We applaud the Columbus Dispatch for weighing in on this important issue. On November 8, 2013, that paper published its editorial entitled ‘Drifting Closer to Danger-If Social Security isn’t reformed, harsh arithmetic will take its course’. They note the latest ‘poll findings that Americans aged 50 and up oppose the idea of raising the Social Security Retirement age or trimming cost-of-living increases for the program’. The also note that Social Security will be bankrupt in 2033 and will have taxes available to pay only ¾ of the benefits payable. Given that the program was financed by current generations paying for the retirement of past generations, a major problem has been set up with ‘the entry of the huge baby-boom generation into retirement… a demographic train wreck that can’t be wished away’. Others have referred to the Social Security Retirement program as a Ponzi scheme that has begun to fail. The editorial recommends ‘that politicians and people willing to look at the problem honestly will have to start talking about it honestly’. In addition, it recommends that the under 50 voters should be polled and consulted since they will be the ones likely to suffer the consequences of any change. Finally, it notes ‘the first step will have to be taken by either politicians or voters willing to acknowledge an unhappy reality’. We concur with the editorial. Remember, this pending bankruptcy of Social Security Retirement in 2033 is one of the three bankruptcies facing us. The Social Security Disability program goes bankrupt in 2016 and Medicare in 2026. We all will be impacted and need to insist that the President and Congress act now. I have outlined the many options available to our nation both in this blog and in this website.
Harry Pukay-Martin
In a recent opinion piece in the Columbus Dispatch, Robert J Samuelson hits the nail on the head as he opines about Social Security Retirement. In his “Social Security Can’t be Off Limits”, he notes that in 2012, 23% of the budget went to Social Security Retirement. This line item will increase dramatically as baby boomers retire. He noted that ‘in 2010, there were 40 million Americans 65 and older. By 2020, that number is projected to be 55 million; by 2030, 72 million.’ That is an 80% increase in just 17 years. Social Security Retirement goes bankrupt 3 years later in 2033. He notes that, if Social Security Retirement and other related programs (Medicare, Medicaid, and Social Security Disability) are not part of the deficit reduction, then ‘either taxes will rise steeply or other federal programs (defense, food stamps, environmental protection) will be cut sharply’. We are seeing these sharp decreases of the other federal programs with the FY 2014 and FY 2015 budgets just being enacted. He notes that the 3 arguments to prevent Social Security Retirement from being cut are false. Most Social Security beneficiaries are not poor but make over $35,000 (64.1%) a year and 25.9% make over $75,000 annually. These folks are not poor and could contribute further to the deficit reduction. The second argument concerns the fallacy that benefits were earned and saved. The Social Security Retirement program has always been one where the next generation paid for the past generation’s retirement. This is still true. No money was saved, it simply paid for current beneficiaries. If this program was subject to the US pension laws, it would have been taken over a long ago by the pension guarantee corporation and benefits would have been cut substantially. The third argument to prevent Social Security Retirement from being rationalized is that it does not contribute to the current deficit. That is not true. Since 2010, benefits have exceeded taxes and that will continue. That deficit position of Social Security will worsen as the baby boomers continue to retire. Let’s quit kidding ourselves and fix the program now while we still can and before it is too late. 2016 is the year when Social Security Disability goes bankrupt. 2026 is the year when Medicare goes bankrupt. 2033 is the year when Social Security Retirement goes bankrupt. I have outlined the many options available to our nation in this blog and in this website. The President and Congress need to act now.
Harry Pukay-Martin
AARP in its Washington Watch section entitled Budget Cuts Looming in its November 2013 AARP Bulletin disappointedly made no recommendations for restoring the health of the Social Security Retirement program and saving it from bankruptcy. Social Security Disability is projected to be bankrupt by 2016 and Social Security Retirement by 2033. AARP instead resorted to platitudes such as ‘ find fixes (to the budget challenges) that won’t hurt Medicare and Social Security beneficiaries’ or ‘Keep Social Security separate from the rest of the budget and shore up the program without using it to reduce the deficit’ or ‘For Social Security, changes should be discussed only in the context of strengthening Social Security and retirement security’ or ‘We want to make sure that earned Social Security benefits are not used as a piggy bank for the budget debate’. There were no concrete and strong recommendations for restoring the social security programs. To put it very personally (and you readers can do the same for your own circumstances), I will have my social security retirement benefits cut by 23% or more in 2033 when I am 85 and unlikely to be able to work. I am getting nervous and angry. When will AARP put together a solid set of recommendations that will prevent the Social Security programs from going bankrupt in the near future? When will they present these recommendations to Congress and lobby to get them passed and enacted into law. It is time for AARP to act.
