They don't want you to know the REAL reason Social Security is in trouble, But I'm going to tell you anyway - by Robert Reich

Found here. Our comments in bold.

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One can be sure that if a leftist is going to explain something, it will not be accurate, it will not clarify, and it will not be intended to impart information.

That's because leftists like Dr. Reich are only interested in The Narrative, that is, the talking points and bumper sticker slogans promulgated by Central Command. The Narrative is circulated throughout the media landscape every day, and leftist writers, commentators, and news operations dutifully regurgitate it.

So Dr. Reich pretends to be a truth teller, but he's simply doing his duty to repeat The Narrative, spouting agitprop in service to The Agenda. The Agenda is the dismantling of the system. The system, being racist, unfair, and hurtful to the worker and minorities, must be replaced. 

But in actual fact, none of these issues are important to the Left. They are simply excuses for advancing the leftist dream. So, nothing you will read below will be true, accurate, logical, or helpful. 

Dr. Reich is a calculating liar. He's sold his soul to The Agenda, and that is the only reason he supports Social Security. 

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Friends,

The trustees of the Social Security fund said Tuesday that the fund will be depleted by late 2032, a year earlier than the trustees’ projection last year of 2033. If nothing is done, benefits will automatically be cut six years from now.

The common understanding is that Social Security’s shortfall is due to the huge postwar baby boom, now retiring, and to America’s increasing life expectancy. (Dr. Reich changes the subject. Why did the trustees change the projection in just one year? This has nothing to do with any long term trends, because it happened in one year.)

The usual recommended fix is to reduce Social Security benefits or raise the age of eligibility. As Speaker of the House Mike Johnson, warned Monday, “entitlement programs” like Social Security “have to be adjusted and fixed.” He said Republicans will introduce a plan to do that. Brace yourselves.

I used to be a Social Security trustee, and I call bullsh*t. (Um, no. The previous "fix" of Social Security was to increase the age of eligibility, which is a defacto decrease in benefits. Dr. Reich now opposes a decrease in benefits, which of course would be an admission of the failure of Socialist's favorite government program, and of his own efforts as a trustee as well. 

He tells us to brace ourselves because the Republicans are about to do what he as a trustee already did.)

The baby boom can’t be blamed for Social Security’s shortfall. The Greenspan Commission, which in 1983 recommended the reforms that Congress then made — raising Social Security payroll taxes (At least Dr. Reich admits that these are taxes and not an investment or an insurance policy.)

and also raising the eligibility age for collecting Social Security benefits — (Did Dr. Reich forget that there was a third adjustment, to make Social Security benefits taxable?)

knew all about the baby boom and figured it into its calculations. (Early boomers like me can now start collecting full benefits at age 66; late boomers born after 1960 have to wait until they’re 67 to collect full benefits.) (Whether or not the Greenspan Commission adjusted their calculations in anticipation of baby boomers is irrelevant. The key matter is, were those adjustments correct? Could the Commission accurately see into the future 40 years? Are there other elements, like immigration, inflation, taxation policy, and unemployment, that might have had unanticipated effects?

In actual fact, the adjustments made by the Commission did not solve the systemic problem of Social Security. And the dozens of other adjustments made over the decades haven't fixed it either, because Social Security can't be fixed.)


Americans’ increasing life expectancy isn’t at fault, either. While wealthier Americans are living longer, that’s not the case for lower-income Americans. The Urban Institute estimates that life expectancy in the top 20 percent of income-earners is 91 years for people born in the 1990s, four years more than people born in the 1950s. Yet the life expectancy in the lowest 20 percent of income-earners is fewer than 80 years. (??? What kind of argument is this? Poor people aren't living as long as rich people? Really? If poor people die sooner, then they stop collecting Social Security. This would be a benefit to the System. 

Dr. Reich is not thinking clearly.)

So what’s the real cause of the Social Security shortfall? What did Greenspan’s commission fail to predict? Widening inequality.

