Social Security is in better shape than you think
As the nation’s politicians pretend to confront our burgeoning deficit crisis, calls for privatization of Social Security are coming back into vogue.
The left-over from the Bush Era reappeared on the political radar screen last week when ranking minority member on the House Budget Committee, Rep. Paul Ryan (R-Wisc.), proposed privatization of Soc. Security in his GOP alternate budget roadmap. And while the GOP leadership has been running away from Ryan’s recommendations, Tea Party leaning members of Congress, such as Michele Bachmann (R-MI) and Marsha Blackburn (R-TN), have been quick to embrace the idea as a means to further their extremist message and rile up their reactionary base.
Setting aside the recent ‘up close and personal’ glimpse into how privatization might have spelled disaster for America’s seniors during our financial and economic near collapse, independent reports conclude that -while we do need to have an eye out for the health of Social Security in the long run- the baby boomers are in no danger whatsoever of losing their Soc. Security benefits.
Did you know that there is currently a large surplus in the Social Security Trust Fund?
While the surplus will not last forever, The Social Security and Medicare Board of Trustees reports that it will be enough to carry us through 2037. At that time, absent changes to the program, Social Security taxes would bring enough in to pay out 75% of the current benefits level.
Is this a problem that must be addressed for the long term? Yes. But does it rise to the level of a crisis for the baby boomers or beyond? Certainly not yet.
According to the 2009 Annual Report of the aforementioned Social Security board, we will reach the point where more is flowing out of the Social Security Trust than coming in sometime around 2017. The non-partisan Congressional Budget Office suggests it will happen closer to 2020.
Says Kathy Ruffing of the non-partisan Center for Budget and Policy Priorities,
The trustees’ annual report does not depict a program in crisis. Policymakers should act sooner rather than later to put the program on a sound long-run footing, but today’s beneficiaries and workers approaching retirement need not fear that their Social Security benefits are at risk.
Via CNBC
While those who benefit from the ‘sky is falling’ approach to riling up constituents are once again doing their level best to scare the hell out of the senior citizens who happen to comprise the nation’s largest voting block, along with those soon to join their ranks, the truth is that (a) none of them are in an danger of losing benefits and (b) we have a long history of making needed changes to sustain Social Security.
The calculation is not difficult.
The population burst that is the baby boomer generation provided a huge surplus in working Americans contributing their tax dollars to pay for the benefits for the generation that preceded them. However, with fewer workers in what we call Generation X, there aren’t enough contributions coming in keep the system in the black forever.
Obviously, that’s a problem – but one we have previously recognized and moved to correct.
In 1983, President Reagan created the Greenspan Commission to study and make recommendations to protect the future of Social Security. The commission realized that by the time the last of the baby boomer generation reached retirement age, the ratio of workers paying for retirees would go from 16 workers for each retiree down to 2 workers for each boomer in their retirement years.
To deal with the problem, the Commission recommended that the retirement age be raised to 67 by the year 2026 and that Social Security taxes be raised to make up the deficit. Congress enacted the legislation to make it happen.
In the 1990’s, Congress again raised the Social Security tax to the current level of 12.4%.
Many in the X Generation believe that they have been treated unfairly as they must pay the increased taxes to support the boomers. While there is some truth to their complaints, the reality is that the boomers have made their own increased contributions, both through the added taxes they’ve paid through the increases of both the 80’s and 90’s and seeing benefits delayed until many reach the age of 67.
And while Generation X may be unhappy with their burden, there is some good news for them. Estimates place the X generation’s ranks at about 40 million while the generation behind them, the Y Generation, is believed to be about 70 million. That means Gen X will benefit from ample support of the generation who will bear much of the burden on their behalf, allowing the tax rate to decrease as the ratio of worker to retiree swings in favor of the Gen. X’ers.
We do need to focus on what is required to keep Social Security healthy for everyone. But when the risks of privatization are weighed against the gains, one struggles to see the benefit.
In the meantime, don’t fall for the crisis mentality some would seek to spread in order to stampede you into their political camp. If you are a boomer, nothing is going to happen to your benefits. If you a member of Gen. X, changes will be forthcoming to lessen the burden. And while it is often difficult for the young to take the long-term view, try to keep in mind that the increased numbers of workers coming behind you is very much in your favor.
Sometimes, things are as bad as you believe they are. But sometimes, they really aren’t.
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Whenever the subject of Soc.sec. reform comes up, it’s always raise retirement age or cut benefits. How about starting with removing the cap on taxed income? Rarely do you hear it mentioned, unless of course it’s to dismiss it as another progressive lost cause.