Harry Pukay-Martin
Harry, you are being too soft on AARP and their allies. These attacks on Congressmen trying to fix Social Security and save it from bankruptcy are terrible. They are more than outrageous. They are more than shortsighted. They make me so mad I could spit. I should burn my AARP card. AARP is selling the older people out as well as their children and their grandchildren. Who do they represent with their outlandish behavior? I don’t know but it is concerning. I think AARP has lost its way. From my own selfish perspective, I wonder what AARP is going to do for me when I have a 23% cut in my social security retirement benefits when I am 83? Nothing I suspect. They will just blame the Congress for not acting. What a lie! They prevented the Congress from acting. Such nonsense.
AARP spends $174 million lobbying Congress and others each year after earning $1.2 billion in revenues by providing insurance and other products to the public especially the elderly public. Why has the IRS not taken them to task and taxed them on this income? Why, instead, has the IRS devoted their resources to Tea Party groups with no money when this giant goes untaxed and unburdened with appropriate oversight?
AARP needs to start being part of the solution to this impending Social Security bankruptcy now rather than being part of the problem. Let them publicize the issue, present a credible plan, and then work to get it adopted by Congress.
Sam Allen
In a recent Bloomberg Business Week article titled ‘Warning Congress not to Mess with Grandma’, the magazine details the concerted attacks on members of Congress who try to
fix the impending bankruptcies of Social Security (The Social Security Disability program will be bankrupt in 3 years in 2016 and the Social Security Retirement Program will be bankrupt in 2033). These attacks are coming from AARP and related organizations. There are 3 problems with these attacks. First, many of us want these bankruptcies resolved so we know what we are going to receive in social security retirement benefits. If nothing is done soon, I will have my social security retirement benefits cut by 23% in 2033 when I am 85, an age when I am unlikely to be able to work again. That is not fair. The second problem with these attacks are that my children and their generation will have no social security to rely on. That is not fair. The third problem with these attacks is that they suggest these organizations want to hide these impending bankruptcies from the public at large and the aged public specifically and not allow public discourse and public action to resolve these bankruptcies. This is fantasyland and like the proverbial ostrich sticking his head in the sand. The AARP has communicated a bit on its website presenting both sides of the argument. However, it has not communicated more broadly about these pending bankruptcies nor has it set out a thoughtful robust plan to resolve them, and then lobbied the Congress to adopt this plan.
These Social Security impending bankruptcies need to be addressed now. As you have seen in our recent blogs and can review in our website, there are straight forward steps that can be taken to solve these problems. We need to come together as a people and have our Congress and President discuss, debate, decide, and resolve this issue. It is not rocket science but it will be hard and not without personal sacrifice and trade-offs. If we do not take up the issue now, it will just get harder over time and it will imperil our country and its ability to survive in the future.
Harry Pukay-Martin
In order to insure the long term solvency of the Social Security Retirement Program, there are many steps that might be taken to accomplish this important national priority. However, the options to reach this important goal come down to increasing the social security taxes to support the program or lowering its expenditures and in effect the benefits of the program.
We, at United We Stand, LLC. are recommending the following steps.
For tax increases to support the Social Security Program
1. Remove the 2% employee contribution hiatus. This would produce $112 billion annually. This has been done. Wonderful!
2. Remove the exemption from social security taxes on salary reduction plans. This step is unscored.
3. Subject Flexible Spending Account withholdings to Social Security Taxes.
This step is unscored.
4. Subject Cafeteria Plan Employer expenditures to Social Security Taxes. This
step is unscored.
5. Subject commuting Employer expenditures to Social Security Taxes. This
step is unscored.
6. Subject Health Insurance Employer expenditures to Social Security Taxes. This
step is unscored.
For lowering the expenditures on social security,
1. Increase the age when full social security benefits can be taken. The present age is
66 to 67 depending on your date of birth. Increase the age for full social security
benefits to 70 (phase in starts in 2023 and is finalized in 2040). This will cover
44% of the Social security shortfall.
