Now, with the Social Security program back in the spotlight, with Reeps promising to address mammoth deficits in other ways, there are certain facts about the system that most Americans don't know.
These include:
- Receiving Social Security is not a right under the Constitution, or in U.S. law evidently. As difficult as this might be to believe (even for modern Social Security recipients) the government website itself (ssa.gov) makes it clear:
There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.
In this 1960 Supreme Court decision Nestor's denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor's benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not a contractual right.
- Millionaires are exempt from paying payroll taxes but still collect Social Security benefits.
Yes, it is indeed true. The "payroll cap" actually prevents billions of additional dollars from flowing into the Social Security Trust Fund. That cap is currently set at $160,200 which means anyone earning at least $1 million a year automatically stops paying into Social Security once that tax threshold is reached. That threshold will be attained this year at barely 7 weeks into the year according to the National Committee to Protect Social Security and Medicare (NCPSSM)
- The Social Security Trust Fund Is Real:
The Social Security Trust Fund is based on real bonds, not merely "IOUs", as the Right wing media continuously seeks to portray. Never mind the types of bonds in which the Trust Fund is invested are not the same as bonds traded on Wall Street. Why would they be when the idea is to preserve capital for future outlays not reduce it if bond yields go south?
As my Swiss friend Rolf made clear in 2010 after then Treasury Secretary Paul O'Neill claimed the Social Security Trust Funds contained no real money:
"If they let that happen to their own people, what's stopping them from doing it to foreign bond holders? Nothing! What kind of demonstration is that of full faith and credit? None! At least here in Switzerland we believe it a terrible omen and message to send the international bond community. If you renege on your own people, you can certainly do it to us. So why should we not cash in our bonds when the Social Security betrayal of American citizens arrives?"
What follows would be a mass withdrawal from all previously held securities, including all T-bonds now held by the Chinese and Japanese. Splitting hairs about bond definitions and realities is therefore a fool's errand because in the end no foreign investor will buy it. He accepts at face value all bonds (including those underlying Social Security) have the full faith and credit of the U.S. government behind them. If they don't, or one set is reneged upon, then the promise means nothing.
- Social Security Benefits Are Subject To Taxation- And It's Not Adjusted For Inflation:
In 1983 Congress voted to start taxing Social Security benefits, again reinforcing the 'reservation of power' concept - see top fact. It established $25,000 as a taxable target (for adjusted gross income or AGI) plus half of the taxpayer's annual benefit as the first threshold, i.e. requiring income tax payment on 50 percent of the benefit. In 1993 Congress added a second threshold: $34,000 of which S.S. recipients would pay tax on 85 % of the benefit. Unlike other components of the program (e.g. COLA) these tax thresholds were never linked to inflation and remain the same as the earliest threshold imposed in 1983. This means that an ever increasing share of benefits is being snatched away - or one might say, "clawed back" by the government.
- Social Security benefits will be cut 25% by 2033 unless the Payroll Tax Cap is increased or eliminated
Yes, you read that right. Unless a major infusions occurs, the program's Trust Fund will become unable to pay out the same benefits by 2033-34 necessitating a 25% cut in benefits. But this is not the same as being 'insolvent' as the corporate media nabobs are wont to screech. Organizations and people can become insolvent and perhaps file for bankruptcy if their debt is excessive. But the government doesn’t have this same peril because Social Security has no EXTERNAL "collectors". It is in fact the government that OWES Social Security not the other way around. This is because of multiple years of dinging the Trust Fund to pay for other budget items, like military.
The most efficient, direct way to avoid that insufficient payout calamity would be to increase the payroll tax cap or eliminate it entirely. (That would also partially correct for all the money taken out.) Besides, it's already been done for Medicare, back in 1994, so it's not engraved in stone. In fact, a bill introduced in the Senate on February 13th by Bernie Sanders and Elizabeth Warren is designed to do just that. And in the process extend the benefits by an additional 75 years.
See Also:
by Richard Eskow | March 1, 2023 - 7:09am | permalink
Excerpt:
Like they used to say in the old neighborhood, some things ain't complicated. If your senator or representative won't tax the wealthy to protect and expand Social Security, then they care more about America's 728 billionaires than they do about the 66 million children, disabled, and older people currently receiving benefits—or the many millions that will follow them. They don't deserve to stay in office if they can't represent their own people.
Social Security is a vast, highly successful program. That makes it sound complicated. It's not. It was built on simple moral and operational principles.
And:
by David Badash | February 9, 2023 - 8:12am | permalink
— from The New Civil Rights Movement
Excerpt:
Many across the nation were likely horrified but not surprised Tuesday night when Congresswoman Marjorie Taylor Greene (R-GA), and several other House and Senate Republicans lashed out at President Joe Biden as he delivered the State of the Union Address, falsely branding him a “liar” for telling the truth: The GOP has consistently called to gut, sunset, or otherwise dramatically alter or dismantle the critical, life-saving social safety nets of Social Security and Medicare.
But it’s no secret Republicans for years, including recently, have wanted to take an ax to these programs, and other “entitlements,” despite proof they literally save lives.
And:
by Linda Benesch | February 26, 2023 - 6:33am | permalink
Is your salary less than $160,200? If so, you’re among the 94 percent of American workers who pay into Social Security all year long. But there’s a privileged group that’s about to stop paying into Social Security for the rest of 2023: People who make $1,000,000 a year. Their last day of contributing to Social Security is February 28.
And:
No comments:
Post a Comment