Adding yet another BIG LIE to the GOPs expanding list: Social Security actually added a $69 billion(with a “B”) SURPLUS in 2010 and $95 billion to its surplus in 2011 according to the 2011 Social Security Board of Trustees Annual Report.
So, 2011’s net gain brings the Total Social Security Surplus at the End of 2011 to $2.7 trillion (with a “T”)!
English: Scanned image of author’s US Social Security card. (Photo credit: Wikipedia)
Social Security’s surplus is approximately double the $1.4 trillion collected in corporate and personal income taxes for 2011. Furthermore, the surplus is projected to continue increasing its surplus until 2021; the year that the youngest “baby boomers” reach full benefit age.
I don’t know, but that does not sound as if the Social Security Trust Fund is on the road to insolvency to me.
Despite the inconvenience of annoying facts, the GOP Lie would have you believe that Social Security is broke already and sinking the national coffers. The inconvenient truth is that Social Security is running a huge surplus. It is just another attempt at manipulating the public perception by repeating a lie often and in unison.
The GOP (read: Paul Ryan’s Budgets), who wants to kill Social Security, have worked diligently to convince (especially the young) voters that the Social Security taxes they pay to support today’s older population will do nothing for them. Nor, according to the propaganda, will it be there for them, when it is their turn to collect theirs.
It’s another blatant example of the GOP strategy of reducing complex issues to bumper sticker watchwords that their base and legions of corporate media outlet-contributors (ABC-Disney / NBC-Comcast / CBS-Viacom / FOX-Rupert Murdoch Empire / CNN-Time/Warner(Bros.))can spoon-feed to the gullible public.
Additionally, with a few minor tweaks and Social Security can be safe for as long as we want.
As I have detailed in many previous articles (“Austerity vs The One-Penny-Solution), the current long-term GOP strategy, which began under Ronald Reagan, is to:
Roll back all Great Depression era consumer protections( “Stop the GOP Assault on the U.S. Economic Future”)
Redistribute the tax burden from corporate elites to the middle and lower income sector of the economy.
As the chart below will attest, the GOP has been quite successful. In addition to success on a mathematical scale, they have also adroitly convinced a large portion of these sectors, mostly poor and middle-income whites, to support this shift despite being against their own interest.
The Redistribution of U.S. Tax Burden
The chosen method of redistributing the tax burden from those with the most income to those with the least has been through Social Security taxes. From 1961 through 2011, the year covered in the last Social Security report, Social Security taxes grew exponentially from 3.1 percent of Gross Domestic Product to 5.5 percent.
Conversely, income taxes, both personal and corporate, have rapidly declined as a percent of GDP. The personal income tax slid from 7.8 percent of the economy to 7.3 percent, with most of the decline enjoyed by people in the top 1 percent of incomes.
But the big drop was in the corporate income tax category. Corporate taxes fell from 4 percent of the total economy to 1.2 percent! Notice that the corporate income tax fell by 2.8 percentage points, and almost entirely offset by a 2.4 percentage point increase in Social Security taxes, on which Capital Gains and Corporations pay nothing (even though according to the Supreme Court corporations are people).
The well-hidden result has been to ease the taxes on the wealthy, while reallocating the tax burden to the vast majority of workers. Considering ownership of stocks is concentrated in huge percentages by already wealthy individuals, the benefit of those lower capital gains and corporate taxes went overwhelmingly to the top 1 percent. Also, remember that the Social Security withholding tax is capped, at $108,600 in wages (2010/2011), and $110,000(2012). Therefore, most of the burden of the increased payroll tax goes to the bottom 90 percent of wage earners.
This cap alone makes absolutely no sense since those with the most disposable income require the least assistance from the “safety net” of Social Security, but are entitled to it anyway.
Of course, to finance this windfall for the wealthy, in 1983 President Ronald Reagan sponsored an increase in Social Security taxes. He changed the program from pay-as-you-go to one that began collecting a vast surplus over current payouts in benefits. His considerable talents in propaganda resulted in convincing the public to have the “baby boomers” prepay part of their collectible benefits.
The extra tax was supposed to pay off the federal debt with the surplus to be invested in federal bonds. Instead, Reagan ran huge deficits, violating his 1980 promise to balance the federal budget within three years of taking office with the surplus collected through taxing the wage earners.
The Neo-Confederates pay homage to THIS iconic Conservative?
Redistribution of Wealth from the Poor Masses to the Wealthy Few
One effect of this Social Security scheme was to finance tax cuts for those at the top, whose highest tax rate fell during the Reagan years from 70 percent to 28 percent, and for corporations, whose rate fell from 50 percent of profits to 35 percent.
Result: Those with less subsidized those with more.
The other effect was a massive increase in consumer debt.
Americans saddled with higher Social Security taxes took out loans to cover other needs.
The $2.7 trillion Social Security surplus was a primary factor in a $1.5 trillion increase in consumer debt since 1984 along with stagnant wages as the wealthy continued to benefit from the major reduction in the top income tax rate and corporations benefited from reduced corporate rates
Paying a tax of any kind in advance is expensive. When it is being withheld from every paycheck along with stagnating wages it is easy to see why consumer debt ballooned.
As any tax-planner will tell you, a tax deferred for 30 years is in effect a tax avoided, provided you invest the avoided taxes rather than spending it. Of course, for those on the opposite side of the equation, a dollar of tax paid in 1984 cost $2.20 in today’s dollars, and that’s before counting the interest that could have been earned.
The Time to Act Is Now-But Use Facts As Your Guide Not Distortions
Make no mistake; with “baby boomers” beginning to retire, Social Security will start to pay out more than it takes in-probably around 2021, according to projections in the same 2011 annual report. This is where the truth-bending GOP likes to focus.
But that scenario can easily be avoided through a combination of minor policy changes that would ensure full benefits continue to be paid.
Restore, at the very least, the Reagan standard that 90 percent of wages are covered by the Social Security tax (i.e. raise the cap on wages subject to Social Security withholding). Better still, remove the cap altogether.
Raise the Social Security tax rate by one or two percentage points.
Enact the One-Penny-Solution that I have detailed in previous articles (i.e., “Austerity vs the One-Penny-Solution”).
Social Security is a government program funded by a dedicated tax. So quit using it as an ATM machine to fight unsanctioned and unfunded wars. The ONLY two wars ever fought by the United States without a corresponding revenue increase to cover the wartime expenses were, surprise, George W. Bush’s Afghanistan and Iraq. Even Lyndon Johnson eventually raised taxes to fund the Vietnam War. Johnson established a 6 percent surcharge on corporate and individual income tax despite his resistance because of his fear it would negatively affect the larger Great Society undertaking.
The GOP Wants To Eat but Still Have Their Cake
There are two ways to look at the GOP’s perception of Social Security.
First, you can simply view the program as part of the general federal budget, with the dedicated tax as a mere formality. Use the funds when needed for emergency purposes, but replace them once the emergency has passed
Take Social Security as a standalone entity – as long as Social Security still has funds in its trust fund, it doesn’t need new legislation to keep paying promised benefits
Two views, both of some use. But the GOP wants it both ways. They say that for the last 25 years, when Social Security ran surpluses, it didn’t mean anything. It’s just part of the federal government. But when payroll taxes fall short of benefits, even though there’s lots of money in the trust fund, Social Security is broke!
Come on people!
Does Bumper-Sticker Ideology really have to be your guiding principle?