The simple Social Security fix no one wants to talk about

One change could eliminate the long-term shortfall, promote tax equity and allow a modest benefit increase now

The 2012 Social Security Trustees’ Report shows the nation’s most important and popular social insurance system is on sound financial footing for at least another generation. With $2.7 trillion in its trust fund, Social Security can pay full benefits through 2033.

After 2033, the program can still pay 75% of benefits, even with no action by Congress. And because of how Social Security calculates benefits, that “75%” of benefits in 2033 will still be, on average, higher in inflation-adjusted dollars than full benefits are today.

But America can do better than that. Under the “Scrap the Cap” plan, Social Security can pay 100% of benefits after 2033, and even modestly expand benefits today, if Congress makes one simple change: eliminate Social Security’s cap on taxable income (now set at $110,100) so high income earners pay the same tax rate as middle class workers.

Eliminating Social Security’s cap on taxable income (now set at $110,100) means
high income earners would pay the same tax rate as middle class workers

The additional funding could boost benefits for low-income earners, add credits for individuals (often women) who take time from work to raise their family, and restore benefits for college students that were cut in the 1980’s.

“These improvements immediately boost the American economy, build economic security for women, and safeguard educational opportunities for young people who have suffered the loss of a parent,” according to Marilyn Watkins, policy director for the Economic Opportunity Institute.

Social Security benefits are more critical to American economic security than ever. According to estimates, nearly one-half of Americans will be unable to maintain their standard of living in old age. About 1 in 4 Washington households – more than 1 million Washingtonians, including 73,000 children – received old age, survivor, or disability benefits from Social Security in December 2010.

[Cross-posted from Washington Policy Watch]

Event Reminder: The Many Faces of Social Security

Click to download a PDF poster of this event.

Average life expectancy increasing – but for whom?

From Ten Reasons Not to Cut Social Security Benefits:

The main argument for hiking the Social Security retirement age—which amounts to an across-the-board benefit cut of about 7 percent for each year it is raised—is that average life spans are increasing.

But longevity improvements are highly concentrated among upper-income and well-educated Americans. Over the past twenty five years, life expectancy at age 65 has increased by just one year for lower-income men, compared to five years for upper-income men. As the graph below shows, men in the bottom half of the earnings distribution have shorter life expectancies today than men in the top half had back in 1982. For women in the bottom half of the earnings distribution, life expectancies actually have declined over the same period.

Reducing benefits for everyone on the basis of longevity improvements for only the most prosperous Americans would be an inequitable and poorly reasoned policy response.

Support the Reid-Sanders Social Security Protection Amendment

We need you to call your Senators and demand that they vote for the Reid-Sanders Social Security Protection Amendment.

Majority Leader Harry Reid (NV) and Senator Bernie Sanders (VT) are leading the fight in the Senate to protect Social Security from drastic cuts. The vote will be this week.

Their amendment says:

Social Security benefits for current and future beneficiaries should not be cut and Social Security should not be privatized as part of any legislation to reduce the Federal deficit.

Call your Senators RIGHT NOW toll-free at 1-866-251-4044. You’ll be given a choice of which of your state’s two senators to be connected with. Call BOTH if you have the time. It only takes a minute each. Tell the person who answers the phone:

I am a voter/constituent living in [your state]. I am calling to tell the Senator:

  • I oppose any cuts to Social Security and
  • I strongly urge them to vote YES on the Reid-Sanders Social Security Protection Amendment.

Please take the time for this very important effort today. This is for all of us who depend on Social Security. Call Today: 1-866-251-4044.

Social Security benefits allow Harriet Moulton to care for her grandson

From Social Security: What’s at Stake for Children, Youth, and Grandfamilies

With her two children grown, Harriet Moulton and her husband began to map out how they wanted to enjoy a little more space and time together. “We figured that we had a number of years to ourselves, to do things we’d like to do. We had two empty bedrooms – one was going to be his study, one was going to be for my art and sewing.”

But a phone call six years ago derailed their plan. Harriet heard her son’s voice on the other end of the line. “Come get Damian,” he said, “or he’s going to the state. I can’t take care of him.”

She responded without hesitation. “Hold on while I get an airplane ticket,” she said. “I’ll be right there.” Harriet, who was 44 at the time, bought a ticket to Colorado and came back with Damian, her three-month-old grandson.

For several years, Harriet and her husband, George, took care of Damian. Just before she and her husband completed the process of legally adopting Damian, George died in May 2010. The following October the adoption went through, but fortunately Damian remained eligible for survivor benefits.

“I’m really thankfully we were able to adopt him,” Harriet said. “It allows him to be eligible for the survivor benefit and every penny counts.” Continue reading “Social Security benefits allow Harriet Moulton to care for her grandson”

Social Security helps George Arévalo care for his three grandchildren

From Social Security: What’s at Stake for Children, Youth, and Grandfamilies

For his next birthday, George Arévalo has a simple plan to celebrate. “I’ll be doing what I’m supposed to be doing – taking care of the children.” With his wife Virginia, 77, George has cared for his three granddaughters, ages 6, 12, and 18, for the past three years. George and Virginia depend on Social Security benefits.

“It’s there to make sure my granddaughters can go to the doctor when they are sick, eat healthy food, and live with loving family members,” George said. “That’s all I have to live on.”

George was in his 70s when he was told his son and his daughter-in-law weren’t going to be able to continue to take care of his grandchildren. The retired barber and his wife decided they would step in.

“I thought to myself, I’m not going to give them to Child Protective Services,” he says. “I’m going to take care of them. And I did. They are happy right here in my home.” Continue reading “Social Security helps George Arévalo care for his three grandchildren”

Social Security helped Maureen Sullivan continue her education after her father died

From Social Security: What’s at Stake for Children, Youth, and Grandfamilies

Maureen Sullivan’s father made education a high-priority for his family and held high expectations for Maureen and her older sister.

“My dad was an extremely intelligent and knowledgeable man,” Maureen said. “He was a lifelong learner and he instilled a strong sense on the value of education in my sister and me.”

Unfortunately, Maureen’s father didn’t get the chance to see his daughters graduate from college. He passed away when Maureen was 14. Thankfully, however, the Social Security survivor benefits that Maureen received helped to keep her family in their home and Maureen in the school she attended.

“I was a freshman in high school and my sister was a freshman in college at the time,” Maureen said. “Emotionally, my dad’s loss hit us really hard. We were hit hard financially as well. The majority of our income had come from my dad’s salary. Social Security survivor benefits really helped us to pay the bills and have food on the table. We were grateful for the support.” Continue reading “Social Security helped Maureen Sullivan continue her education after her father died”