So Secretary of the Treasury Tim Geithner once again throws Social Security onto the table today.
Statement by Secretary Geithner on the Releases of
Social Security and Medicare Trustees Reports
Please note the conclusion.
"Finally, after we have passed health care reform that puts our nation on a path to lower growth in health care costs and expanded affordable coverage, this President will work to build a bipartisan consensus to ensure the long-term solvency of Social Security. The President explicitly rejects the notion that Social Security is an untouchable politically and instead believes there is opportunity for a new consensus on Social Security reform.
Well, I can save you some time, Mr. Secretary.
So what brought this up, this time and why is the White House joining in?
This year's Social Security Report projects that the Trust Fund will be exhausted in 2037, four years earlier than the Trustees projected last year. This change is primarily due to the economic recession, recent data that prompted a small downward adjustment to the projected level of real GDP after the economy recovers and the fact that our citizens are on average projected to live longer lives. Nevertheless, Social Security can continue to pay full benefits for nearly 30 years, and cover approximately 75 percent of scheduled benefits thereafter.
Admittedly this is the final bullet point from the report in the Secretary's statement. Most of this report and the various listed government actions have to do with Medicare, and rightfully so. Which is part and parcel of the need for Health Care reform and the long and tortured road to single payer. Or at least the road to regulating insurance companies down to their underwear so that the public, both collectively and individually, stop being looted for private profit over their health.
But I am interested in the section on Social Security. And the return of the illusion that it needs 'a new concensus.' There is a public concensus already, President Obama and Secretary Geithner. Social Security works. The public likes it. Don't screw it up. And since the trust fund is solvent for thirty years, there is time to do it right so that people don't lose benefits or have to work longer.
Unfortunately that is unless you realize that the government stops taking in more money for Social Security then it has to expend more then they take in for Social Security in only ten years. And since there is no trust fund, this money must come from the general fund.
And that is the elephant in the room. You know the one, where the public is told that the Social Security Trust Fund is being funded by increased monies from the FICA deductions, but the fund is merely an accounting, but the monies are being used in limiting the deficits of running the government when taxes on the wealthy were cut below the level needed to run that government. Think of it this way, Reagan and the rich thought they were paying too much to the government, but the government still need funds to run. Taxes had to be raised somewhere to offset that loss, and the burden had to be put on the poor and the middle class. What better way to do it with their consent then to supposedly be using that money to guarantee the one clear cut benefit the poor and middle class get from the government, Social Security. But now there is a big problem. What had been a real revenue stream for the government isn't really one anymore. The numbers say the trust fund is solvent for thirty years, only there isn't really a trust fund. Unfortunately, the people who have been paying a large portion of their income to the government expecting to have a cushion for their later years are expecting that 'investment' to come through, and the people in charge don't know how they are going to do it. Now many will say this isn't an investment, but an insurance fund. Alright, just so it is clear, they are expecting the insurance to make the expected return on their 'premiums'.
The SSI element of the FICA payroll deduction hasn't really been used as a premium or an investment though, lets call a tax a tax. That SSI deduction from your paycheck is in large part a tax, any part of it not actually used to fund current Social Security benefits has been used to run the deficit spending of the government. So what we really had was a tax increase on the poor and middle class to pay for a tax giveaway to rich. When you hear all about how the rich give so much in taxes, keep in mind they don't calculate all that Social Security money into the equation, even though it has been used as revenue for the government for the past thirty some odd years. Remember when George W. Bush called the trust fund nothing more then pieces of paper, well that wasn't just a misstatement. It is really how the people who have been running the government think about it. Not money, not T-bills, not obligations, just pieces of paper. And if Social Security, probably the most important piece of social legislation in the history of the United States, which has been on the right wing conservative kill list for decades can be dismantled or weakened after extracting all that extra money from Main Street well that is just icing on the cake.
But one of the great things about calling Social Security a tax is to recognize that the same standards that apply to those making less then a hundred thousand dollars a year, should apply to those who make more than that.
Let me put it simply for you, President Obama and Secretary Geithner. The only reform for Social Security that I can approve as part of the 'concensus' is the recognition that the Social Security Trust has been funding the government as an additional unacknowledged tax for over three decades which has been unequally applied to the American public. With that inequality in mind, it is time for those who received the benefits of the Reagan/Bush/Bush tax cuts without paying this additional tax to pay their fair share to increase and rebuild the Social Security tax fund. This can be done by the removal of the cap on Social Security deductions. All income, including bonuses, should be used to calculate the FICA payroll deduction. When, and if, any excess monies are no longer being used to fund the government deficit, caps can be reexamined.
There the Social Security problem is solved for an extra decade. That way you have time to spend on another more pressing issue for the financial well being of America and its people, real regulation and oversight of the Financial Industry.