Sen. Sanders’ Plan To Actually Fix Social Security

You hear over and over that Social Security is “in trouble” or that we “can’t afford it.” This is as far from true as can be, and the idea behind this is to convince people to just give up on defending the program and let the haters have their way. The people who hate Social Security the most are the ones who say they want to make these changes to “save” it. Well Bernie Sanders loves the program and has introduced a bill that actually will save it.
The Haters
Conservatives have hated Social Security from the start, because it is a program that demonstrates once and for all the value of progressive governance. Social Security is as clear an example of We, the People watching out for and taking care of each other as there ever was. It has made a huge difference n the lives of older people, and their/our families. It works, is cost-effective and requires minimal overhead to keep it going. So they hate it.
A very recent example of conservative hatred for Social Security came from Senator Marco Rubio of Florida, who said, that We, the People helping each other makes us weak,

“These programs actually weakened us as a people. … All of a sudden, for an increasing number of people in our nation, it was no longer necessary to worry about saving for security because that was the government’s job.”

Substitute the words “We, the People” or “each other” for “government” in Rubio’s statement and you’ll get the point: people don’t have to worry so much because we’re taking care of each other. He says that makes us weak. Yikes!
Decades Of Attacks
For decades conservatives who hate Social Security have been using every trick in the book to turn people against the program. Over and over you hear, “It’s a Ponzi scheme.” “It won’t be there for you.” This latest attack is that it “makes us weak.” And of course the old classic: “Social Security is broke.”
The “it’s going broke” and “won’t be there for you” attack strategy goes back to a 1983 Cato Institute Journal document, “Achieving a Leninist Strategy” by Stuart Butler of Cato and Peter Germanis of the Heritage Foundation. The document is still available at Cato, and select quotes are available at Plotting Privatization? from Z Magazine. If you have time it is worth reading the entire document (in particular the section “Weakening the Opposition”) to more fully understand the strategy that has been unfolding in the years since. But if you can’t, the following quotes give you an idea:

“Lenin recognized that fundamental change is contingent upon … its success in isolating and weakening its opponents. … we would do well to draw a few lessons from the Leninist strategy.”
” construct … a coalition that will … reap benefits from the IRA-based private system … but also the banks, insurance companies, and other institutions that will gain from providing such plans to the public.”
“The first element consists of a campaign to achieve small legislative changes that embellish the present IRA system, making it in practice a small-scale private Social Security system.
“The second main element … involves what one might crudely call guerrilla warfare against both the current Social Security system and the coalition that supports it.”
“The banking industry and other business groups that can benefit from expanded IRAs …” “… the strategy must be to propose moving to a private Social Security system in such a way as to … neutralize … the coalition that supports the existing system.”
“The next Social Security crisis may be further away than many people believe. … it could be many years before the conditions are such that a radical reform of Social Security is possible. But then, as Lenin well knew, to be a successful revolutionary, one must also be patient and consistently plan for real reform.”

Here is what to take away from this: Every time you hear that “Social Security is going broke” you are hearing a manufactured propaganda point that is part of a decades-old strategy. Every time you hear that “Social Security is a Ponzi scheme” you are hearing that strategy in operation. Every time you hear that “Social Security won’t be there for me anyway” ” you are witnessing that strategy unfold.
The Problem
The Social Security program is entirely self-funded, separate from the way that the government taxes and spends for other programs. People set aside money in their working years, they get a monthly amount when they retire. (The program also has other benefits including disability benefits, survivors funds and others.) Social Security does not contribute to the deficit in any way.
You never hear that the huge, vast, bloated, enormous, mammoth military budget is “going broke” or “won’t be there for you.” But year after year you hear that Social Security is “in trouble.”
Currently the program has built up a huge trust fund — over $2.5 trillion. This is invested in US Treasury Bonds, and is earning interest. But there are projections that this trust fund will be depleted in approx. 2037, and if this happens the program will have to cut payouts by as much as 25%. (Hey. when does the military budget Trust Fund run down?)
One big reason for this shortfall is that the last time the programs was comprehensively adjusted (1983, Greenspan Commission) certain economic growth and income projections were used to decide how much “payroll tax” to take out of people’s paychecks. They increased the amount taken out of paychecks, and set up an increasing “cap” on the income that would be taxed. Right now 6.2% (temporarily reduced to 4.2%) is taken out of paychecks, and employers kick in another 6.2%, on income up to a “cap” of $106,800. There is no “payroll tax” on amounts above that “cap.”
But something changed between 1983 and now: almost all the income gains have gone to a few at the very top. Instead of people who mostly were under that “cap” getting raises, thereby increasing the amount they pay into the fund, the raises went to people who already pass that amount, so the increased income is not contributing to the program. So that money that was calculated would go into the Social Security Trust Fund instead went to the top few. As a result the program is no longer bringing in enough money to keep the trust fund fully-funded past 2037.
Sen. Sanders’ Solution
Senator Bernie Sanders is introducing a bill to the Senate to fix this, once and for all. In simple terms, this bill will start taxing income above $250,000 a year to cover this Social Security shortfall. So instead of just “raising the cap” it lets that cap stay, and then takes it off again on income above $250,000. In effect it means there will be a gap between the current top income that is taxed, and $250K.
Get the money from where the money went: So because much of the real Social Security problem is that so much income is now going to just a few at the top, this gets the money to fix the problem from those top-level incomes.
Here is Sanders, talking about his bill:

“When [Social Security] was developed, 50 percent of seniors lived in poverty. Today, poverty among seniors is too high, but that number is ten percent. Social Security has done exactly what it was designed to do!”