Remember, the Social Security payroll tax applies only to earnings up to a certain cap. This year, that cap is $184,500. Earnings at or below this amount are taxed at 12.4 percent. The cap rises every year according to a formula roughly matching inflation. (Of course. Increasing taxes is always the answer...)

Back in 1983, the cap was set so the Social Security payroll tax would hit 90 percent of total income in America. That 90 percent figure was built into the Greenspan Commission’s fixes. The Greenspan commission assumed that, as the cap rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 83 percent of total income in America. It went from 90 percent to 83 percent because a steadily larger portion of the nation’s total income has gone to the top. (Dr. Reich studiously avoids real numbers, like actual SS tax paid historically, actual benefits received, and the number of people paying into the system versus receiving benefits.)

In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today, the top 1 percent takes in more than 20 percent. (They don't "take" income, they get paid for the work they do.)

This year, someone earning $1 million in wages stopped paying any Social Security payroll tax at the beginning of March. Jeff Bezos probably stopped a few minutes past midnight on January 1. (Bezos receives a salary of $80,000. That doesn't mean that's the only source of income, but that's his salary.)

Elon Musk, a few seconds after midnight on January 1. (Musk receives a salary of $54,000. Again, he has other sources of income. but clearly, Dr. Reich doesn't understand the difference between income and wealth.)

(In point of fact, Bezos, Musk, and other robber barons (If Dr. Reich has some evidence of illegality, let's see it.)

of this Second Gilded Age get all the cash they need by borrowing against their fortunes, rather than bother with pesky wages, so they probably pay a pittance in Social Security taxes.) (So the proceeds of a loan should be treated as taxable income? What?)

Logically, then, to get back to 90 percent, the ceiling on income subject to the Social Security payroll tax has to be raised. (Yes, raise taxes. It's works every time. Well, except it has never worked...)

If all income in excess of $400,000 were subject to the Social Security payroll tax, (Wait. Dr. Reich is not referring to moving the cap up to $400,000, this is a threshold. He wants the SS tax to apply to income above $400,000. 

But he doesn't tell us about what happens under the $400,000 level. We are pretty sure he doesn't want to stop taxing below $400,000, because that's where the real money is.

So what is he proposing? Would SS tax be levied from $0 - $184,500, the stopped, then started again at $400,000? 

We're guessing that Dr. Reich's salary falls between $184,500 and $400,000.) 

Social Security’s solvency would be guaranteed forever. (That's a total fairy tale.)

We could also expand Social Security benefits. (Indeed. Tax the rich and redistribute it to the poor. In actual fact, that's the unstated purpose of SS, to redistribute wealth. However, SS has always been presented as benefit commensurate with the tax. That's the reason for the $184,500 cap, that people above this level do not get additional benefit so they shouldn't have to pay for nothing.

But to increase the SS tax on high income earners without increasing their retirement benefit is an admission that SS will no longer be tax /=/ benefit. It would be overt wealth redistribution. The mask will be off.)

So there’s no reason even to consider reducing Social Security benefits or raising the age of eligibility. (Dr. Reich, you were a trustee, and you lowered benefits. Were you wrong then, or are you wrong now?)

The logical and necessary response is simply to raise the cap, (??? Raising the cap REDUCES revenue to SS. Remember, the $400,000 number is not a cap, it's a threshold. Apparently Dr. Reich lost track of The Narrative for a moment.)

Mike Johnson and other Republican shills for the oligarchs to the contrary notwithstanding.


Additional background:

Social Security is America’s most effective anti-poverty program. Last year, it lifted 23.5 million Americans out of poverty, including 16.5 million seniors. Before its creation, about half of our nation’s seniors were living in poverty. Today their poverty rate is just 10.3 percent. (Dr. Reich ought to read his own references. We quote: 

The U.S. Census Bureau did not begin tracking the poverty rate until 1959.

Social Security was installed in 1935, so between 1935 and 1959 there is no real way to document Dr. Reich's claim.

