Social Security report leads to more calls for cuts

San José, CA – On April 21, the Trustees of Social Security and Medicare released their annual report. The report includes a projection that the Social Security benefits will be greater than income next year for the first time since 1982. The Social Security trust fund, which has grown to almost $3 trillion, will start to be tapped for the first time.

The Wall Street Journal said that Social Security and Medicare “have contributed to larger deficits set to exceed $1 trillion in 2020.” This is the big lie promoted by Wall Street billionaires to try to get cuts in Social Security benefits. For more than 30 years, Social Security has brought in more than it spent, which has led to the large trust fund. In fact, Social Security has run a surplus, and made the federal government deficit smaller than it otherwise would have been.

The Trump administration has already broken its campaign promise to not cut Social Security or Medicare; its budget proposal has $900 billion in cuts to these two programs over the next ten years.

What none of the major or corporate newspapers mention is what happened the last time Social Security had a shortfall in the 1980s. There was no trust fund then, so the government borrowed money until it worked out a plan to raise the Social Security tax rate on workers from 5.4% to 6.2% – a 0.8% increase that was matched by employers. Today a similar tax rate increase of 1.1%, or $11 on every $1000 of income, would do the trick.

This tax increase could be even smaller if the Social Security tax were made fairer. Right now, it is a regressive tax, that is, a tax that falls more heavily on lower-income taxpayers. The Social Security tax also only covers wages and salaries up to $128,400. So one way to make the Social Security tax more fair would be to lift the cap so all wages and salaries are taxed. Medicare already does this.

Another way would be to have Social Security tax all other forms of income that are not currently taxed. This is would include interest, corporate dividends, business profits, rental income, or capital gains from sales of stock that mainly go to high income individuals.

Either of these would reduce the need to increase the Social Security tax rate, and doing both might eliminate the need to raise the tax rate at all.

Last but not least, the projected end of the Social Security trust fund is because the trustees expect immigration to fall in the coming years. While this is what Trump and the Republicans want, increasing immigration would help overcome the funding issue, as immigrants tend to pay more in Social Security taxes than they receive in benefits.

Working people who rely the most on Social Security for their retirement and disability need to expose the lies of Wall Street and the politicians, including some Democrats. We need to fight any and all efforts to cut benefits. We also need to fight efforts to privatize Social Security, which would hand our retirement savings over to Wall Street.