Republicans want to pull a Social Security scam

I remember a point in my life – somewhere around the welfare reform debate of the 1990s – where I decided it was wrong to assume that Republicans were deliberately setting out to hurt the poor and the elderly with their policies. I differed with their policies, but Republicans like Tommy Thompson of Wisconsin convinced me that their motives were sincere, if nothing else.

That’s getting to be a harder notion to maintain. Fresh off passage of Rep. Paul Ryan’s ruinous and radical budget proposal that would cripple Medicare and Medicaid, Republicans – including so-called moderate Sen. Lindsey Graham, have introduced a proposal to cut $6.2 trillion worth of Social Security benefits over the next 20 years. Keep in mind that Social Security is actually in pretty good shape. Sure, there’s going to be a shortfall when the bulk of the baby boomers go through the system, but we’ve been preparing for that for decades by charging far higher Social Security taxes than necessary, thus building up a large surplus. Once the demographic bulge of the baby boomers is through, Social Security is on a completely sustainable path with only minor tweaks.

According to the Congressional Budget Office, eliminating the cap on income subject to Social Security (now set at around $106,000) would all but eliminate any long-term solvency issues for Social Security.

For Graham, though, such a proposal is a complete nonstarter. In fact, he blusters that doing so could “destroy the country.”

“It’s much better to give up benefits on the end side than pay taxes now,” he said. Better for who?

It’s important to understand what this move and other radical proposals to increase the Social Security retirement age or otherwise drastically lower benefits are actually about. They are not about “saving” Social Security. They are, in fact, about reneging on a debt and abandoning an obligation.

As I said, Social Security has been collecting far more in revenue than it needs for the last couple of decades. That was part of the Social Security reform of 1983, and it was intended to build up a large surplus for the baby boomers’ retirement. And it worked. But now that baby boomers are retiring, some politicians don’t want to the surplus to actually be spent on Social Security.

The problem, of course, is that the surplus was lent to the federal government. The money that came in was used to buy Treasury bonds and then spent. That’s not a bad thing. Treasuries are very secure investments – and the law demands that the federal government pay Social Security before any other creditor.

But for nearly 30 years, that surplus has been used to keep income taxes artificially low compared to the level of government provided. Now that it’s time for Social Security to start cashing in those bonds, taxes might have to go up if we want to keep the same level of services. What should not happen, though, is what Graham and his fellow Republicans are urging: Benefits for the people who have been paying extra into Social Security for most of their working lives should not be cut to avoid raising taxes on those who, by design, avoided paying Social Security taxes on much, even most, of their income.

This would constitute a massive transfer of wealth from those who can least afford it to those who already have most of it. And, as I said, it would mean the nation was reneging on a debt and solemn obligation.

Conservatives like to call Social Security a Ponzi scheme, even though it is anything but. However, if they are successful in robbing the citizens who helped the nation accumulate more than $2 trillion in surplus of more than $6 trillion of benefits, they will have perpetuated a scheme of a magnitude that would make Bernie Madoff blush.

Don’t let that happen.

 

2 Responses to Republicans want to pull a Social Security scam

  1. Nearly everyone including myself has been paying Social Security taxes for most of our working lives. It is ONLY a Ponzi scheme if the government doesn’t pay benefits to citizens that citizens have earned. The Republicans are trying to do this. Therefore that makes them the Bernie Madoff in the discussion. It is a shame and a scam on the American people to try to do this. If we simply do nothing as an article I read yesterday and let all the Bush cuts expire for everyone we will be just fine.

  2. trog69 says:

    As a retiree who probably won’t be affected by the present shenanigans, I am ready to take to the streets in protest with those who aren’t as lucky, and who deserve the same treatment I get now. This article needs to be shouted from the rooftops, and those Tea Party assheads who are already getting theirs should stfu and siddown before they make even bigger fools of themselves.

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