by Middle Class Warrior
Rightardia has written about Social Security and these are some of the facts and some opinions:
Facts:
1. Social Security (SS) is fundamentally a forced savings plan.
2. SS is not subject to the vagaries of the stock market that a privatized plan would be.
3. SS is funded by the FICA tax, the most regressive of federal taxes with the $108,500 cap that has little affect on the most affluent Americans.
4. Because social Security is taxed using a regressive formula, the middle class has borne the brunt of the tax since it inception in the 1930s.
5. SS has little effect on the deficit because it is not funded by federal income tax. In fact, money has been borrowed by the federal government from the excess payments to the Social Security trust fund. The federal government has to issue a bond when it borrow this money.
6. Both the UK and Chile tried to privatize their SS systems but neither country was successful. UK citizens enjoy retirement benefits half of their US counterparts because of the Margaret Thatcher privatization experiment.
Opinions:
1. Because of the SS cap, it has become a political football when the GOP is in power.
2. The tax will affect the affluent more in the future because the average American makes less than $100,000 per year. These 'have mores" are the GOP base.
3. The simplest way to 'fix' SS would to be to apply it to 100 per cent of every Americans income like the other half of the FICA tax, Medicare. The FICA taxable rate could be lowered for both employees and employers which is 6.5 per cent of income.
4. The Republicans know that the Democrats are planning to reform Social Security in the next session of congress they are calling 'the lame duck session," a term that had only been applied to the president after a president from the other party is elected.
5. The GOP knows the only solution to keep SS solvent is to either rise the cap or reform the FICA tax. Rightardia thinks the latter is the best approach because it will eliminate the politics that goes on every presidential term in few other country except the US. The billionaires and millionaires need to start anteing up for Social Security, too.
6. Obama has already stated that SS will not be privatized. Even if the GOP were to take the House in the fall, any privatization bull that would reach Obama's desk would be vetoed. The GOP was unable to privatize SS when the Republicans controlled the congress and the presidency during the Bush terms. Why does the GOP think such a privatization plan can now succeed?
7. The GOP will try to divide the middle calls on this issue by suggesting there will be no Social Security left for younger Americans. They may continue efforts to suggest SS is a deficit issue, but nearly 85 per cent of the deficit was caused by GOP tax cuts and defense spending according to the Nancy Pelosi blog, the Gavel.
8. The Republican end game may be to privatize SS so Wall Street can loot the SS Trust Fund and charge management fees on private SS accounts.
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