Later in the same article: 

The poverty rate among the elderly has dramatically declined. Whether that was the result of Social Security or other factors is beyond the scope of this review.

The SS system was installed during the Great Depression, i.e., a time of economic turmoil. Thus unemployment and poverty were sky-high. In such a context is would be impossible to determine what effect any program had on any economic factor, because the installation of SS was not at a time of economic normalcy.

We can, however, look at some economic trends during that time period. First, unemployment:

Notice the trending of the graph. It's rather obvious that the real solution to the Great Depression high unemployment was not FDR's New Deal programs, but rather, Word War II. 

Regarding poverty, here's the data back to 1959:

LBJ, another leftist hero, installed his Great Society programs in 1965 to combat poverty, which inconveniently was still a problem 30+ years after FDR. 

Again, notice the trending of this graph. Poverty was already declining  precipitously BEFORE the big government programs were installed. Like FDR, LBJ's big government programs solved a problem that was already going away.

These programs, therefore, have no effect on poverty.)

Without Social Security, nearly 4 in 10 seniors would have had incomes below the official poverty line. (The official poverty line is a political standard, not an economic one. The poverty rate is generally set approximately at the lowest quintile, which means no matter how much money people have there is always the lowest quintile. So Dr. Reich's figures are largely a fiction.)

Hollowing out of private pensions makes Social Security all the more important. One in 5 Americans 50 and older have zero retirement savings. (Dr. Reich justifies peoples' irresponsibility.)

Meanwhile, the average Social Security benefit at the start of last year was $1,975 a month ($23,700 annually). (The current poverty income levels are: 

So SS provides enough benefit to barely, barely keep a retired couple above the poverty line. What a wonderful program.)

Social Security is also the federal government’s biggest children’s benefit program through its disability and survivors’ benefits. (Government has this big program, and its bigness is good?)

In 2024, 1.7 million children received Social Security benefits, and the vast majority are eligible to receive survivors’ benefits if a parent were to pass away. Additionally, millions more children are part of a household where all or part of the household income comes from Social Security. Social Security is estimated to lift close to 1 million children out of poverty each year. (These figures are nonsense. There is no way to determine how many poor there would be unless there were a control case where Social Security was never installed.)


Other fixes that have been introduced in Congress:

1. The Social Security Expansion Act

Senators Bernie Sanders and Elizabeth Warren have introduced this plan for several Congresses. (It is cosponsored by Budget Committee Members Merkley, Whitehouse, Van Hollen, and Padilla.)

The bill imposes Social Security taxes on wages above $250,000 and applies the same 12.4 percent rate to capital gains and business income. (Yes, more taxes. Of course.)

That would boost benefits for almost all retirees by $200 per month, using a more generous measure of inflation to calculate the cost-of-living increase, and setting a minimum benefit at 125 percent of poverty. (Blatant, obvious wealth redistribution. Marx would be proud.

At least Dr. Reich admits that the cost is 12.5%, which is the total percentage of a worker's pay.)

When estimated in 2023, it achieved 75-year Social Security solvency (But Dr. Reich previously said, Social Security’s solvency would be guaranteed forever. So which is it: 75 years, or forever?)

solely by increasing taxes on incomes above $250,000. (In order to increase SS taxes, there must be taxes already being paid. But the current cap is $184,500, above which no one is currently paying SS taxes. So the SS tax is not being increased at $250,000, it's being installed.)

 
2. Medicare and Social Security Fair Share Act

Sen. Whitehouse and Rep. Boyle introduced this bill starting in the last Congress. Budget Committee Member Van Hollen is a co-sponsor. It adopts the tax increases of the Sanders bill, adjusted to start at $400,000. The bill has no benefit increases, so it significantly overshoots solvency, and there would be extra revenue. The bill achieves 75-year solvency for both Social Security and the Medicare Hospital Insurance trust fund. (Sighhhhhh...)