Posted on 10/25/2024 7:10:56 PM PDT by SeekAndFind
More members of Congress, 329, co-sponsored the Social Security Fairness Act (SSFA) than nearly any other legislative proposal in 2024, but that may not be evidence of lawmakers’ eagerness to fix what ails the retirement pension program—the bill doesn’t address the fundamental insolvency issue.
The SSFA would end two provisions of current law that reduce benefits for millions of public employees at all levels of government with separate pension systems. Eliminating the provisions means more Social Security benefits for such workers.
In other words, the SSFA would increase the total amount of Social Security benefits paid out without providing new revenues to fund them. Even so, the bipartisan proposal is likely to pass Congress and President Joe Biden—who promised in his 2020 campaign to eliminate the provision—is expected to sign it into law when lawmakers reconvene after the election.
For decades, Social Security has been the untouchable “third rail” of American politics that virtually no Democrat or Republican dares to propose changing for fear of angering legions of elderly and disabled voters who depend on the program.
Approximately 70 million Americans are beneficiaries, making Social Security the largest federal entitlement program.
The Social Security Trustees’ latest report projects that the system will become insolvent in 2035 unless Congress approves major reforms soon.
Meanwhile, the ratio of workers paying into the system to beneficiaries is heading downward. The ratio in 1950 was 16 workers to one beneficiary; today that ratio is 2.8 workers per beneficiary. Plus, retirees are living longer today, drawing more benefits over time.
Politicians increase benefits, but are loathe to increase Social Security taxes or slash benefits.
The seemingly impossible challenge for Congress and the White House is how to reform Social Security if increased taxes and reduced benefits are untouchable. The last president to propose a major reform was George W. Bush, who shortly after being re-elected in 2004, suggested privatizing the system.
Under that proposal, Americans would have been allowed to divert some of their Social Security taxes into government-approved private investment funds. Bush hastily dropped the plan after opposition in both parties and in the mainstream media exploded.
More recently, two lawmakers have ventured beyond the raise-taxes-reduce-benefits dilemma to explore other ways of saving Social Security before it becomes insolvent.
Rep. John Larson (D-Conn.) has introduced his Social Security 2100 Act repeatedly in recent years, and it has gained strong support (188 co-sponsors) among his Democratic colleagues. Larson is the top Democrat on the House Ways and Means Committee’s Subcommittee on Social Security.
During a floor speech earlier this year, Larson said that “more than five million of our fellow Americans have worked and paid into the system and get below poverty level checks from their government.”
Larson noted, however, that it has been decades since Congress approved changes designed to shore up the Social Security system’s finances. He also rejected suggestions from House Republicans that a study commission be created to recommend reforms.
“It’s long overdue that we not study this—how about we do what we’re elected to do by the public and actually vote,” he said.
“I commend President Biden for saying, look, the way we’re going to pay for this is by lifting the cap ... on people making more than $400,000 a year.”
Larson’s bill would not hike the Social Security tax rate, but would apply Social Security taxes to all taxpayers making more than $400,000 annually. The present salary cap on Social Security taxes is set at $168,600.
“Millionaires have already stopped paying into the Social Security program. Bill Gates stopped paying back in January. That is wrong, it’s not right, but to lift that cap will allow us to not only extend the solvency of Social Security, but increase benefits across the board,” he said.
According to an analysis by the Peter G. Peterson Foundation, an individual making $500,000 annually only pays Federal Insurance Contributions Act (FICA) levies on the first $168,600 of income, which equals $10,453 a year. Under the Larson proposal, the same individual would pay $31,000 in FICA levies, nearly three times as much.
Larson did not respond to requests for comment.
Venturing even further into reform is Sen. Bill Cassidy, a Louisiana doctor and ranking Republican on the Senate Committee on Health, Education, Labor and Pensions.
Cassidy calls his proposal the “Big Idea” and it is based on the creation by Congress of a new $1.5 trillion investment fund that is totally separate from the Social Security Trust Fund—which receives FICA revenues that pay for benefits.
Asked by The Epoch Times how the new fund would be financed, Cassidy said “that is open to negotiation. You could sell government assets to fund it over time, you could borrow it and put it in there.
“Folks say ‘But wait a minute, isn’t that going to increase your debt?’ It turns out you’re not spending it, you’re putting it into escrow. And according to the Congressional Budget Office, that’s going to be considered a wash.”
The Big Idea escrow fund would be managed by an independent company that would bid for the job, assume a fiduciary responsibility for the results and invest the fund in a conservative portfolio of private sector entities to function like Sovereign Wealth funds.
