Social Security is Already Under Attack Again
Now that the Republican party has lost the presidency and failed to recapture the House of Representatives, Republicans and the more stupid Democrats in Congress, along with the chattering classes, will immediately resume their “National Debt” hawkishness.
While Donald Trump and Mitch McConnell were giving away trillions of dollars, no Republicans spoke out against the deficit spending required to underwrite those giveaways, nor were they worried about the national debt.
Mitch McConnell is already sounding the deficit and national debt alarms again and, per usual, he blames SOCIAL SECURITY AND MEDICARE for the fiscal crisis that his party caused, despite the fact that Social Security and Medicare are off-budget expenditures and have not cost the federal government one red cent more in 2020 than it did in 2016. What McConnell is really trying to do is pay off the Trump Tax Cut Debt with Social Security revenues, which is something he has been trying to do since he arrived in the Senate.
The Social Security Truth Serum
Social Security is not funded from income tax revenues and should not be included in those pie-charts showing where the federal government spends its money because that money doesn’t belong to the federal government. It belongs to the people.
Let’s remember the real reason that Republicans keep attacking Social Security: the employer’s share of the monthly contribution. Since 1935, employers – and that means every employer doing business in the United States – have been making contributions to their employee’s social security accounts because the Social Security Act of 1935 REQUIRES them to do so.
Currently, employers actually pay 7.65% of each employee’s wages (the term wages is used to cover both salary and hourly workers) into that employee’s Social Security Account. (That number includes Medicare.)
Since 1935, American businesses have paid out trillions of dollars into the fund….and they want that money back. (I believe that actual number is approximately $7 trillion but that calculation is several years old now.)
Total wages paid to all American workers in 2019 was approximately $18. 6 trillion, which means that employers kicked in approximately $1.386 trillion in 2019….and they want their money back!!!
If the employer’s share of the Social Security emolument were canceled, you would never hear another word about restructuring Social Security.
Without the Employer Contributions, Social Security would make no sense whatsoever, because it would just be a guaranteed savings account for workers. The intent behind the Employer Contribution was to FORCE employers into some degree of profit-sharing with their employees.
The Rise of the Gig Economy
The widespread adoption of the “Gig Economy,” meaning the use of independent contractors to fill positions formerly filled by hourly and salaried employees, which has been accelerating rapidly during the epidemic, is specifically aimed at shielding employers from their Social Security and Medicare obligations because self-employed people (all of whom are supposed to qualify as independent contractors, which many do not) must pay the employer’s share of the Social Security and Medicare contributions, doubling their overhead to 15.3% of their gross income. That comes out of their gross income and it is not tax-deductible for them while the employer contributions to the Social Security and Medicare Trust Funds ARE TAX DEDUCTIBLE for employers and employee-related expenses.
Having been a contract worker for most of my life (what else would you call a freelance writer), I have often felt that this particular part of the law was unfair. Employers should not be allowed to evade Social Security and Medicare payments even for gig workers. Don’t forget that the employers aren’t liable for vacation pay, sick pay, or injured worker compensation
Increasing the Social Security rate by one percent to the worker and one percent to the employer would go a long way toward guaranteeing Social Security into the foreseeable future. A two percent contribution from each would ensure the survival of the Fund into perpetuity but that would probably be too onerous for workers.
Making Social Security payments non-taxable would also go a long way toward improving the standards of living for people who depend on Social Security.
Eliminate the grossly unfair practice of cutting off the Social Security payments to the spouse of a deceased recipient. Married couples earned those retirement funds together and their lives in retirement are based on their joint income. When a husband who earned more than his wife dies, the wife receives the husband’s stipend but loses her own. The same is true for husbands who lose their wives.
Stop and think about that for a moment and realize that, if the same couple paid the same amount into a private retirement fund, the surviving spouse would continue to receive the same income. Since this rule affects women more often than men, this should be on every feminist’s agenda, regardless of his or her gender.
And, finally, outlaw the practice of the federal government “borrowing” funds from the Social Security Trust Fund when those funds are repaid without the interest that would be accrued if the funds had been invested properly.
Thank Francis Perkins
Social Security was the brainchild of Francis Perkins (1880-1963) who served as Secretary of Labor under FDR from 1933 to 1945, making her the first woman to hold a cabinet post, longest-serving Secretary of Labor and the actual architect of the entire New Deal program. Remember her name.
That’s Francis in the featured image at the top of this post. Tip your hats.