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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3 thoughts on “Sen. Sanders’ Plan To Actually Fix Social Security

  1. This is an excellent article which portrays much of the problem. The enemies of Social Security did declare war against Social Security in that 1983 Cato Journal article. I devoted a whole chapter of my 2005 book, “Social Security: The Attempt to Kill It,” to this plan. I have devoted the past ten years of my life to researching and writing about Social Security funding, and I have published four books on the subject.
    Everything you say about Social Security would be true if the $2.6 trillion in surplus Social Security revenue generated by the 1983 payroll tax hike had been saved and invested as it was supposed to be. Social Security would be fully solvent for another 25 years, and it could be made solvent for decades beyond 2036 by simply removing the cap on earnings that are subject to the payroll tax. Currently, only the first $106,800 of income is taxed for Social Security purposes.
    There is, unfortunately, a huge problem threatening future Social Security benefits that all government officials know about but most of the American people do not know about. None of the $2.6 trillion in surplus Social Security revenue was saved or invested in anything. It was all spent, as it came in, to fund wars, tax cuts for the rich, and other government programs.
    I am a progressive Democrat so I rarely quote conservative Republicans but everyone needs to hear what Senator Tom Coburn of Oklahoma said in a Senate speech on March 16, because it is absolutely true, and it is a threat to all of us.
    “Congresses under both Republican and Democrat control, both Republican and Democrat presidents, have stolen money from social security and spent it. The money’s gone. It’s been used for another purpose.”
    The following morning Senator Coburn added these words as he appeared on MSNB.
    “We have stolen $2.6 trillion from it. We put paper money in there. But the problem is is we spent the money. We didn’t just take it. We took it and spent it.”
    Senator Coburn is a medical doctor who has personally delivered more than 4,000 babies. On this issue, he is looking out for those babies and the rest of us. I urge you to visit my website at http://www.thebiglie.net to learn more about the “great Social Security theft.” We must join together and demand that the government repay the $2.6 trillion of stolen money!
    Allen W. Smith, Ph.D.
    Professor of Economics Emeritus
    Eastern Illinois University
    ironwoodas@aol.com
    1-800-840-6812
    http://www.thebiglie.net

  2. I first discovered the Social Security fraud 11 years ago while doing research for my first Social Security book, “The Alleged Budget Surplus, Social Security, and Voodoo Economics.”
    On September 27, 2000, I appeared on CNN TODAY with anchor Lou Waters to discuss the new book. I tried my best to convince Waters and the audience that the government was at that time spending all surplus Social Security revenue on other government programs. But Waters seemed more amused than interested in what I was saying. He finally asked me,”Are you a voice crying in the wilderness?”
    As things turned out I was a voice crying in the wilderness in 2000, and I continued to be such a voice for another decade. Fortunately, the truth is slowly beginning to come out, but not through the mainstream media. The government has managed to keep this dirty secret from the public for the past 25 years and the subject is still taboo with the mainstream media. When Dan Rather reported a story that the government did not want reported, journalists learned what happens to those who do not cooperate with the government’s wishes. As long as the government does not want this story reported,it will not be reported by the mainstream media.
    When my book, “The Looting of Social Security” was published by a New York publisher in 2004, I thought I was about to expose the Social Security fraud, but that book soon met with foul play. I appeared on CNBC morning news on February 26, 2004 as one of two invited guests to respond to Alan Greenspan’s call for cutting Social Security benefits the previous day. I used the occasion to hold my new book in front of the camera as I said, “Alan Greenspan should be ashamed of himself for what he is not telling the American people.” Several weeks later, the book disappeared from bookstores nationwide and Amazon.com listed the book as “unavailable.” My publisher refused to release the rights to the book so I could publish it elsewhere, so I was effectively muzzled during the period of George W. Bush’s campaign to privatize Social Security. I eventually regained the rights to the book and a new release of it has recently been published.
    The following shocking video about “THE GREAT SOCIAL SECURITY THEFT.” was produced by WTSP Channel 10, the CBS affilate in Tampa, Florida. The American people must wake up before it is too late!
    http://www.wtsp.com/news/local/article/195201/8/Social-Security-Trust-Fund-stolen-by-the-Government
    I need help in exposing the great Social Security theft. Please visit my website at http://www.thebiglie.net
    Allen W. Smith

  3. “The Social Security program is entirely self-funded… Social Security does not contribute to the deficit in any way.”
    This is not, in fact, true. The Obama-GOP tax deal of late last year reduced the FICA payroll tax from 6.2% to 4.2%. Social Security’s asset position was protected only by drawing the difference from general revenues. This meant that Social Security will add more than $100 billion to “the deficit” this year.

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