Editor’s note: This op-ed is by Sen. Bernie Sanders.
Social Security is the most successful social program in American history. More than half of our elderly population lived in poverty before 1940, when Ida May Fuller of Ludlow, Vt., received the first Social Security check. Because of Social Security, the poverty figure today is less than 10 percent. Social Security also provides dignified support for millions of widows, orphans and people with disabilities. One in four veterans receives Social Security benefits in addition to help they receive from the VA.
Since Social Security was established 75 years ago, every nickel owed to every eligible American has been paid in good times and bad. While corporations destroyed the retirement dreams of older workers by eliminating defined-benefit pension plans, Social Security was there paying full benefits. When Wall Street greed and recklessness caused millions of working people to lose billions in retirement savings, Social Security was there paying out full benefits.
Despite its success, Social Security now faces unprecedented attacks from Wall Street, the Republican Party and a few Democrats. If the American people are not prepared to fight back, the dismantling of Social Security could begin in the very near future.
Rep. Paul Ryan, the new chairman of the House Budget Committee, has been open about his desire to partially privatize Social Security, lower cost-of-living adjustments (COLAs), and drastically cut benefits. A majority of his fellow Republicans agree. There are threats on other fronts. A deficit reduction commission established by President Obama called for increasing the retirement age to 69, reducing COLAs for today’s retirees, and cutting benefits for future retirees making as little as $42,000 a year.
Just about every day, in one form or another, we hear from our conservative friends that Social Security is in “crisis,” that Social Security is going “bankrupt” and that the Social Security Trust Fund contains nothing more than a pile of worthless IOUs. As a result of this barrage of misinformation, many young Americans have been convinced that when they reach retirement age, Social Security will not be there for them.
So what are the facts? Why have there been such concerted attacks against Social Security?
According to the latest report of the Social Security Administration, Social Security will be able to pay 100 percent of promised benefits for the next 26 years. After 2037, Social Security will still be able to pay about 78 percent of promised benefits. The non-partisan Congressional Budget Office (CBO) says Social Security will be able to pay full benefits to every eligible recipient until 2039, and beyond then cover 80 percent of promised benefits.
While Social Security is strong for a quarter century, Congress should stabilize it for the longer term. That is why I agree with President Obama, who has called for raising the cap on taxable income. Today, that cap is at $106,800. By removing the cap on incomes of $250,000 and more we can make Social Security fully solvent for generations to come.
Even with no change, the fact is that Social Security has a $2.6 trillion surplus that is projected to grow to more than $4 trillion in 2023. Is this surplus, as some have suggested, just worthless IOUs? Absolutely not! Social Security invests, as it should, the surplus money it accumulates into U.S Treasury bonds, the safest interest-bearing securities in the world. These are the same bonds that wealthy investors, China, and other foreign countries have purchased. The bonds are backed by the full faith and credit of the U.S. government which, in our long history, has never once defaulted on its debt obligations. In other words, Social Security bonds are as safe as any other U.S. debt obligation.
Further, despite the manufactured hysteria about a “Social Security crisis,” Social Security has not contributed one penny to the very serious deficit situation we face. Social Security is fully funded by the payroll tax that workers and their employers contribute into the system, not the U.S. Treasury. Our deficit has, in recent years, been largely caused by the cost of two wars, tax breaks for the rich, a Medicare prescription drug program written by the insurance and pharmaceutical industries, and the Wall Street bailout — all unpaid for. Social Security has played no role in our deficits.
Why has there been such a concerted effort to privatize Social Security, raise the retirement age or cut benefits? There are two reasons. First, Wall Street stands to make hundreds of billions in profits if workers are forced to go to private Wall Street firms for their retirement accounts. Second, as the Republican Party has moved far to the right and become much more anti-government, there are more and more Republicans who simply do not believe government has a responsibility to provide retirement benefits to the elderly, or help for those with disabilities.
Needless to say, I strongly disagree with both of those propositions. That is why I have recently formed the Defending Social Security Caucus in the Senate. In my view, maintaining and strengthening Social Security is absolutely essential to the well-being of tens of millions of Americans. We cannot allow it to be destroyed or dismembered.
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While I don’t subscribe to the hysteria promulgated by some in the GOP regarding Social Security, I still feel compelled to point out that Sen. Sanders appears to be playing fast-and-loose with the facts about Social Security’s solvency. He counters the argument that Social Security’s surplus is illusory by noting that in fact it’s funded by, “U.S Treasury bonds, the safest interest-bearing securities in the world.” He notes this fact as if, somehow, U.S. Treasury bonds are *separate* from taxpayers. But the “full faith and credit” of the federal government can only be paid by us, the taxpayers. In other words, the “surplus” is a liability owed by the American people, to be paid either through tax revenues or borrowing. Sen. Sanders rightly excoriates Wall Street for its greed, but Sen. Sanders’ is advocating the position that liabilities are assets; how is this any more enlightened than the idiocy he scorns?
And when it comes to Social Security’s long-term solvency, what Sen. Sanders conveniently leaves out of his narrative is the fact that Social Security isn’t even means-tested. He paints a picture of old people being left to starve, freeze, and go without their meds, whereas in fact rich people receive Social Security just like folks who are barely scraping by. Why won’t Sen. Sanders advocate the common-sense approach of means-testing Social Security so that only those who truly need it receive it? He’s all about taxing the rich at higher rates because they can afford it; it’s logically inconsistent for him to NOT advocate that socially secure persons should not receive Social Security.
