Bush is plotting one of the biggest thefts in world history, the looting of the Social Security Trust Fund. The Fund currently holds 1.6 trillion dollars in US Treasury bonds. The need to redeem these bonds with General Fund money makes the numbers on the Bush tax cuts fail.
Bush will try to renege on the debt. I believe that the scheme is: gut benefits, and then tell the Social Security Administration to not redeem the bonds.
Our problem is: people cannot grasp numbers like $1.6 trillion. We need to personalize the Trust Fund. The theft is on the scale of stealing a new car from every worker in America. Numbers below the fold.
The Trust Fund bonds were purchased with the excess FICA contributions every worker and employer has paid each year since the Reagan/Greenspan changes to the system in the early 1980s. Starting in roughly 2028, the Social Security Administration is supposed to cash in these bonds and use the proceeds to help pay baby boomer benefits. (Benefit payments exceed FICA contributions starting in 2018, but interest income from the bonds makes up the difference for another ten years.)
The trick for reneging on the bonds is probably going to be changing the formula for calculating year-to-year benefit increases. Today these are calculated based on average wages. If Bush switches to a formula based on inflation rates, it will cut the average benefit by roughly 45% in 2042. Private accounts are a distraction: the real action is going to be the benefits calculation.
The Social Security web site (www.ssa.gov) provides historical data that allows us to calculate how much individuals have paid into the Trust Fund. The key yearly numbers are:
· Social Security receipts (mostly FICA contributions)
· Social Security expenses (mostly retiree, survivor, and disabled benefits)
· Average wages earned
· Cap on wages subject to FICA taxes
· Interest received on trust fund bonds
From these numbers, we can calculate the following:
Q. How much of your FICA taxes go to the Trust Fund?
A. Last year, 31.1%. Since 1984, 24.5%
Q. How much has a worker earning the average wage, which was $34.566 last year, paid into the Trust Fund since 1984?
A. $23, 926. That includes the employee tax, the employer tax, and interest earned on his or her Trust Fund contributions.
Q. How much has a worker earning the maximum wage subject to FICA taxes, which was $87,900 last year, paid into the Trust Fund since 1984?
A. $58, 292.
Over the past two decades, every worker has paid tens of thousands of dollars to strengthen Social Security based on the Reagan/Greenspan plan. This money is ours. It was not taken from us to enable lower taxes on the wealthy, or to fund the Iraq War--it was taken from us to strengthen Social Security.