Politics Social Security Taxing and spending
by Sarah at Thirdlayer
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Why Occupy?
The folks who are standing up to tear gas and rubber bullets have a reason. If we understand it, we can fix it, starting in November:
Health Care Social Security Taxing and spending The Economy
by Sarah at Thirdlayer
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Open letter to Senator Mark Warner
Dear Senator Warner:
As the text of S. 1247, a bill to develop and recruit new, high-value jobs to the United States, to encourage the repatriation of jobs that have been off-shored to other countries, and for other purposes. comes available, I will follow it closely. This is an important issue, and attracting “new, high-value jobs to the United States” is a number one priority. I hope that your bill has considered the environment in which jobs grow, one in which:
- people have economic security — money — and can purchase goods and services,
- the infrastructure will bear the weight of the commerce, and
- there is a rich culture to enjoy and opportunity for children and families.
Recent downturns and responses to them based on cuts in spending have reduced all three of these aspects of our economic environment. Above all, it is the responsibility of government to maintain a culture in which people enjoy living and have opportunity. Our corporate welfare focus is foolish. We need to build infrastructure, take care of the health care mess once and for all by extending Medicare to everyone who wants to enroll and supporting Medicaid. We need to defend — and extend — Social Security and restore the retirement age to a reasonable 62, which would open up opportunity for young people. Older people who can scarcely keep up the pace are now locked into jobs they are no longer able to do by the necessity to keep employer medical insurance and the prospect of poverty with reduced Social Security. Let older Americans retire and spend their retirement accounts and Social Security on travel and support for their children and grandchildren — something other than medical care — and the economy will turn around.
I look forward to voting for you again and again as our Senator from Virginia, and I hope I will get to vote for you for President in the future. Please understand that I do not want to take away from business, but business does not thrive except in a dynamic culture that produces demand for goods and services. Money trickles up, not down, and we know this every time we pay our credit card payment. If we keep cutting off our most vulnerable and forcing our middle class into poverty by low wages, expensive education, rising food costs, rising energy costs, abusive credit practices, and tax incentives to wealthy private corporations we will not survive.
For an economy to thrive, some of the money that goes up needs to be forced back down to the bottom so that it can recirculate. The way to do this is to collect taxes from the people who use our labor force and our infrastructure and our consumer base to become wealthy. The wealthy are not the source of jobs, they are the result of many people working to get by and to have a few dollars extra to take the family to the beach once a year and to carry smart phones in their pockets. The working people are the source of jobs and the source of wealth because they both do the work and generate the demand for goods and services. Infusing money at the top and asking corporations for the favor of a few jobs is utterly ridiculous.
I hope that your new bill considers the workers in the United States when you are thinking about jobs, because if our workers are not healthy and hopeful and do not benefit from their work we will not have an economy no matter how much money we give to corporations.
I hope also that you will see this message. I know that you receive many letters, but this message is clear. In the United States today we are seriously talking about taking out the foundations of the economy and trying to sustain the wealth at the top by giving more money to wealthy people. This is a third world solution, and we can do better.
What to do about Social Security
On April 4th, the Bristol Herald Courier printed “Social Security: no easy answers” by Media General’s Washington bureau chief Marsha Mercer. In reality, there is an easy answer to the problem Social Security will face in 2037, and it has been around for many years. It has been formally before Congress as a recommendation since it was placed there in the 2005 report to Congress of the Social Security Actuary Department. The report recommended that we lift the cap on wages subject to Social Security contributions.
When Social Security began in 1940, the US average annual earnings for white males was $2,984.00. White women averaged $771.69, Black men averaged $537.45, and Black women $331.32. Currently the average for US workers is $36,000 to $42,000. The income limit subject to Social Security contributions in 1940 was $3,000.00, which certainly included all of the middle class, and this cap has been adjusted many times over the years so that it is now around $108,000. Increases have been based on the cost of living index. Currently with increasing concentration of earnings in the top 2% of earners, a larger concentration of wealth at the top actually demands a change in this formula. Until the most recent two decades, most of the money earned in the United States was subject to Social Security contribution because most of it was earned in the old fashioned way by regular people. Currently working people have a smaller share of earnings, so Social Security contributions, while they have kept pace with the cost of living to this point, will begin to fall short in 2037 if we keep the same formula.
As wages have increased and the disparity between rich and poor has widened, Social Security has never run a deficit. It has a surplus now and is not part of the deficit we hear so much about. Cutting it will not cut the deficit. Privatizing it will produce a windfall for financial institutions — again widening the gap between Main Street and Wall Street. If Wall Street were placed in charge of Social Security, private for-profit financial institutions would develop an array of retirement plans which they would spend money to market to consumers, deduct their money for marketing, take a healthy fee for managing our money, and invest our mandated retirement savings in the stock market. They would make money, and we would be at risk.
Social Security is insurance that protects all of us. We pay in as a federally-mandated contribution and are entitled to stated benefits owed to us in return. These benefits mean seniors can maintain their homes and purchase goods and services. Families do not have to support their elders while paying for school and college for their children. Businesses can sell goods and services to seniors, and young families can afford to purchase more goods and services since their seniors have their Social Security benefits. These benefits accrue not only to people who draw Social Security benefits but to their children and grandchildren, to people and businesses that sell them goods and services, and to the economy at large. Social Security is a continuing economic stimulus, a savings plan, and a foundational economic support that we cannot afford to discontinue or to weaken by privatization.
The simple solution for the continuance of Social Security was given to Congress in 2005 in a report by the Social Security Actuary Department. They recommended that the cap on earnings subject to Social Security contributions be lifted. Currently we pay Social Security tax on the first $108,000 ($106,000?) of annual earnings. The Actuary Department recommended including all earnings in the Social Security Tax and keeping benefits as they are. This small change would affect only the highest-paid 3% of us, since around 97% of wage earners make less than the current cap and already pay the Social Security contribution on all of their earnings. The change would, according to the calculation of the Actuary Department, make Social Security solvent for another 75 years.
See the version of this post edited to 300 word limit published in The Bristol Herald Courier