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I think anyone who pays into Social Security should be able to draw from it when they retire even if they have other means. The simplest and most fair solution is not increasing the retirement age, and absolutely not privatizing. The wealthiest Americans have just been given a tremendous gift by Congress and President Obams with the extension of the Bush tax cuts. We should be collecting Social Security Tax on all income and taxing the earnings of those Wall Street types who make millions (or billions) on dividends and capital gains (think hedge fund managers) yet pay only 15%.
This year’s Social Security tax cut is only making the problem worse. We went from what Bernie says – the system was solvent far into the future – to a situation where Social Security is now running in the red this year. My more cynical side wonders if this is really a plot by Republican and ‘small government’ advocates to starve Social Security and justify their arguments that it is broken, and naturally that privatization is the only way to fix it? They have been remarkably successful these past few years convincing Americans that big bad governement and public employees are the cause of all economic and financial woes. Despite no credible evidence to support this argument.
Social Security is the Defined Benefit Retirement Plan for all Americans. If we allow it to be undermined, just as there are those who want to strip public employees of their benefits, we face a bleak future where the vast majority of Americans live in poverty.
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Mr. Hamlin,
People like George Soros, Bill Gates, and the hedge fund managers you vilify clearly don’t need Social Security payments. It makes no sense to me that liberals advocate progressive taxes, but then, for some reason, believe that even rich people should have taxpayer-funded subsidies like Medicare and Social Security.
Is it because there is guilt associated with taxing them more? I can’t imagine that’s the case.
So *why* should rich people who DON’T need Social Security get as much of this benefit as those who DO need it?
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Bernie Sanders is a true patriot who defends a Defined Pension System created 75 years ago so that all Americans can avoid poverty when they retire in old age.
Why do Americans have to worry about the solvency of a system that is protected in most Western Democracies in the world?
Why should we always be worried about the fact that the US is the only wealthy advanced democracy that espouses rugged individualism but really has a history in its infancy of the promotion of the general welfare.
The US is a society that is inherently fairminded but has extreme tendecies to promote Dog Eat Dog mentality especially with Republican Extremists in control of most of Congres in 2011.
Social Security is safe until 2037. Why not make it more safer by making sure those who make more than $250,000 pay their fair share? Why should the working poor and the Middle Class fight to keep it whole and stable?
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You assume a lot about people. Did I say anything about Medicare?
I didn’t vilify anyone. I stated my opinion that people who make their living on capital gains and dividends could be taxed at the same rate as people who earn wages. Do you think it’s fair that someone who makes $5 billion (as one hedge fund manager actually did last year) pays a lower tax rate than someone who makes a miniscule fraction of that amount in wages? Whether a rich retired person needs social security or not, when they were working they paid the same percentage of their wages (up to about $106,000) as everyone else. If I leave my employer I get to take what I contributed to my retirement with me. If the rich don’t need social security would you advocate a refund of the Social Security taxes they paid all their lives?
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Mr. Hamlin,
You’re right, you didn’t vilify anyone; I read something into your reply that wasn’t there, and I apologize.
However, to your question about whether the rich should get a refund, I answer no, they should not. And nor should they get tax breaks that the rest of us don’t get. But when it comes to Social Security, it should provide retirement benefits only to people who need it, and should be funded by everyone who has the ability to pay.
And I pointed to Medicare only as another example of a program that isn’t means-tested, but should be. In other words, I believe these programs should help only those who need it.
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Thanks. I think you can make a good argument to means test social security. I wonder about the fairness of not paying benefits to someone who paid in, but on the other hand the same could be said of almost any taxpayer funded social program.
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The long running success and popularity of Social Security and Medicare is found, I believe, in the fact these programs are based on everyone participating and everyone benefiting. These programs are both designed to be insurance programs.
I would not like to see it means tested.
I fully support both these programs, and I fully support keeping them mandatory and a tax.
I believe any tax increases to fund these programs should be distributed across all payers, and there is a good argument to be made regarding a progressive tax structure.
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You obviously care about means testing but even if it were adopted it would have no appreciable impact on the health of the system. The people you’re referring to (Soros, Gates, et al) represent a teeny tiny percentage of all those who will receive benefits. Even if you expand it to the top 1% (in VT that’s filers reporting > $300k), it’s so few people that redistributing their foregone benefits is basically a rounding error.
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Mr. Hoffer,
I would think individuals making more than $200K and families making more than $250K would be ineligible for government-funded retirement payments (using the same cutoff as was proposed for who should be ineligible for the Bush tax-cut extension). I actually think people making substantially less than that should have no trouble saving for their retirement and paying taxes to support those less able to do so, but that’s just a gut feel and I don’t want to jump too far into matters with which I’m not familiar.
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The simple answer to funding is to raise the income limit from the current $106,800. We don’t have to go up to a billion dollars in income either. That’s too simple and straightforward however. The Holy Grail for some Republicans however is: financial protection of the most wealthy Americans. They give the most money to politicians.
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Raise the social security tax and limit the amount that we give to the wealthy!!!!!!!