Tag Archives: scrap the cap

Contest Backfires on Social Security Privatizer

(via AFL-CIO Now)

Oh, the sweet irony.

Pete Peterson is the conservative billionaire who is a major financier in the effort to dismantle, cut and privatize Social Security, Medicare and Medicaid. Recently he and his foundation held a contest asking folks to submit videos on why it is important to “fix” the national debt of which, he and his foundation falsely claim, Social Security is a major contributor.

Sometimes the best-laid plans for a propaganda campaign can go awry. The winner of the $500 grand prize determined by popular vote on the website came from the completely opposite side of Peterson’s cut Social Security argument.

The “Just Scrap the Cap” winning video features rapping seniors rhyming their way to the conclusion that the way to shore up Social Security’s long-term finances isn’t through cuts or privatization but by scrapping the payroll tax cap on Social Security. That means billionaires like Peterson and rich CEOs would pay the same Social Security tax that low- to upper-middle-income workers do. Currently, any income above the $113,700 cap is exempt from the Social Security tax.

Peterson’s check went to Robby Stern of Social Security Works, the group that produced the video. Stern signed it over to Social Security Works and said:

“We will use the $500 to finance our education efforts and our Scrap the Cap campaign. We want to save Social Security from Peterson and his band of wealthy supporters.”

AK Senator Begich Announces Plan to Make Social Security Fair and Dependable

From Sitka News:

U.S. Senator Mark Begich (D-Alaska)

U.S. Senator Mark Begich (D-Alaska)

U.S. Senator Mark Begich (D-AK) introduced his three-point plan to strengthen Social Security today at a roundtable discussion with Alaska organizations that are likely to feel the effects of President Obama’s recent budget proposal to cut Social Security benefits.

“There are responsible ways to cut the budget without hurting our seniors,” said Sen. Begich.  “While I agree that we need to make major cuts to reduce the deficit, let’s be clear – Social Security is not the problem.”

In response to the president’s proposal, Begich outlined his own plan to make sure Social Security remains viable and robust for decades.  Key elements of the plan include:

  • Replace the current system for calculating cost-of-living adjustments to more accurately reflect the cost-of-living for seniors.  This would replace the consumer price index (CPI) for workers with a CPI-E, which reflects costs for seniors and would increase their benefits.
  • Lift the cap on high-income contributions.  Current law sets a cap on contributions for higher income earners; this year they quit paying when their wages hit $113,700. By phasing out this cap, which has essentially become a tax loophole, more people would pay into Social Security all year long.  As a result, the solvency of the trust fund would be extended for about 75 years.
  • Repeal provisions that unfairly penalize workers. The Windfall Elimination Provision and Government Pension Offset formulas currently used to calculate Social Security benefits penalize workers, especially many of Alaska’s public employees, who contributed to Social Security in past jobs but retire under other “non-covered” government pensions.  This currently affects 10,200 Alaskans and can reduce their Social Security benefits by more than a half.  Senator Begich proposes to repeal the provision in the Social Security Fairness of Act of 2013, which he will introduce next week.

“The future of Social Security is a huge concern for many Alaskans,” said Begich.  “The plan I outlined today will ensure that Social Security is available for Alaskans and their children for the next 75 years.”

Begich also said he can’t support the so-called “chained CPI” proposal outlined in the President’s FY 2014 budget and championed in the past by many Republican lawmakers.  Most chained CPI proposals hit low-income seniors and disabled Americans especially hard, he said.

Invitees to the roundtable included representatives from the American Association for Retired People (AARP), American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), and National Education Association – Alaska (NEA-Alaska) who discussed the merits of the proposal during an hour-long discussion at Steller Alternative School.

Rep. Barney Frank on the Social Security cap

From Daily Kos:

barney frankIf former Rep. Barney Frank does get an interim appointment until a more permanent replacement to fill Sen. John Kerry’s seat is elected, he has a plan for dealing with the nightmare fiscal scenario created for the country in the coming few months with the forestalled fiscal cliff. He’s advocating for progressive Social Security reform to be part of the mix.

Simply put, he thinks Democrats should push for additional revenue through an increase in the payroll tax for upper-income earners–not just the very rich, but also the near-rich who made out quite well  in last week’s fiscal cliff deal. With President Obama backing off of his original pledge to raise tax rates on family incomes over $250,000 and shifting the threshold to $450,000, the Democrats left vitally needed revenues on the table. The answer for the next round is clear, says Frank: Get more money out of the exempted swath of income—from both those whose incomes fall within that window and above it—via the payroll tax.”We did not get at taxes between $250,000 and $450,000, which makes it good territory for putting it out for the Social Security payroll tax base…There is a segment of income from people who make between $250,000 and $450,000 who we think could sustain an increase in taxes,” he said. “If they had been [hit with an income tax increase] I’d say we don’t want to double-hit these guys, but now it’s a second cut at the apple for this [income range] in a politically popular way, to protect Social Security rather than taking it out on the old woman in Boston living on $15,000 a year.”

That last bit of the quote is in reference to the chained CPI, the currently in vogue “solution” to extending the life of Social Security. The current payroll tax cap is $113,000—anyone making more than that pays payroll taxes on just that amount and the rest is clear. It is revenue ripe for the picking, and far more equitable approach to shoring up Social Security than shrinking benefits.

A Sen. Frank, with no real allegiances within the Senate, no need to make friends there, and nothing to lose by raising a little hell could be just the ticket for some common sense Social Security reform.

