On August 14, 1935, President Franklin Roosevelt signed the Social Security Act into law, ignoring the apocalyptic predictions of Republicans such as New York representative Daniel Reed, who said on April 19 of that year:
“The lash of the dictator will be felt and 25 million free Americans will for the first time submit themselves to a finger print test.”
Reed’s colleague from New York, Representative James W. Wadsworth chimed in on that same day:
“This bill opens the door and invites the entrance into the political field of a power so vast, so powerful as to threaten the integrity of our institutions and to pull the pillars of the temple down upon the heads of our descendants.”
As many Americans have come to learn over the years, Republican predictions of calamity rarely come true, and such is the case with Social Security, which has been credited with helping millions of citizens maintain a dignified lifestyle throughout their senior years. The Center For Budget and Policy Priorities estimated in 2010, without Social Security, 45 percent of Americans aged 65 and older would live in poverty. Thanks to Social Security, that number is 9 percent.
Unfortunately, in recent times some Democrats have joined Republicans in promoting falsehoods and inaccurate information about Social Security. Even President Obama has indicated a willingness to consider a change to how Social Security cost of living increases are figured, through the use of something known as “Chained CPI (Consumer Price Index).” For those who may not be familiar, Chained CPI makes assumptions about buying habits that may or may not be correct, and its use will produce lower cost of living increases for Social Security recipients than using the traditional Consumer Price Index. Where the standard CPI calculates cost of living increases based directly on the price of goods and services, Chained CPI assumes that as the cost of certain things increase, people will settle for lower cost alternatives.
A popular example of how Chained CPI works is with the price of beef vs. chicken. Chained CPI figures that if someone can no longer afford to buy beef, he or she will simply switch to buying chicken. But what happens when chicken becomes too expensive? Will the Chained CPI formula use cat food in its calculations?
Thanks to the mainstream media and politicians who refuse to check the facts or who are simply being deceitful, the public believes many things about Social Security that just aren’t so, such as:
- Social Security adds to the deficit
- People live much longer now, so we need to raise the Social Security retirement age
- Most people get much more money out of Social Security than they ever put in
- Social Security is bankrupt
All four of those claims are 100 percent false. Republicans have to demean the program whenever they get the opportunity because Social Security is one of the things that anti-goverment Republicans hate; a government program that works. But Democrats should not be propping up Republican falsehoods by appearing to agree with them.
Currently, Iowa Senator Tom Harkin is sponsoring a bill to remove the cap on earnings subject to the Social Security (or FICA) tax. Currently this tax is only collected on the first $113,700 of “earned” income. (Earned income is an important term, because “unearned” income, such as dividends and interest, is not subject to FICA tax at all.) According to a 2010 Congressional report:
If all earnings were subject to the payroll tax, but the base was retained for benefit calculations, the Social Security Trust Funds would remain solvent for the next 75 years.
The same report also identifies growing income inequality as a reason why the cap should be removed:
Since 1982, the Social Security taxable earnings base has risen at the same rate as average wages in the economy. However, because of increasing earnings inequality, the percentage of covered earnings that are taxable has decreased from 90% in 1982 to 85% in 2005. The percentage of covered earnings that is taxable is projected to decline to about 83% for 2014 and later.
In other words, the average wage is rising, but because most of the increase in wages is going to the top earners, more and more earnings are falling above the cap.
The website of the group The Other 98 Percent has a petition you can sign to call on Congress to strengthen Social Security. You can also call or email your senators and congresspersons and ask them to support Senator Harkin’s bill.
See the article “Everyone Is Lying To You About Social Security, Here Is The Truth” for more information about false and misleading claims regarding Social Security.
Happy Birthday, Social Security! May you have a long, long life!