Respectfully submitted by Lawrence E. Rafferty (rafflaw)- Guest Blogger
We have all heard the cries that so-called entitlement programs like Social Security need to be cut in order to “save” them from extinction. Now that I am 62 years of age, I have become more interested in the issue of Social Security’s solvency.
CEO’s have gotten involved in the process through the now infamous Fix the Debt campaign initiated and funded by Billionaire Pete Peterson and the parallel campaign started by the Business Roundtable. Both of these campaigns are supported by big business and CEO’s of large corporations with no concern where their retirement funds are going to come from.
“In the current budget debate, the loudest calls for Social Security cuts are coming from two lobby groups led by CEOs who will never have to worry about their own retirement security.
The report, titled Platinum-Plated Pensions: The Retirement Fortunes of CEOs Who Want to Cut Your Social Security,
points out that two organizations, Fix the Debt, a PR and lobby machine launched in 2012 and led by more than 135 CEOs of major corporations, and the Business Roundtable, a 40-year-old association made up of about 200 CEOs of Americas largest corporations, are involved in a protracted campaign aimed at cutting, and ultimately, gutting Social Security.
Platinum-Plated Pensions, written by Sarah Anderson, the Director of the Global Economy Project at the Institute for Policy Studies, and Scott Klinger, Director of Revenue and Spending Policies at the Center for Effective Government, found that the CEOs belonging to Fix the Debt and Business Roundtable are sitting on massive nest eggs of their own.” Bill Berkowitz
Maybe I am an exception, but I was amazed to read the report linked above to see just who is claiming that the only way that Social Security can be saved for us mere peons is by raising the retirement age and reducing benefits. Many of the CEO’s making this claim have millions in their own pension or retirement accounts.
“According to Platinum-Plated Pensions, The average Business Roundtable CEO has $14.5 million in his gilded nest egg, more than 1,200 times as much as the $12,000 median retirement savings of U.S. workers who are within 10 years of retirement.
Ten CEO members of the Business Roundtable (four of whom are also members of Fix the Debt) have corporate retirement plans valued at more than $50 million. Of these, three have retirement assets of more than $100 million.” Bill Berkowitz
Now, in all fairness, just because someone has no need for their Social Security benefits, it doesn’t automatically disqualify their opinions on the subject of improving Social Security for all of us. However, these CEO’s do not have a real stake in what happens to Social Security because if it exploded tomorrow, they still have millions in their own accounts.
The ideas that Fix the Debt and the Business Roundtable have offered do nothing to make it more equitable or make Social Security work better for all retirees. Their idea of a “fix” is to delay benefits and force poor and middle class workers to stay in the work force even longer.
They even claim that raising the minimum retirement age to 67 is necessary because we are all living longer. Even that claim is suspect. One economic expert has brought some sunlight to the living longer claim.
“Before I get there, however, let me briefly take on two bad arguments for cutting Social Security that you still hear a lot.
One is that we should raise the retirement age — currently 66, and scheduled to rise to 67 — because people are living longer. This sounds plausible until you look at exactly who is living longer. The rise in life expectancy, it turns out, is overwhelmingly a story about affluent, well-educated Americans. Those with lower incomes and less education have, at best, seen hardly any rise in life expectancy at age 65; in fact, those with less education have seen their life expectancy decline.
So this common argument amounts, in effect, to the notion that we can’t let janitors retire because lawyers are living longer. And lower-income Americans, in case you haven’t noticed, are the people who need Social Security most.” Paul Krugman
While I am hoping Mr. Krugman is correct that lawyers are living longer, his evidence seems to suggest that the Fix the Debt and Business Roundtable people are all wet. Could those millionaire and Billionaire CEO’s have some ulterior motive? Could the CEO’s efforts and money spent pushing their Fix actually be an attempt to prevent the country from taxing the wealthy on all of their income or reducing or eliminating many of their tax benefits that harm the economy and fatten their wallets?
