With Republicans now in control of both houses of Congress, the current president already on record as having supported cuts in Social Security and Medicare, and all signs pointing to the likelihood that the 2016 election could bring us either a neo-liberal or a neo-conservative president, and an increasingly Republican-dominated Congress, it’s time for an aggressive mass movement built around defending and expanding both those critical public funding programs.
The first step is getting out the truth that Social Security is not broke or doomed, but simply needs to be better funded by ending the free pass given to the wealthy. Simply eliminating the cap on income subject to the FICA tax, currently set at the first $118,500 of earned income, would make the system fully able to pay all promised benefits for the next century or more. Extending the tax to cover unearned income -- basically capital gains (a tax that only impacts the wealthy) would allow for an expansion of benefits.
There is today $2.8 trillion in the Social Security Trust Fund, a fund that was created by a compromise reform reached by President Ronald Reagan and a Democratic Congress led by House Speaker Tip O’Neill back in 1983. The idea at the time was to have Baby Boomers and their employers pay more into the system ahead of the time they would be retiring, when their numbers would place a burden on current workers (the Boomers’ kids and grandkids), since the system has always since its inception financed current retirees’ benefits through current workers’ FICA payroll tax payments. (The reform also raised the full retirement gradually from 65 to 66 and later to 67 for people born after 1964.)
That advance funding of Boomer retiree benefits is now starting to be tapped but that is what was supposed to happen to it, a point the doom-sayers and political scare-mongers fail to mention. It turns out, though, that the advance funding was not large enough for several reasons. One, very positive, is that people are living longer than projected because of improved nutrition and medical advances. Another is that a series of recessions and market collapses, especially during the “lost decade” of 2000-2010, caused in large part by corrupt investment banks in 2001 and by Wall Street’s mega-banks turned casinos in 2007-9, cut severely into FICA contributions, as well as into workers’ personal savings and net worth.
Right-wing and corporate propaganda to the effect that the Trust Fund is smoke and mirrors or just “IOU” scrips, is absurd. It’s true that Washington politicians promptly borrowed FICA tax revenues as soon as they came in the door to allow them to fund things like endless wars and Pentagon war-profiteers without raising taxes, but that debt is every bit as real as the federal debt held by investors in the form of treasury bills and notes. It will be covered, whether by rolling it over into new debt or by raising taxes.
Boomers have the political power to remake Social Security and to expand Medicare to all! We just have to use it!
In any event, as has been often pointed out, even were the fund to be exhausted in 2033 or 2034 because of inaction by Congress to boost revenue for Social Security, the system would, at the current FICA tax rate of 6.2% for employee and employer, still be able to fund 77-78% of promised benefits out into the distant future beyond the time when the last Baby Boomer has moved off to some Woodstock in the sky.
More importantly, there is no way that will happen. Why? Because the Baby Boom generation, in retirement, will constitute not just the largest block of elderly voters in the nation’s history (almost 78 million people!), but also will represent the largest elderly bloc proportionately, in history, fully 1.5 times as large a segment of the electorate as the already powerful current senior vote.