2013
When I first read this in the Washington Post I had to reread because I couldn’t believe what I was seeing. Here is the fundamental question, exactly how much of the wealth of the United States are we going to transfer to those age 65 and older? Why in heavens name do seniors deserve a more generous inflation adjustment (or any adjustment for that matter when you consider few other Americans enjoy guaranteed increases in income)? Of course seniors generally live on a lower average income, but by age 65 you have had forty plus years to prepare. There is only so much of someone else’s money to spend. If a single income family of four earned $150,000 a year, with the standard deduction their income taxes would be about $22,408. With this proposal they would pay $9,300 in Social Security taxes for a total of $31,708 plus Medicare and state income taxes.
At a time when Social Security and Medicare are in fiscal trouble, simply raising taxes AND improving the benefits further is irresponsible. We may have to raise taxes just to keep the existing Social Security program going. Where will the money come from to save Medicare and the Social Security disability trust?
Let’s solve some problems before we create new ones. 😡 Does it in any way make sense to create new and growing obligations and liabilities, or raise taxes on anyone when we must talk about major changes to the tax code (think less deductions and exemptions) simply to deal with the deficit? [See the previous post on this blog]
Politicians have an innate ability to ignore the larger picture and integration of every program and every dollar. Ah, I forgot, seniors vote! 😀
As may be expected, the über progressive Senator Elizabeth Warren is also promoting this concept. I love it when she and others quote the average Social Security benefit, the average based on all current recipients ($1,250). In fact, using the Social Security estimator, a person retiring at age 65 on January 1, 2014 who currently earns $60,000 per year will have a monthly benefit of $1515 and assuming the person is married with a spouse who has no benefit, the combined monthly pension is $2,272.50 or $27,270 which equals 45% of current income, not a bad deal at all. To have the well promoted 80% replacement of pre-retirement income, the person needs an additional income of $20,730 or $1,727.50 per month and to do that one needs a lump sum of about $292,039, an amount hardly unattainable by a prudent person over forty years. Warren and others also insist on characterizing a slowing of the future COLA as cutting Social Security benefits. No one is suggesting cutting benefits, but rather slowing the growth in future benefits. Of course, these same people say there are budget cuts when the increase in the budget is less than planned. The Warrens of the world and their logic are simply dangerous.
Where will the money come from to meet the progressive agenda for Americans under age 65? Besides, as a group seniors have a lower poverty rate than younger groups and the Country as a whole. 😮
In recent days, those styling themselves “bold progressives” have been rallying support for a bill sponsored by Sen. Tom Harkin (Iowa) and Rep. Linda Sanchez (Calif.), both Democrats, that would increase Social Security benefits. Supporters tout it as courageous pushback against austerity; in fact, it’s a case study in how not to redefine liberalism for the 21st century.
The Harkin-Sanchez proposal would change Social Security benefit formulas to produce an average increase of $60 per month, plus a more generous annual inflation adjustment, than the program uses now. It also would extend the life of the notional trust fund from which benefits are drawn by 16 years. To pay for this, the bill would subject all wage and salary income to the 12.4 percent Social Security payroll tax, as opposed to only drawing from income up to $113,700 as is presently done. For someone earning $200,000 per year, this would mean a tax increase of more than $4,000 per year. For someone earning $1 million, the tax increase would be $58,700.
via Social Security proposals are wrongheaded – The Washington Post.
If you want to know what it means to be a progressive, check out this manifesto. It’s too bad they can’t seem to stick to their own principles, but instead see government as the solution to every problem while ignoring the very unfairness they decry that is caused by political machinations.
Related articles
- Elizabeth Warren: Social Security is effective and popular, so let’s expand it (rawstory.com)
- The Federal Budget and deficit and you-options for reducing the federal deficit, squarely on the middle-class (quinnscommentary.com)
QUINNSCOMMENTARY 
In regard to Social Security increases. What you apparently don’t realize is in order to live in the community these days, one must pay HOA fees and much higher school taxes!- something most of us never encountered back in the days of the 70’s 80’s, we also have higher expenses with dentures, co-pays for tests even though we pay $104 + for Medicare – most of these require a co-pay. .School taxes are out of sight – even with the over 65 deduction, the only good thing about that is we are allowed to pay it in 4 payments To get an up-to-date med, other than a generic (one that isn’t going generic for many years) the co-pay is very high. with a small income, from SS and a small retirement from a job, these increases are necessary to just survive in the community. I doubt that many of us as Seniors utilize the community amenities that we pay as much as Condo HOA’s, we are just trying to stay out of Senior living places! I don’t believe that we as seniors should expect a lot of increase, just enough to at least keep up with the rising prices. 1.5% hardly does that as projected for 2014! I am finally seeing some increase in the $’s I lost in my investments, however, some blue chip stocks are still about $30 per share (i.e. GE) less than they were when the market dropped, although dividends prove to be better! Again, one must take into consideration that the government did put the Trust fund into the General fund some years back, subsequently anyone could use it. It was quite solvent before that point, now talk is that it will be defunct. Why doesn’t the government pay back the trust fund and consider it a debt as well as other debts it has – no talk has ever mentioned that! Those monies were $’s that we as workers paid into and the government chose to take it for whatever use! So, perhaps Elizabeth Warren is right! If an analysis was ever done to check how much went into the General fund, perhaps the Government owes the Trust fund those dollars back that they used for other programs!!
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The government is paying back to the SS trust every month in terms of interest payment used now to pay SS benefits. In a few years the Trust will need to cash in the bonds sold to the US Treasury and the government also pay back that money.
It’s really no different than you buying a savings bond, you get interest each month on the money you lend and when you need it all you cash it in. In the meantime the government uses the money for general expenses.
Dick
Richard D Quinn
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