait a minute.
Congress didn't actually set aside the extra Social Security money--it was too good a thing to pass up.
It spent the surplus SSA money and issued Special Issue Certificates for future taxpayers around 2014 to pay off. But wait! If the Baby Boomers are retired and the working taxpayers have to increase their taxes to pay for the benefits...something is wrong here...why bother to increase the Social Security Tax beyond what was necessary since 1983 ?
I get it now: to spend it on stuff other than Social Security under the cover of "saving Social Security" which it apparently hasn't because Congress is now "saving Social Security" all over again !
Did I mention it coincided with the Reagan tax cuts" and some cynical type of people might say it help fund those tax cuts on the top by raising payroll taxes on the bottom. Please don't blame the Replicrats alone; the Demiplicans were fully in on it and spent your Social Security money with equal abandon all these years.
Recently there was a standing Ovation by both Parties when the President announced a cut in the Social Security payroll Tax as a stimulus to the economy. It also makes a good excuse for later cutting benefits to match the social security tax cut cuts, small as they were.
Here's what the Congressional Research Service, as reported in Forbes, says is the reason why Social Security is underwater now and it has to do with the growing Income Inequality in the United States.
The Great American Social Security Lie - Forbes
[Edited de DOOG]
We are consistently led to believe that it is the ‘aging workforce’ that rests at the heart of Social Security’s funding problems. Tune in to any of the media reports covering the numbers just out and this is what you are going to see and hear.
The claim, while legitimately representing a small piece of the problem, fails to explain the lion’s share of the crisis we will experience in the Social Security Trust —and by lion’s share I mean a full 60 percent of the entitlement’s funding shortages.
The ‘aging workforce’ narrative serves to encourage and support the critics who claim that our problem is too many retirees lining up to collect their entitlements only to find that the government has failed to properly manage the Social Security trust fund—leaving the next generation of beneficiaries to be shortchanged 25 years down the line. As a result, the privatization pushers argue that Americans would be far better off looking out for their own retirement accounts so that government mismanagement will not come between hard-working citizens and their retirement money.
This is the Great American Social Security Lie.
It is true that there were some variables that could not be anticipated such as people living a bit longer than expected. However, as it turns out, any mistaken projections in this regard are not what is causing the bulk of the projected shortfall in contributions to the Social Security Trust.
Greenspan’s calculations were based on the presumption that income distribution in the United States would remain reasonable—just as it had since America learned the lessons of the how extraordinary disparities in income distribution lead to extraordinarily unfortunate economic events like the Great Depression.
How could Greenspan and his crew possibly have predicted that—at the very time he was making his calculations regarding the future solvency of Social Security—the nation was about to undergo a massive case of amnesia whereby the lessons of the Depression would be completely forgotten and greed at the top would return to, once again, trump sensible economic policy?
So, how does our record income inequality play into our Social Security problem?
The result of the nation’s growing income disparity has altered the Greenspan expectation that 90 percent of income would stand as the tax base for Social Security contributions to our current circumstance whereby only 83 percent (or less) of income is being taxed for the Social Security fund as more money flows into the pockets of those earning more than the cap.
This from the Congressional Research Service-
*Since the 1980s, the share of covered workers below the taxable earnings base has remained relatively stable at roughly 94%. However, the share of covered earnings that are taxed has fallen from 90% of all earnings in 1982 to 83% in 2007. The large declines in the late 1990s were mainly because salaries for top earners grew faster than the pay of workers below the cap.*
What we see is yet another example of how the long running stagnation in workers’ wages has wrought real damage on even unexpected elements of the American economy. It is not only a matter of worker’s having less money at their disposal to support our consumer driven economy. We now see that stagnant wages has reduced the contribution levels going into the Social Security Trust as upper level earners avoid the tax on a huge portion of their income.
For more Info about Social Security see
The REAL Year Social Security "Goes broke".
Social Security is "Underwater" Now.FIRST EIGHT YEARS ANNIVERSARY HONOR ROLLthis April 18th, 2012 and will be Officially Celebrated That Day! SEE http://www.techimo.com/forum/imo-com...ml#post1070600
June 22nd, 2012, 04:21 PM #2
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The Forbes article was quite informative. Thanks for sharing.Good job, friend-of-friends!
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