Politics

Liz Warren on Social Security

Last November the Huffington Post quoted Elizabeth Warren as saying:

“Social Security has a $2.7 trillion surplus. If we do nothing, Social Security will be safe for the next 20 years and even after that will continue to pay most benefits,” she said. “With some modest adjustments, we can keep the system solvent for many more years –- and could even increase benefits.”

What do you call a surplus? I call it something over and above that which you need. The dictionary says 1. excesssurplusagenimiety — a quantity much larger than is needed

The amount in the Social Security Trust is needed to pay benefits through 2034, it is not a surplus. There used to be an annual surplus when incoming payroll taxes were greater than expenses, but that stopped a few years ago. There is no surplus. The money in the Trust is needed to pay some known liabilities. By the time Social Security can “pay most benefits” all the money in the Trust will be gone (the Trust will have redeemed all its bonds from the Treasury – and the Treasury will have borrowed more money to do that).  That “most benefits” is 75% of what beneficiaries are collecting, so if you are collecting $1500 a month, come 2034, you will receive $1125. Reduced benefits will be paid only by incoming payroll taxes. 

As for Warren’s “modest adjustments,” the Trustee report says the shortfall is equal to 2.88% of payroll. You could also modify the COLA in several ways. And, of course, as Warren and friends favor, you can eliminate the cap on taxable wages (without an increase in benefits reflecting the higher contributions). Many upper middle class workers and their employers may not see a 6.25% tax increase as a modest adjustment. And such a change turns Social Security into another welfare program. That’s not what Democrats and Republicans voted for in 1935. Eliminating the taxable wage cap does not fully solve the current problem … 

and we haven’t even talked about increasing benefits‼️

Populist rhetoric is the most dangerous element of American life. It is accepted without question by so many people who spend no effort in looking at the facts and long term consequences. 

Vote tally on Social Security

Vote tally on Social Security

Advertisements

8 replies »

  1. I have no idea whether this is accurate or not, but the AARP “Research” arm says that removing the pay cap on social security taxes would wipe out 86% of the long term social security shortfall.

    http://www.aarp.org/content/dam/aarp/research/public_policy_institute/econ_sec/2012/option-eliminate-the-payroll-tax-cap-AARP-ppi-econ-sec.pdf

    It would have long term unintended consequences, but both liberals and conservatives have been known to ignore that before.

    Like

    • Removing the cap would go a long way in making it in a more solvent position. I know many that quit putting into the SSI fund in April based on their wages.

      Like

  2. Many Democrats believe that taking the cap off earnings subject to social security taxes is the preferred way to solve the problem. This is fundamentally changing the system into an industrial strength wealth transfer program from high earners to low earners. I don’t like to admit it, but I believe that is eventually what will occur. Maybe not for a decade, but sometime in the next twenty years.

    Like

What's your opinion on this post? Readers would like your point of view.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s