“[Wall Street executive John] Paulson and [former President Donald] Trump have talked about creating a Sovereign Wealth fund. Advisers to Joe Biden have talked about creating a Sovereign Wealth fund. Now what we’re talking about with our Big Idea is somewhat of a Sovereign Wealth fund,” Cassidy said. Paulson is often mentioned as a potential Secretary of the Treasury if Trump is re-elected.
The same approach is already in use in the pension field, Cassidy said, with the federal government’s Thrift Savings Plan (TSP) for civil servants, the U.S. National Railroad Retirement Trust, Wisconsin’s public employee retirement system, and the Canadian government pension system.
Cassidy said the fund is projected to generate sufficient profits to cover 75 percent of Social Security’s revenue shortfall and that he is open to alternative approaches to covering the remaining 25 percent.
“Combined with some relatively minor tweaks to the program, at the end of 75 years, all the accumulated debt would be paid off, and the Social Security program would be able to cover its obligations in perpetuity,” he said in an earlier statement.
Asked how misuse would be avoided, Cassidy said “we’ve got a couple of mechanisms, we had the Heritage Foundation help us draft the way by which to prevent political meddling.” He said former Comptroller General David Walker has also suggested several solutions.
Cassidy said he supports a ban on investing in firms based in China, an issue that ensnared TSP managers in 2019 when Sen. Marco Rubio (R-Fla.) and Sen. Jeanne Shaheen (D-N.H.) highlighted the risks of federal worker contributions investing in Chinese firms.
Read the rest here...
It’s so completely pathetic.
1-stop pissing away our wealth on illegal aliens
2-stop pissing away our wealth on welfare
3-stop pissing away our wealth on Ukraine
4-stop pissing away our wealth on the UN
Don’t have to go any further than this.
Exactly.
If junkie Jezebel manages to steal the election in 2 weeks, SS will be gone and gee whiz just in time for me to collect it after paying into it since I was 13. She has every intention of putting the criminal foreign invaders she allows into the country to collect it, more like steal it.
The assumptions underlying these discussions are blatant lies.
There is no actual Social Security Trust Fund with any real money in it so there is no “trust fund” to “balance”.
Anyone who says different is lying.
Full stop.
Social Security is a pay as you go system.
Congress collects the taxes.
Congress pays the benefits.
They can change the law any time they want—for any reason they want—by any formula they want.
It can be rational or irrational—anything they want.
Full stop.
Any claim otherwise is a lie.
Alan Greenspan said it best about being able to “save” Social Security but the purchasing power of those benefits were questionable.
If they do, they're personal or "petty cash" and again, no FICA withheld.
American workers are supposed to be payin' in for their own retirement.
I wish more people understood this. I also wish more people understood that Social Security is an intergenerational wealth transfer program, not any kind of "insurance" or investment.
Correct.
The politicians of both parties for many decades have maliciously and intentionally told lie after lie after lie about this government program...
so of course most people believe the lies.
Most folks have real lives and are not going to waste their time researching this stuff.
(A friend of mine wrote a book about it decades ago so that is why I knew about it back then.)
The SS crisis is one of many consequences of the aborted generations.
The babies aborted at Roe v. Wade in 1973 would have entered the workforce around 1991.
Their children—assuming they “started early’—would have entered the workforce around 2009.
We are just a couple of years away from when the GRANCHILDREN of aborted of 1973 would be entering the workforce.
The dems and rinos passed the bill to give SS to illegals
who never paid into it.
sen.grahm was one of them (booo)
Also,no such thing as a SS Trust Fund.It went into general funds under lbj.
It is not an entitlement program. Employers and employees pay into a trust fund. I began telling people fifty year ago that the rate should be 8% for each, if you expected to pay the costs.
There is an IRS regulation under code section 412 that says an Enrolled Actuary may not use a funding method that pays for 99% of the benefits of a private pension plan. Yet somehow, it’s OK to fund less than 100% of Social Security benefits. Repeatedly.
The program transfers wealth between generations. Between different income levels. Depending on the assumptions, it’s racist and sexist and collarist.
The employer does not pay half the contribution in practice. The employer looks at what the employee provides, decides what they are willing to pay in total, and reflect the SS contribution when making an offer.
That would be a great start. Return it to original intent.
Yes!
It’s not impossible, but it does take the will to make it happen.
That includes politicians raiding every pot with a dime in it. Fat chance of that!
An audit of Social Security will probably reveal huge numbers of enrollees are not eligible. Them most recent example are the millions of illegal aliens added. Cleanse the rolls for starters, and you may well solve a big part of the problem.
“Employers and employees pay into a trust fund”
Meet the “trust fund”:
What Is Social Security?
www.investopedia.com/terms/s/socialsecurity.asp
That is like calling the Moon a planet.
You can do it if you want—but you might want to reconsider.
:-)
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