Tuesday, July 18, 2017

The Latest Effort To Screw Social Security Retirees

Public comments by me in response to an article in The Atlantic, "House GOP Budget Plan Cuts Medicare and Social Security".

How dare the GOP change the retirement age and tell us it's part of budget reform. Changing the retirement age will have absolutely no effect on the Federal Budget or the National Debt. To say otherwise is a deliberate lie.

Social Security is not the biggest federal expense. It is not even a federal expense; by law it is not part of the Federal Budget. Social Security has its own revenue stream. Politicians love to include the Social Security annual surpluses in their budget figures to make their deficits appear smaller, but those surpluses go into the Trust Fund, not general revenues. When Social Security starts to run deficits to fund the baby boomer retirements, shortfalls in payroll tax revenues will be paid out of the $2.8 trillion in the Social Security Trust Fund. But then those same politicians will have annual deficits in their budget. That is the main reason why they want to raise the retirement age, so that Social Security continues to have annual surpluses and their budget figures look better. But the real Federal Budget and the National Debt will not change by one thin dime, and we will be screwed.

Any adjustment to retirement ages or benefits only affects the date at which time the Trust Fund is depleted (currently around 2033, after which Social Security revenue can pay only 80% of benefits through the year 2092 unless simple adjustments are made to payroll tax rates or salary caps). Social Security benefits are financed by dedicated payroll taxes plus earned interest on U.S. Treasury Bonds (those supposed paper IOUs) in the Trust Fund, not by general revenues. If Social Security redeems Treasury Bonds to pay benefits, the U.S. Treasury department simply sells new bonds to other entities such as China to keep the National Debt funded. They do not pay for the redemption of Treasury Bonds out of general revenues.

Social Security is not broke (would you be broke with trillions in your bank account?).

Conservatives are against Social Security ideologically. They do not want the government involved. They would rather the private sector handle retirements. Of course, private retirement accounts would be subject to administrative fees (think 20% rather than less than 1%). And $2.8 trillion to invest sounds wonderful to the financial sector. But Trump signed an Executive Order revoking the fiduciary responsibility of financial advisors to act in your best interest. And private retirement accounts are subject to loss by fraud (think Bernie Madoff), theft (Leonard Cohen's manager stole all of his money and he had to go back to work in his 70's), bankruptcies, and stock-market crashes. Social Security will always be there. Unless, of course, politicians take it away from us.

A word about Social Security Disability. A certain percentage of Social Security revenue funds the disability portion of the program. Adjustments are made from time to time in percentages to make sure both the disability and retirement accounts are fully funded. One new tactic of the radical conservatives is to divide and conquer by playing the disabled and the retirees against each other. But implying that reducing benefits for the disabled somehow benefits retirees or somehow improves the Federal Budget are flat out lies.

Social Security is separate from the Federal Budget and has its own revenue stream. Surpluses are put into the Trust Fund and deficits are paid from the Trust Fund. Changes to disability benefits have the same effect as changes to the retirement age. It only changes the date that the Social Security Trust Fund is depleted, and that date is 16 years away (2033). There. is. zero. effect. on. the. Federal Budget. Just because politicians conflate Social Security and its surpluses with the Federal Budget to make their claimed figures appear healthier does not change that fact. They are flat out lying to your face (or are profoundly ignorant of the budget they are in charge of) if they claim otherwise. Don't fall for it. Don't allow them to screw with your retirement or your disability. Call those shysters and tell them to keep their greedy hands off of the most successful federal program ever.

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