For the record: Social Security on trial again

Since we are condemned by Republican crazies to spend another season defending Social Security from tinkering that could devastate people who depend on the program, a little more awareness of how the program actually works might be helpful.

By way of Josh Marshall:

Social Security and Medicare are funded (almost entirely) by a payroll tax of approximately 15% on wage and salary income up to a statutory cap, which currently stands at $160,200. That is tax is split between the employer and the employee. That funds the two programs. A couple generations ago, Congress increased the tax to build up a surplus to pay for the benefits of the baby boom generation. That’s the “trust fund”. Social Security “lent” that extra money to the rest of the federal government, i.e., it purchased government bonds. Eventually that Trust Fund will run out of bonds to cash in. The current estimate is that that will happen in the mid-2030s. This is when Social Security supposedly become ‘insolvent”.

But that’s a meaningless term. The federal government has to pay its promised benefits and if they can’t all be paid by out of payroll taxes the remainder can and will be paid out of general revenues. This was actually the assumption about what would eventually happen back when the program was founded almost a century ago. ...

This doesn’t mean it’s a non-issue. It means there will be funding gap and that’s just a budgetary issue to be resolved. It’s not ‘insolvent’. That’s just scare talk. Now, how can the funding gap be resolved? You could just pay the remainder out of general revenue (the general tax base of income, corporate, capital gains and other taxes that are not tied to any specific program). ...

The aging of the baby boom generation does stress the system; when we arrived in the 1950s needing more kindergartens, our sheer numbers stressed the public school system too. This is a repeat of a phenomenon that our numbers have repeatedly triggered over the decades. And any sane politician who acts surprised is lying.

Marshall goes on to delve into the weeds a bit (and his take is interesting), but those of us who need the Social Security we worked for can stay focused on the main point rather than the details.

The money exists to pay what Americans earned in our working years. If the government needs money, the answer is get it from people who have it, not to nickel and dime people who don't. Raise taxes on rich people and corporations -- that's where the money is.