2. Increase the age when full social security benefits can be taken using a longevity
Index starting in 2041. This will cover 23% to 27% of the social security shortfall
depending on the details of the plan.
3. Freeze social security payments for 3 years. This will save $13 billion in FY 2014,
$30 billion in FY 2015, and $48 billion in FY 2016. There will be no retroactive
adjustment in the future to make up for this freeze.
4. Change the cost of living escalator from the CPI to the Chained CPI. This will
cover 23% of the Social Security shortfall. It will also reduce expenditures by
$11 billion per year.
5. Increase the number of years in the wage history used to calculate social security
benefits from 35 years to 38 years. This will cover 13% of the Social Security
shortfall.
6. Make the social security benefit calculations more progressive than they currently
are using the Simpson Bowles Plan. This will cover 45% of the Social Security
shortfall.
7. Reexamine the disabled for recipients who can now work. For each 10% found to
be able to work, expenditures fall by $14 billion per year. The estimates range
from 33% to 67% of the disabled can work. This generates between $47 billion to
$94 billion annually.
By taking these steps, we move the social security program to a stable and solvent position in the long run. In addition, we decrease the deficit by $71 billion in FY 2014, $88 billion in FY 2015, and by $106 billion in FY 2016 and help to avert the insolvency of our country.
One final step needs to be taken. To prevent future problems, we must put into law that any insolvency of the Social Security Trust Funds noted in the annual report issued by the Trustees of the Social Security Trust Funds must be addressed by the Congress and the President. Any solvency issue not addressed by the Congress and the President by December 31 of the year the report is issued will result in the stoppage of pay for the Congress, the President, and the President’s cabinet. Once the pay stops, no retroactive restoration of that pay will be allowed. Pay will be resumed when the solvency issue is addressed.
Harry Pukay-Martin December 9, 2013
Harry, you are not hard enough on the President. At a time when we need to be brought together, the President is fermenting class warfare. At a time when one of the best men to live on this earth just died and who brought his people together avoiding a race war, Obama tarnishes Mandela’s memory by trying to divide his own country. Obama falls back on what he does well-doing a stump speech and pandering to a like minded crowd. He will not do the real work of the President which is to lead the country on the domestic and foreign fronts. I think he gets bored with the work that must be done to accomplish the nation’s business. I think that he also does not like the work, he is not experienced at it, nor is he adept at it. He cannot persuade foreign leaders to follow his lead as President Bush did. He cannot persuade legislators to follow his lead or compromise with them as President Johnson did. He cannot draw up an innovative program and execute it as President Roosevelt did with Social Security. Either the President should decide to roll up his sleeves and get the work of the nation done as best he can or he should resign.
Sam Allen
In a recent speech, President Obama declared an end to the war on budget deficits and instead took up the issue of income inequality. I don’t quite understand. The budget deficit is still over $600 billion for FY2013 and continues to be in a deficit position for the foreseeable future. That deficit begins to accelerate in FY 2016. Our debt is $17.2 trillion and climbing each year. Mr. President, respectfully, management is all about focus and focus on the important issues. You are very good at giving stump speeches and bringing up issues that stir the crowd. This may make you happy and warm your heart. However, you are the President of the United States and you have a job to lead this country. You need to address the important issues facing the US and deal with them until they are solved. The budget deficit and the resulting debt level is key, for without money, there is no mission. For the sake of your kids and all the other children of our fair land, please get back to work and work on and resolve the deficit and its related debt.
Harry Pukay-Martin
There are many options to prevent the Social Security Retirement program from becoming bankrupt by 2033. However, the Congress and the President must take action now. Below are some of the options.
The options to reach this important goal come down to increasing the social security taxes to support the program or lowering its expenditures and in effect the benefits of the program. Where the information is available, the effect on the overall annual Federal deficit (i.e., in 1. below under taxes, we note ‘This would produce $112 billion annually’) as well as the current estimate of the effect on closing the solvency gap within just the Social Security program will be noted (i.e., in 2. below under taxes, we note ‘This will cover 98% of Social Security shortfall.’).
For tax increases to support the Social Security Program, listed below are some of the options that have been put forward.