Some people out in the world actually have jobs that stress and strain the body. They shouldn’t have to work into their 70’s. While I realize that, early on in the program, most people died before they could collect, that doesn’t mean we should go back to those conditions.
As to privitization – I guess the banksters feel they didn’t get enough of our money with the bailouts. Now they want to take all our savings and retirement benefits, live their fairy tale lives, and leave the rest of us to die in poverty. I’d love to have these people hang out with me or my friends for a week or two – but I’m afraid I’d leave them bleeding in a ditch somewhere.
Its hard not to make an analogy between Rep Alan Grayson’s GOP health plan of “die quickly”. With no healthcare reform perhaps thats how the Bauchmanns and Blackburns of the world plan to reign in Social Security as well. If people dont live longer, you pay less total benefits. In all seriousness, its hard to believe people are so stupid as to forget the past year and support privatized Social Security. Unfortunately here in the “information age”, false claims can become viral before they can be debunked…leaving many people to believe whats out there. Its not the old-time media anymore that actually fact checked and valued the truth
Rick, how do you think the bailout would have been different if a bunch of helpless old peoples’ social security benefits were tied up in the stock market?
Probably not. While the bailout pulled the banking industry out of the fire, it really didn’t do much to lift stocks, bonds or other investments. A bail out for Main Street would probably have more effect.
In response to another comment. See in context »I think that if Social Security had been tied up in Wall Street, we’d actually get tougher financial reform and a lot more rapidly than we’re getting it now.
In response to another comment. See in context »Somehow the idea of trusting both the government, who uses the fund to boost the budget numbers and Wall Street Bankers who regularity crash the economy, sounds nuts. I like the locked box.
The locked box is fine. However, investing the surplus in government bonds (which is what they do) is not a bad way to go. US bonds are still the safest investment on the planet. If those go to hell, Social Security will be the least of our problems!
In response to another comment. See in context »It would be in better shape if the 5 million public employees, who are now exempt from social security taxes….paid their fair share….that is 1 in 4 public employee is exempt…..mostly teachers, cops, fire, local government
All 340,000 claifornia public school teachers are exempt…and teachers in 13 other states
Locally around here, all employees of cities of simi valley, ventura, oxnard all exempt
All 30,000 employees of the city of los angles get to pocket social security taxes
VP Joe Biden said paying taxes is patriotic….I guess these people just don’t feel very patriotic
Uhm, that comes as a part of the job benefits. That’s well understood. That’s what you get for contributing to the public good. Doing pertinent things like teaching kids, or protecting citizen, or putting out fires. Important jobs that benefit others instead of, y’know, ranting like an imbecile on the Internet all day while in between sessions of jumping at your own shadow while yelling “The Government is coming to get us all!”
In response to another comment. See in context »Oh, and I say “benefits” even though they don’t get to claim it either. They just don’t have to pay and get their pensions instead.
In response to another comment. See in context »Please read this – /calpensions.com/2009/06/25/social-securitys-massive-rip-off/
You are the only person alive who seems some massive conspiracy benefitting public employees when each and every one of those public employees see it as getting screwed.
In response to another comment. See in context »RE:Uhm, that comes as a part of the job benefits. That’s well understood.
That’s nonsense…..it comes from when social security started in the 1930’s….and it wasn’t believed the federal government could tax the states…..
That is ancient history now…..it based on pure greed now…..
BTW…what reward to the taxpayers get for funding the good life for all government employees? The private sector, which pay for all of government, go to jail if they didn’t pay social security taxes
Andy – I’ve told you this before but you don’t want to hear it. Public employees do not pay into social security and, as a result, DON”T RECEIVE SOCIAL SECURITY BENEFITS. What part of that don’t you understand? If they aren’t getting the benefits why do you find it so disturbing they don’t pay in?
In response to another comment. See in context »In other news….
Andy’s mom just called… apparently he forgot to take his ritalin this morning
He forgets to take it every morning.
In response to another comment. See in context »[...] En tant que politiciens du pays semblant de faire face à la crise naissante de déficit, appelle à la privatisation de la sécurité sociale sont de retour en vogue. La partie gauche de l'ère Bush réapparaît sur l'écran radar politique de la semaine dernière, lorsque la minorité gradé sur le House Budget Committee, Rep Paul Ryan (R-Wisc.), projet de privatisation de Soc. De sécurité dans sa [. . . ] URL article original: http://trueslant.com/rickungar/2010/02/10/social-security-is-in-better-shape-than-you-think/ [...]