There is a new attack on social security. As you may remember, before the recent collapse of the economy, conservative forces claimed that the social security system was headed for crisis and offered privatization as the solution.
The truth was that there was never a real crisis; it was manufactured. The health of social security is determined using models to predict economic trends over the next 75 years. The social security crisis was the result of the assumptions used in the modeling—these assumptions assumed rates of growth that were lower than during the 1930s. If one made growth assumptions that were more in keeping with historical trends, there was no crisis. The aim of the conservatives was to push money into the stock market where private interests could make millions managing it. Thank goodness this privatization push was resisted.
But the same forces are hard at work again. The Associated Press recently ran a story calling social security a “giant federal Ponzi scheme” that will soon collapse because of a lack of money. The Washington Post recently warned us that social security is one of “the primary drivers . . . of the nation’s financial problems.”
This is all silly. Social Security is still running surpluses. Moreover, even using its conservative assumptions, the social security administration is forced to admit that the current system will have plenty of money to meet all its obligations through 2037. The Congressional Budget Office puts the date at 2043.
Would you give up a program working as intended because of predictions that SOME 30 YEARS FROM NOW it might not have sufficient money to cover all its promises?
Actually, even if the social security administration’s prediction is accurate, we still don’t face a crisis. Right now social security taxes are paid on all labor income up to $106,800. Earnings above that ceiling are not taxed. Why is this important? As the Wall Street Journal explained in a recent article titled “Pay of Top Earners Erodes Social Security”:
The data suggest that the payroll tax ceiling hasn’t kept up with the growth in executive pay. As executive pay has increased, the percentage of wages subject to payroll taxes has shrunk, to 83% from 90% in 1982. Compensation that isn’t subject to the portion of payroll tax that funds old-age benefits now represents foregone revenue of $115 billion a year. . . .
Lifting the earnings ceiling could result in higher Social Security benefits payments to higher-income individuals, since benefits are based on a worker’s highest 35 years of earnings. But the additional tax revenue would have decades to earn a return, thus offsetting the cost of the additional payments.
Social Security Administration actuaries estimate removing the earnings ceiling could eliminate the trust fund’s deficit altogether for the next 75 years, or nearly eliminate it if credit toward benefits was provided for the additional taxable earnings.
You are reading that right—even using the most conservative estimates about future economic trends, the social security system would remain fully operational if we just removed the earnings ceiling on the wealthy.
So, what is class power? One measure of class power is the ability to shape public discussions in such a way that attention is focused on what you want to talk about and away from what you don’t want to talk about. The rich want social security privatized, not saved. So the media obligingly give us story after story about the crisis in social security and the need to drastically change the system.
The rich don’t want to talk about the growth in inequality and its negative social consequences. Thus, simple reforms that would strengthen the system are never discussed (except by publications like the Wall Street Journal which are largely read by an audience that fully understands its class interests).
When will we recognize and promote our own class interest?