by Dale Coberly


Ho Hum.  The 2019 Social Security Trustees Report was released yesterday.

The Committee for a Responsible Federal Budget published its usual half truths (also known as “lies”):. “We are all going to die!”

The Reporters and Columnists Who Cover Them ™ reported the half truths as the whole story:  “We are all going to die!”

The “Progressives”  demanded the “rich pay their fair share”  and “expand Social Security” to pay for everything

Angry Bear ignored the whole thing.

The whole truth would have pointed out that while there is a funding problem projected for sixteen years in the future,  it’s a small problem and the Trust  Fund is NOT the problem.

If the future arrives as expected, Social Security will not be collecting enough “taxes” to pay the “promised”  benefits at that time. (The payroll tax is not really a tax.  It’s an insurance contribution… a way for workers to save for their own retirement.  They get the money back with interest when they need it most.)

Social Security WILL be able to pay benefits that are about 80% of promised.  That will be more in real value than benefits are today.

Those benefits COULD be redistributed so they continued to provide enough help to the poorest retirees (and widows and orphans) at the expense of the richest.

But it would be better to just raise the payroll “tax” about 2% for each the worker and his employer and continue to pay the benefits as promised.

No one would miss the 2% out of his paycheck,  and he would get the money back in the form of a more comfortable retirement, which he will need and want MUCH more than whatever he would have spent that 2% on today.  The 2% is not lost to some government black hole:  the workers get their money back plus “interest” when they retire.

It would be still better to raise the “tax” gradually… about one tenth of one percent per year. (This is about a dollar per week per year.) This would not only not be missed, it would not even be noticed.  And it would create a full Trust Fund which would provide enough interest to lower the needed “tax” by about one percent.  It would also avoid the government having to pay back the money it has borrowed FROM Social Security.  That money would become just a paper debt acting as a reserve to smooth over periods of recession.

The importance of this approach is that it would preserve Social Security as worker paid insurance for workers…  something Roosevelt insisted upon so that SS would not become “the dole” just another welfare program subject to the political manipulations of the rich and influential (“we have the will but not the wallet”).

Under Social Security as designed the rich do pay their fair share.  They pay exactly what the insurance is worth to them,  and their “excess” payments are what provide the money to supplement the benefits received by the poor. (“Excess” in the sense that if you don’t have a fire, your insurance payments were “excess.”)

The Trustees Report this year was actually “better” than it was last year if you take the date of the “death of the Trust Fund” seriously, which you shouldn’t. 

Sadly,  this is not a ho hum moment.  The opportunity to pay for the needed raise in the “tax” gradually will begin to expire next year.

And while it would still be possible to pay, say, an extra one percent now and the other one percent later,  or even to pay the whole two percent in about 15 years,  it would be much better to go for the gradual increase and avoid all the hysteria that will come when “Social Security is Broke!” ™

but you won’t.