Sign our petition asking Massachusetts Gov. Deval Patrick to appoint Barney Frank interim U.S. senator from Massachusetts.

News: Young voters face conflicting visions of Social Security’s future

From the Florida Sun-Sentinel:

young male worker in tieToday’s young adults face a future of higher taxes or lower benefits to keep Social Security afloat by the time they retire.

That’s why young people have the most at stake in the presidential debate this year over very different visions for Social Security, an economic mainstay in the retirement haven of Florida where more than one in five residents get checks every month totaling $4.5 billion.

Some voters who fear that the popular program will disappear before they retire are attracted to Republican plans to allow them to invest part of their payroll taxes in stocks and bonds rather than put it all in the Social Security trust fund.

Others fear that “privatizing” Social Security would result in a roller-coaster ride on the stock market that would put their future at risk and undermine a lifeline that has kept millions out of poverty.

“The contrast is pretty clear on Social Security, so this is one issue that will influence my decision,” said Jad Khazem, 18, a pre-law student in Boca Raton who will vote for the first time in November. “As someone who lived with his late grandmother for years as a child, I know how important it is for seniors to retire with peace of mind. I’m a little uneasy about this privatization talk.”

He and many other voters favor raising the cap on the yearly income that is taxed for Social Security – currently limited to $110,100 – to bring in more revenue and help keep the system solvent. The Social Security tax is 12.4 percent of earnings, half paid by workers and half by employers. The maximum benefit this year is $2,513.

“I am more than willing to pay a little more money out of my paycheck to help someone else,” said Anna Eskamani, 22, a full-time worker at Planned Parenthood and part-time student in Orlando, whose family received Social Security survivor benefits while she was growing up. “That’s why this nation is so great, we support each other’s growth.”

Other proposals include raising the eligibility age for full benefits – which is already rising gradually to 67 — or limiting benefits to the wealthy.

But many young voters are wary of relying on a government program that is projected to run short of money by 2033.

“At the rate Social Security is going now, it won’t be there when I retire,” said Matt Hoopfer, 21, a student at Florida State University. “We can’t rely on the government to keep track of our money because they keep borrowing from Social Security, and now we’re almost out. I believe in private investing, I believe in individuals being able to do what they want with their money and getting their return on it.”

Voters have a clear choice between President Barack Obama and Republican challenger Mitt Romney, who are pointing in opposite directions on Social Security.

Obama says mere “tweaks” would preserve the system, though he has not proposed a fix during more than three years in office.

“We will keep the promise of Social Security by taking the responsible steps to strengthen it, not by turning it over to Wall Street,” Obama said while accepting the Democratic nomination for re-election.

Romney has been somewhat more specific. He proposes to retain the current system for those 55 and older, lower the rate of cost-of-living increases for higher-income future recipients and gradually increase the eligibility age by another year or two.

Romney has embraced the concept of investment accounts under Social Security but has not spelled out a proposal. The Republican Party platform this year calls for an overhaul that would “allow younger workers the option of creating their own personal investment accounts as supplements to the system.”

Backers say that stocks simply out-perform Social Security over time, despite the occasional market crash, so why not tap them?

“Today’s young workers will have a very low rate of return on Social Security. For those now in their 20s, it would not even be the bond rate,” said Pam Villarreal, senior fellow at the National Center for Policy Analysis. “These little blips in the stock market are not a good comparison. If you have a personal account to supplement or replace Social Security, you are going to be in it for the long haul.”

But many voters were unnerved by the market crash of 2008, when the average 401(k) retirement-savings account plunged by 23 percent. Stocks have largely recovered since then. The S&P 500 stock index closed on Thursday at its highest level since Dec. 31, 2007. But those who cashed out after the crash suffered big losses.

“The stock market is great for other types of financial investment. But a system like Social Security, which has been stable for so many years, doesn’t need to be reinvented, it just needs to be adjusted,” said Carl Fowler, 60, an emergency-management trainer in Port Saint Lucie.

Experts for many years have said the system could be easily fixed for generations, but only if politicians had the will to make gradual adjustments to taxes and future benefits.

“We would have to put a crowbar in our wallets. Some people would have to pay more in taxes, and we might want to do some slight adjustments in payouts of benefits. But the pain would be easily absorbed and shared across the population,” said Marilyn Moon, a former Social Security trustee and now senior vice president at the American Institutes for Research.

“Nobody wants to deal with the fact that this will cause pain to solve, even if it’s fairly minor pain. We don’t have a lot of political courage in this area at this point.”

Video: An easy fix for Social Security – Scrap the Cap!

An educational event at Highline Community College on April 12th highlighted some of the common misconceptions about Social Security – and showed how easy it would be to strengthen the program and improve benefits.

The event was taped and edited together by the Washington State Labor Council’s Kathy Cummings. Please enjoy this brief video featuring highlights from the event!

Rep. Dennis Kucinich to headline WA forum on Social Security

Representative Dennis Kucinich will be speaking at a forum entitled “The Threat to Social Security – An Issue for All Generations” on April 12th at Highline Community College in Des Moines, WA.

The event will run from 6:30 – 8:30 PM in the Student Union Building (Building 8),  and also feature Pramila Jayapal, Executive Director, One America; Marilyn Watkins, Policy Director, Economic Opportunity Institute; and Magdaleno Rose-Avila, Executive Director, The Latino Equality Initiative.

The forum is free and open to the public – please mark your calendars.