I have often wondered why millionaires don’t have to pay Social Security taxes on all of their income like the rest of us who make less than the $113,700 maximum for 2013. When a CEO makes $20 million a year, that CEO pays Social Security taxes on the first $113,700. When someone makes $60,000 a year, they pay Social Security taxes on their entire income. Why shouldn’t Social Security taxes be paid on all income, no matter what the sources? Wouldn’t that be more equitable?
Mr. Krugman also suggests that part of the problem seniors are facing is that the 401k accounts that many of their employers intitiated have not earned what was necessary to retire on due to the market crash and employer greed and employees making poor financial decisions.
“Today, however, workers who have any retirement plan at all generally have defined-contribution plans — basically, 401(k)’s — in which employers put money into a tax-sheltered account that’s supposed to end up big enough to retire on. The trouble is that at this point it’s clear that the shift to 401(k)’s was a gigantic failure. Employers took advantage of the switch to surreptitiously cut benefits; investment returns have been far lower than workers were told to expect; and, to be fair, many people haven’t managed their money wisely.” New York Times
What do you think is needed to strengthen Social Security for all workers? Paul Krugman and many Senators like Sen. Elizabeth Warren agree that we should be talking about strengthening Social Security and not cutting it. Some of the CEO’s mentioned above who have millions in their own retirement accounts have actually run up deficits in their own employees retirement accounts, but yet they still claim cutting benefits and extending the minimum retirement age are the way to go.
“While gilding their personal pensions, many Roundtable CEOs have allowed massive deficits to grow in their employee retirement funds:
- Of the Business Roundtable CEOs whose firms provide pension funds for their workers, 10 have deficits in these funds of between $4.9 billion and $22.6 billion.
- The Roundtable CEO with the largest deficit in his companys worker pension fund is Jeffrey Immelt of General Electric, with $22.6 billion. Immelts personal retirement fund is worth more than $59 million, the sixth-largest among Roundtable CEOs.” Bill Berkowitz
Are these CEO’s merely doing an end run in an attempt to steer Social Security funds into the private sector? Are they trying to steer the discussion away from taxing more income to strengthen Social Security? What do you think and who do you believe?
Well I wouldn’t want to say how much of a hypocrite he is, after benefitting from his deceased father’s SS, while working to deny it to others.
Annie:
Why not? What is that story?
Let’s not mention Paul Ryan and the SS benefit he received after his father’s death.
DavidM:
Knowledge is Power.
Have you seen the movie Gifted Hands about Ben Carson? His mother figured that out and both her sons made it out of poverty.
I wish they would do a movie about Carson’s mother, that is the real story. How this woman raised 2 sons who have done well in life is a story which should be told and retold and emulated by everyone.
What a remarkable woman she is/must have been.
I am really hoping Dr. Carson runs for president in 2016. With Alan West as his VP. Maybe Herman Cain as Sec Tres or Commerce.
There was a song back in the sixties that was played on TV and radio. It reflects the thoughts of those who feel cheated because they paid too much in to a program and will not get it back. These are just part of the lyrics:
[music]
MY boomerang wont come back!
My boomerang wont come back.
I am the biggest disgrace,
To the aborigine race,
My boomerang wont come back.
I..Can!… Ride a kangerooo!
Eat stuff too!
Biggest disgrace to the aborigine race.
My boomerang wont come back.
— end, or sort of.
For those of you out there who think that you paid in too much social security payments and wont get it all back there is some consolation from Down Under. When you die you will go to a better place. You will not have social security or medicare or other such communist notions. You will live on your own on a cloud. You might have to share the cloud with Yahoo but you will be on your own.
