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| John B Larson Homepage |
Social Insecurity to
Go Bankrupt by 2035
A reliable analysis from the horse’s mouth, the Social
Security Board of Trustees – not a MAGA outfit -- indicates social security’s
main trust fund will flatline around 2035.
The trust fund, the asset reserves of the Federal Old Age
and Survivors Insurance and the Disability Insurance trust funds, will be depleted by 2035, around
the same time survivors of the Biden administration are due to celebrate their
victory over the assassination of the internal combustion engine.
There are different reactions to this distressing news,
depending on one’s place in the political scheme of things.
Some multi-term incumbent politicians likely will not be in
office when final rites over Social Security are read. Here in Connecticut,
Democrat politicians who have held office for more than 30 years – U.S.
Representatives Rosa DeLauro and John Larson, for instance -- may not be present
to witness the calamitous results of their handiwork. The two congresspersons
are now, respectively, 80 and 75. And while neither are as rich as Governor Ned
Lamont or U.S. Senator Dick Blumenthal, both millionaires many times over, it
would appear that no legislators in Connecticut’s all Democrat U.S.
Congressional Delegation have ever stumbled upon a poem written by Hilaire
Belloc titled “Advice to the Rich.”
The poem is brief: “Get to know something about the internal
combustion engine and remember – soon, you will die.” There is a difference,
after all, between a life term and the multiple terms in office of
congresspersons in gerrymandered districts. As we all know, death, the great equalizer,
does not spare politicians, and dying is not at all the same as being voted out
of office.
There are only two ways to discharge social security debt –
or, indeed, any debt -- which occurs when money spent exceeds money
appropriated: 1) You may increase taxes, or 2) you may reduce spending. Generally,
progressive Democrats favor increasing taxes to pay down debt, provided only the
super-rich shoulder the increase in taxation, and Republicans generally favor
programmatic changes that reduce spending.
According to a fairly comprehensive piece in the Epoch Times, “Democrats have
proposed bolstering the [Social Security] fund’s finances by asking wealthier
Americans to pay more in payroll taxes, with the Social Security tax currently
capped at 6.2 percent of the first $168,600 of employee wages.
“A plan introduced in 2023 by Sens. Bernie Sanders (I-Vt.)
and Elizabeth Warren (D-Mass.), along with Reps. Jan Schakowsky (D-Ill.) and
Val Hoyle (D-Ore.), proposes to raise payroll taxes on 7 percent of the highest
earners, which would keep the OASI fund solvent through 2096.
“The plan, called the Social Security Expansion Act, calls
for applying the payroll tax on all income above $250,000 per year, among other
provisions.”
A Republican task force recently proposed a solution that involves
raising the retirement age to account for increases in life expectancy while
reducing auxiliary benefits for high-income earners. Social Security benefits
should be apportioned according to need, and the very rich are less needy than
the very poor, Republicans argue.
Over the long run, when we shall all be dead, option 1)
increases the opportunity to spend recklessly money we do not have in hand and
pass on our debts to an already overburdened future generation, an opportunity
rarely resisted by politicians on the hunt for votes. The future does not vote
on measures that affect it, and the easiest way to gain a vote is to buy one
with money appropriated from future taxpayers.
A public debt discharged solely by the raising of taxes is a
merry-go-round that invariably increases net spending in future years, because
money appropriated to pay down debt is often spent to broaden programs that
please the general public.
Option 2) actually reduces long term debt, along with the
political prospects of the party that recklessly spends the public treasury to
purchase votes.
On May 6, following the Social Security Board of Trustees
report, President Joe Biden proposed an easy – much too easy – solution to the
problem addressed by the report. “I am committed to extending Social Security
solvency by asking the highest-income Americans to pay their fair share without
cutting benefits or privatizing Social Security,” said the president.
And here is U.S. Representative John Larson, tackling the problem of debt caused by excessive and imprudent
spending: “Democrats are united in not only protecting Social Security but enhancing
it
(emphasis mine) for the first time in more than 50 years. President Biden was
clear at the State of the Union: ‘scrapping the cap’ on the less than one
percent of Americans making more than $400,000 a year will allow us to keep
Social Security solvent for years to come and strengthen benefits, and
Democrats have a plan to do just that. The Social Security 2100 Act is
cosponsored by nearly 200 House Democrats and would improve benefits across the
board while extending solvency until 2066, while Donald Trump and House
Republicans continue their calls to slash Americans’ hard-earned benefits! By
contrast, President Biden and Democrats are working to strengthen Social
Security, not cut it.”
By “improving benefits” Larson means – extending present benefits
to those yet untouched by a solicitous governing authority. Among other
measures, the Social Security 2100 Act scraps a tax cap that limits the
government’s taxable take to $168,600 per year. The Larson-Biden proposal
raises the cap to $400,000, broadens benefits, and does little or nothing to
reduce social security spending. Just the opposite, the Act increases spending
through an extension of benefits.
Once the rich have “paid their fair share” of social
security taxes, spendthrift politicians like Larson will have on hand a cache
of money to “improve benefits” and gather in more votes until the next crunch
arrives, likely in the not too distant future. This is the usual political merry-go-round
that raises net debt, invariably passing it along to generations yet unborn.
Only in a political Cloud Cuckoo Land is the problem of debt
solved by pulling off the table reasonable spending cuts and increasing debt by
broadening benefits.
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