Saturday, September 3, 2022

Sorry RoJo, Social Security is not in trouble, and it's easy to keep it fully funded

When Ron Johnson starts talking on economic issues, foolishness is likely to follow. As it was earlier this week when RoJo tried to explain away his earlier statements that indicated he'd be OK with taking away guaranteed benefits for Social Security and Medicare.
“Now, the point I want to make in this discussion is the only thing that threatens veteran’s benefits; the only thing that threatens the mandatory spending programs; Social Security, Medicare, others, is our massive deficit spending and our growing level of debt,” [Johnson] said….

“Let me say unequivocally: I have never said I wanted to put Social Security, Medicare, veteran’s benefits on the chopping block or cut them,” he said. “I want to save these programs. I want to stop mortgaging our children’s future.”

Social Security is 100% funded for the next 13 years, and currently has more than $2.85 trillion in its bank account, earning (higher) interest. The only thing that threatens Social Security along with other current guarantees like veterans benefits and Medicare is the willingness of politicians to pay for them.

And if you are turning those earned benefits into discretionary funding, you have made a choice to do so, and are also saying that you can cut these programs.

Later in the week, RoJo floated his latest scheme on how to "help" Social Security's finances. And to boost our labor participation rate.

Because how dare we have people be able to leave the work force on their own terms and retire comfortably! Your service is to this guy first!

Except the scheme to coax those older workers back is to KEEP THEM FROM PAYING INTO SOCIAL SECURITY with those (likely menial) jobs. Which would mean that there would be more people working, but less money to be made available for Socail Security, making it all the easier to try to wreck and kill.

Side note - I don’t want to hear a GD word friom RoJo about our deficit and debt when
1. Our deficit is at its lowest level in 5 years.

2. Ron Johnson voted for the $1.9 trillion GOP Tax Scam that exploded the deficit well past the lower levels that we had before then. Especially when this crook personally added to that number with a major kickback to himself and his contributors.

Back to Social Security - I got a better idea about how to keep it fully funded without having to literally work old people until death, or make cuts in current or future benefits (which RoJo also wants to do). Why don’t we simply raise the cap on how many payroll earnings are taxed? This cap is currently at $147,000, and is on track to be close to $155,000 in 2023 due to inflation.

Workers and employers each pay 6.2% in Social Security wages on those first $147,000 in wages, but not one cent after that. The recent Social Security 2100 bill from Rep. John Larson (D-Conn.) would put in a “donut hole” that re-starts the payroll taxes at all wages above $400,000. That bill also expands some Social Security benefits, but still could allow for full payments for another 5 years (to 2038).

But why not go a step further? Instead of giving a payroll tax break to old workers, why not cut the payroll taxes by 1% for both worker and employer (to 5.2% for each) in 2023, and then drop the donut hole to $370,000. No one making under $400,000 would pay more taxes, it’s a sizable tax break for most workers and small businesses, and I bet we still get more revenue into Social Security.

Compare that to the situation in our currently regressive payroll tax, where big businesses pay lower Social Security taxes on giving 5 well-paid executives $400,000 bonuses than they do in hiring 50 line workers at $40,000. That incentive needs to go away.

We also should note that demographic changes are going to move the “exhaust dates” for full benefits into later years, even without changes. Some of this is for bad reasons. as evidenced by this headline from earlier this week.

And it's not just due to the pandemic that Ron Johnson misinformed about.
In 2019, someone born in the U.S. had a life expectancy of nearly 80 years. In 2020, because of the pandemic, that dropped to 77 years. In 2021 life-span dropped again — to 76.1 years. And for some Americans, life expectancy is even lower, according to a provisional analysis from the Centers for Disease Control and Prevention….

Injuries, heart disease, chronic liver disease and cirrhosis and suicide also contributed to the life expectancy decline. Increases in unintentional injuries in 2021 were largely driven by drug overdose deaths which increased during the pandemic.

"The COVID-19 pandemic has in effect wiped out the health gains that the U.S. has made in the 20th century," says John Haaga, a member of Maryland's Commission on Aging. "To have this second year of crash basically wiping out the meager gains made during the century is really pretty shocking," he says.
Sucks for the country, but it also translates into fewer Social Security recipients, and for lower amounts of time. The lower life expectancy already added a year to the “full benefit” date in June’s Social Security Trustees’ report, and that seems likely to be moved to a later year when it gets its next update.

So no, Social Security does not have any funding issues today or for the near future. And any future concerns can be easily cleared up by making the payroll tax fairer or by paying it out of regular taxes and/or debt like any other program.

What Ron Johnson (well, the puppetmasters of Ron Johnson) wants to do is find any excuse to wreck this successful program, cut taxes for rich people like himself and his donors, and make working people more desperate with fewer options. RoJo tends to be wrong on economic issues in general, but it's the US's Social Security/debt situation that he is most illiterate about.

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