I think he and Elizabeth Warren are dead on exactly right–Social Security if expanded, would in fact also, allow the future of ACA to easily be made “single payer” by taxing the individuals at year’s end. Eliminating the cap on $110,000.00 contributions would also prevent off-shoring incomes, lent back in the form of credit by high yielding foreign banks using Libor racquets to price fix. This would also take ACA out of the budget by taxation on the back end. Social Security creates consumers–consumers buy stuff–stuff that’s made by rich people who own the equities of publicly held companies like Microsoft, WalMart and GM, to name a couple. People who have money to spend, buy cars, houses and then renovate them. Excess money leads to savings–savings leads to money for banks to loan by way of depository requisites. Keynesian Economics works–Demand driven. By the way–just keeping a tally of historic evidence of my FEMA/Texas battle. Hope you check out the video. http://www.youtube.com/watch?v=oNG7Ygo5o3w&feature=youtu.be
Gawd, the hypocrisy.
rafflaw:
Interesting article. Sad too, those corporations should not be borrowing money from an employee pension fund. Are they paying it back with interest? What is the money used for?
Something needs to be done, I dont know why we dont raise the income limit to $500,000 and maybe a percentage of stock options.
We also ought to allow people to put some of their SS into the private sector or just take SS and put it into Al Gore’s lock box and invest in gold and silver and real estate. If SS had actually been put in a lock box and invested properly, we wouldnt be in this position.
But then I dont know why we dont let people invest the 15% in whatever they want. Pass laws to make it easier for people to invest in retirement plans. How about a group of people getting together and buying property which they rent out to fund their retirements?
It seems to me we need more freedom, not less. SS is really a failure when all things are considered, even for the poor because they dont receive enough to live on and the people with a good retirement use it as pocket change.
We really just need to end it and start teaching people about money, how to make it, how to save it, how to invest it and how to spend it. We are a nation of financial illiterates.
Bron wrote: “We really just need to end it and start teaching people about money, how to make it, how to save it, how to invest it and how to spend it. We are a nation of financial illiterates.”
Thanks, Bron. That was the best thing that I read in this thread yet. Education is the answer. Knowledge is power.
Between Brad and David, I see that we have the Tea Party wing speaking. Social Security keeps millions of elderly out of poverty. It is run very effeciently by government and it helps those who most need it.
From Brad:
Redistribution enlarges the parasitical class
Well, Brad, the parasitical class is the one that is NOT paying Social Security on its entire earnings. They get an immediate tax break of 15% once they reach the SS maximum. Talk about parasites. The average person doesn’t have the accountants, the lawyers, the lobbyists, the political connections, and corporate connections that the wealthy possess to get tax laws written for them, bid on government contracts, demand special regulations, and hide income offshore. Talk about parasites. The highest individual tax rate during Eisenhower (a republican) was 91%. That is also the time that America was its most just economically. The wealthy are the true parasites, Brad. You have the GOP/Tea Party types (and spineless dems) demanding cuts to food stamps, while fighting like dogs to cut taxes on the wealthy. Many on food stamps work at Walmart, etc. which are run by multi-billionaires. Talk about parasites. How can Walmart pay its full-time employees so little that they are eligible for food stamps?
Here are few parasitical tax goodies that the wealthy enjoy:
According to a study by The Wharton School at the University of Pennsylvania, mortgage interest deductions for households with incomes between $40,000 and $75,000 average just $523, while households with incomes above $250,000 enjoy an average write-off of $5,459, or more than 10 times as much.
“Most of the capital gains are earned by folks in the top 10 percent, and it’s even concentrated more than that. So the capital gains tax break, which is a 20 percentage-point difference in the amount of tax that is paid on those, is going almost all to the top 5 percent.”
Step-up in basis is expected to save the wealthy (and cost Uncle Sam) $61.5 billion for fiscal 2012, according to the Office of Management and Budget.
“Not surprisingly, this tax expenditure overwhelmingly benefits those who inherit from large estates because it allows gains to escape capital gains taxes if held until death,” says Hanlon.
