Social Security Is OK For Another 27 Years

The picture above shows the kind of "reform" the Republicans would like to deliver to the Social Security system -- they would like to destroy it and give all that money to the Wall Street bankers to play with (it's called privitization). They know it's far too popular with the American people to do that right away, so they are trying to convince people that the system is unsustainable and will soon go broke if benefits are not cut soon. They think they can whittle away at the system a bit at a time until there is nothing left of it.

That's a huge crock of horse manure though. The non-partisan Congressional Budget Office has released a new report that says the Social Security system can keep making full payments to its recipients until 2038-40 -- at least another 27 years. If some adjustments to the system are not made, it will be able to make only partial payments starting around 2040.

But are the needed adjustments substantial? Do benefits need to be cut or the retirement age raised? Will the program still be there when today's youngsters need it many years down the road? The answers to those questions are No, No, and Yes. Only one minor adjustment needs to be made. Benefits do not need to be cut or the retirement age raised. And the program will be healthy and available when everyone alive today needs it (and far into the future).

And what is this minor adjustment that's needed? Simply mandate they every American, regardless of their income, pay the same percentage in FICA taxes. Currently Americans must pay 6.2% of their wages (although this has been reduced to 4.2% for 2011) in FICA taxes. But this only applies to the first $106,800 of wages (and does not apply at all to investment income -- which is the primary income for many of the rich).

That means that workers making less than $106,800 must pay the full applicable percentage, while the rich (who make much more than that) will effectively pay a much smaller percentage of their income than workers do -- and they will get a larger social security check when they retire because that is determined by money earned and not taxes paid. And if all of their income is investment income, they will pay no FICA tax at all.

Is this fair? Of course not! But you can bet the Republicans will fight removing the $106,800 cap on FICA taxes -- first, because it would mean they would have to pay the same percentage as other Americans, and second, it would mean their Wall Street buddies would have to pay the same percentage as the peons who have to work for a living.

And just making the FICA tax fairly administrated (i.e., make everyone pay the same percentage) would result in two good things:

1. Working and middle class Americans (who make less than $106,800 a year) would not have to pay a penny more than they currently do in FICA taxes.

2. Social Security would be fully-funded far into the future -- providing full benefits for many generations of Americans.

Don't let the Republicans fool you into thinking the program is about to go broke or needs massive reform including benefit cuts. It just isn't true. And don't let them fool you into thinking cutting Social Security would help balance the budget. Since Social Security is fully-funded through FICA taxes, it did not contribute to the budget deficit and cutting its benefits will not bring down the budget deficits.