1. Remove the 2% employee contribution hiatus. This would produce $112 billion annually. This has been done. Wonderful!
2. Subject all earned income to social security taxation as presently is the case with Medicare taxes. This will cover 98% of Social Security shortfall.
3. Subject earned income up to $218,100 to social security taxation from $113,700 in 2013. This will cover 36% of the Social Security shortfall.
4. Subject earned income up to $160,000 to social security taxation from $113,700 in 2013. This will cover 16% of the Social Security shortfall.
5. Raise the earned income limit to 90% of taxable wages. If this is done gradually by 2050, this will cover 35% of the Social Security shortfall.
6. Raise the Social Security tax rate for the employee. Each .25% raise in the tax rate will reduce 11% of the shortfall in the Social Security program.
7. Raise the Social Security tax rate for both the employer and the employee. Each .25% raise in the tax rate will cover 22% of Social Security shortfall.
8. Remove the exemption from social security taxes on salary reduction plans. This step is unscored.
9. Subject Flexible Spending Account withholdings to Social Security Taxes.
This step is unscored
10. Subject Cafeteria Plan Employer expenditures to Social Security Taxes. This
step is unscored.
11. Subject commuting Employer expenditures to Social Security Taxes. This
step is unscored.
12. Subject Health Insurance Employer expenditures to Social Security Taxes. This
step is unscored.
For decreasing social security expenditures, listed below are some of the options
that have been discussed.
1. Increase the age when social security benefits can be first taken. The present age
is 62. This proposal is unscored.
2. Increase the age when full social security benefits can be taken. The present age is
66 to 67 depending on your date of birth. If the age for full benefits is increased to
68, this proposal will cover 18% of the social security shortfall (phase in starts in
2023 and is finalized in 2028). If the age for full social security benefits is
increased to 70, this will cover 44% of the Social security shortfall (phase in starts
in 2023 and is finalized in 2040).
3. Increase the age when full social security benefits can be taken using a longevity
Index. This will cover 23% to 27% of the social security shortfall depending on
the details of the plan.
4. Eliminate the cost of living escalator. This step is unscored.
5. Freeze social security payments for 1 year. This will save $13 billion in FY 2014,
$14 billion in FY 2015, and $15 billion in FY2016.
6. Freeze social security payments for 3 years. This will save $13 billion in FY 2014,
$30 billion in FY 2015, and $48 billion in FY 2016.
7. Change the cost of living escalator from the CPI to the Chained CPI. This will
cover 23% of the Social Security shortfall. It will also reduce expenditures by
$11 billion per year.
8. Reduce the social security payments to the top 25% of earners 15% over a period
of time. This will cover 7% of the Social Security shortfall.
9. Reduce the social security payments to the top 50% of earners 28% over a period
of time. This will cover 31% of the Social Security shortfall.
10. Make the social security benefit calculations more progressive than they currently
are. This will cover 45% of the Social Security shortfall.
11. Increase the number of years in the wage history used to calculate social security
benefits from 35 years to 38 years. This will cover 13% of the Social Security
shortfall.
12. Reduce social security benefits yearly depending on the other income of the
recipient. Depending on the plan, it will cover 11% of the Social Security shortfall.
13. Reexamine the disabled for recipients who can now work. For each 10% found to
be able to work, expenditures fall by $14 billion per year. The estimates range from 33% to 67% of the disabled can work. This generates between $47 billion to $94 billion annually.
We can prevent the 2033 bankruptcy of the Social Security Retirement program easily if the President and Congress will act.
Harry Pukay-Martin
Harry, I noted your proposals above. It is inconceivable that AARP has no proposal. I am 63 now and have been with AARP for 13 years. I thought they lobby on our behalf to insure Congress passes proposals to protect us in our retirement. Social Security Disability will be bankrupt in 2016, Social Security Retirement will be bankrupt in 2033, and Medicare will be bankrupt in 2026. That means I will have my Medicare drastically curtailed when I am 76 and my Social Security retirement will be sliced by 23% or more when I am 83. That is terrible. From what I have read in their monthly magazine, AARP seems to only say no to any changes, delays any action, and makes no concrete proposals to get this issue resolved now. We cannot wait until those programs are bankrupt. We need action yesterday. AARP, get off your ass!!
Sam Allen