According to the Tax Policy Center, the top 20 percent of income earners enjoy 80 percent of the tax write-offs for retirement saving while the bottom 60 percent take advantage of a whopping 7 percent of the tax savings.
The problem with the charitable deduction is similar to the mortgage income tax break: The value of the deduction increases with income.
“If I give $1,000 to charity and I’m in a 10 percent tax bracket, I get $100 back on my taxes,” says Wilkins. “But if I’m in a 35 percent tax bracket, I get $350 back from the federal government.”
Read more: http://www.bankrate.com/finance/taxes/tax-deductions-favor-rich-1.aspx#ixzz2lbZ9KswC
I could go on, but you hopefully get the drift…Now compare that with the poor elderly person who is struggling to make ends meet and then come back and tell me that Social Security recipients are the parasites. Get real……..
I have often wondered why millionaires don’t have to pay Social Security taxes on all of their income like the rest of us who make less than the $113,700 maximum for 2013. When a CEO makes $20 million a year, that CEO pays Social Security taxes on the first $113,700. When someone makes $60,000 a year, they pay Social Security taxes on their entire income. Why shouldn’t Social Security taxes be paid on all income, no matter what the sources? Wouldn’t that be more equitable?
Not that I really think solutions like raising the retirement age are desirable or necessary, but there’s a very good reason the taxes (and benefits) are capped–the program is designed to be more of an insurance program, rather than welfare. Sure, poorer participants receive a better deal than richer ones, but by and large Social Security is vastly less redistributive than it would be if you removed the cap–it probably wouldn’t even make sense to describe such a program as anything other than welfare. This was a deliberate choice dating all the way back to FDR’s original design, as he wanted to distinguish Social Security from what was then called “relief” and would now be called “welfare.” For the long-term political popularity of the program, likely a smart move.
**The very first Social Security recipient, Ida Mae Fuller of Vermont, paid just $44 in Social Security taxes, but the long-lived Mrs. Fuller collected $20,993 in benefits. Such high returns were possible because there **
David,
At about the same time of your whine, the Rockeefellows/Wallst wer busy sitting up all sides to WW2 & sold/stole most of the easy oil from Texas/Oklahoma, etc…
You’re whining about Pennies & ignoring Billions back then. Now it’s Trillions they have/are stealing.
BTW: Your Bud Rush even Stole that Name! You might as well have Obama as your super hero. 🙂
David, did you read rafflaw’s article? There is a way in which SS will remain solvent for years to come, just not your way.
Annie wrote: “…did you read rafflaw’s article? There is a way in which SS will remain solvent for years to come…”
Yes, there are several solutions, and he asked for our opinion about the methods. I realize you don’t like my perspective, but my way is one way that can help fix it. I’m not a fat cat like the billionaires proposing it, but I think they didn’t get their billions by being stupid financially, and their concepts appear sound to me.
Yes David,
SSI started out as a Tax the Public Scam by FDR to fund American hating Wallst Banks/Insurance Scum.
The trouble was/is that SSI system has worked & can actually keep on working.
From another post that won’t post yet I put up:
** Remove all withholdings from workers pay checks. Young families have to have funds to raise their kids today not later. There are other ways to raise funds for SSI, Medicaid, etc.. ie: mineral royalties, import tariffs, Airwaves, road use, financial transaction taxes, etc… **
The real problem is people like Billionaire Pete Peterson & other like pukes refuse to give up their US govt welfare checks. IE: Trade Deal Scams, Tax subsidies/havens, etc…
They are nothing but Mafia Gangsters/Thieves & we demand back the money/assets they’ve stolen from this/other nations David!
The following paragraph from Wikipedia helps explain in layman terms some of the math about what is causing the financial problem with Social Security:
The very first Social Security recipient, Ida Mae Fuller of Vermont, paid just $44 in Social Security taxes, but the long-lived Mrs. Fuller collected $20,993 in benefits. Such high returns were possible because there were many workers paying into the system and only a few retirees taking benefits out of it. In 1950, for instance, there were 16 workers supporting every retiree. Today, there are just over three. By around 2030, we will be down to just two.
https://en.wikipedia.org/wiki/Social_Security_(United_States)
Also, we as a nation can honor our elderly by treating them with dignity, allowing them to be autonomous as long as they desire and their health holds out. Elder abuse is a real thing and if unwilling grown children were forced into providing monetarily for their parents we would be seeing homeless elderly, or worse. What kind of society would those on the right foist upon us? Shameful.
Annie wrote: “… if unwilling grown children were forced into providing monetarily for their parents we would be seeing homeless elderly…”
Forced? I consider it a privilege.
I already have met too many homeless elderly as it is. As I said before, a safety net is a good thing, but a planned retirement that breaks apart the family is not.
Family privilege? Seriously? You think that the average working family can afford to take care of their elder parent now? How many families can afford homes large enough to include old mom and dad? If wealthier people want to supplement their parents SS income they are still free to do so, no one is stopping them. David, member of the cat food commision.
Annie wrote: “You think that the average working family can afford to take care of their elder parent now?”
With the breakdown of the family and with people having smaller families, there are fewer that can do it, but many still can.
Annie wrote: “How many families can afford homes large enough to include old mom and dad?”
I don’t see that as a problem for most families. Usually the kids have moved out by the time that is necessary. The seniors needing help often own their own homes free and clear. Many deed restrictions have exceptions for in-law additions or apartments.
I think government assistance to seniors should be a safety net, for those who do not have family able to help. Right now, the government basically steals parents away from the children. Seniors choose not to be a burden upon their children, and the family bonds are thereby broken. It is sad.
Social Security was a bad idea from the start. It use to be seniors worked longer. With Social Security available, they now retire earlier. So Social Security guts the productivity of society. It also hurts the family because seniors use to be taken care of by their family. Now, government paying nursing homes takes away that family privilege. The best fixes for Social Security now is to raise the retirement age and give young people the option to invest at least half of their contributions into their own retirement plan. This would give them control over what type of investment to make, and they could leave the unused funds to their children when they die.
Oops, I didn’t finish my thoughts. By taxing on the entire income we could save SS for years to come, respect our aging population by ensuring they fall into our society’s social safety net, as a civilized nation should. There should be no reason to consider chained CPI, ever.
Reblogged this on SiriusCoffee and commented:
Why is it that the solution for every Big Government program that is failing (and they all do sooner-or-later) is to “fix” it, or “reform” it – as Mr. Rafferty suggests by “expanding it”. Indeed, the problem is that they are just not large enough, and by that, he means to tax the wealthy even more.
Invariably, that’s the solution for people trying to solve income inequality through state sanction. Statists will expand the size and scope of government by feeding it with more money and more power, and hope that the outcome will be one that will be equitable to all. It never seems to work that way. So they reform some more.
Unfortunately, if you liberated the income from all the wealthy, it pales in comparison to the wealth stored in the vastly larger middle-class, and for some (obvious) reason, this class ends up paying the lion’s share of the tax burden.
Redistribution enlarges the parasitical class at the expense of the working class. That’s why “reform” really means more power concentrated in the hands of the few – and those that control them.
The notion that SS benefits should be delayed until age 66 or older is nothing less than discrimination against the laborer that ruined his/her health working a physical job. Many nurses have osteoarthritis of spine and knees after many years of lifting, hauling, running and standing. Aging factory workers, construction workers, tradespeople, many won’t live longer and have an earlier decline in health than those CEOs that sit behind a desk and want to make them work even longer. I heard Elizabeth Warren talk about taxing their entire income as is only fair and equitable and increase the number of people paying into SS by including illegal immigrants. Not only have these robber barons taken jobs and outsourced them, they then demand that the working poor, people who work physically demanding jobs work longer. It’s disgusting.