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Friday, 12 April 2013 10:00

White House and Senate Democrats Should Eliminate Social Security Tax Cap for the Rich: Stop CPI Scam on Elderly

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ambank22BuzzFlash has posted many a commentary on ways to increase the solvency of Social Security without reducing often miserly monthly checks to the nation's elderly.  

Unfortunately, the White House is taking the lead on playing the scrooge of austerity imposed on those who can least afford it, while the president plays golf and dines with the barons of Wall Street who could ensure the long-term financial security of the nation's retirement income program for the working class.

Yesterday, in a commentary, "Elizabeth Warren Shocked by Obama CPI Proposal to Squeeze Blood Out of the Middle Class When the Wealthy Can Sustain Social Security," we once again noted an alternative Social Security financial solidification plan as detailed by Thomas Edsall of the New York Times:

Earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year. Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system…. [Bold and italics inserted by BuzzFlash.]

But because the Obama White House has adopted the austerity meme of the Republicans, the option to the cat food chained CPI doesn't get discussed much.  That is because Obama, as is often the case, is accepting the GOP and Wall Street "frame" of the deficit being reduced, in part, on the backs of the middle class and poor.  As we've noted recently; the president may even believe the false meme.

That is why it is not surprising that a site, Remapping Debate, called Democratic Senate offices and received very little in the way of recognition of or support for having those Americans who earn more than $113,700 pay into Social Security for their income above that level.  In an April 10 article, Remapping Debate disclosed:

For all the talk of the Social Security system running out of money, it is well established that raising or eliminating the cap on the wages subject to payroll taxes would guarantee a healthy Social Security system for many decades, and do so without cutting benefits or raising the retirement age.

Public support for elimination of the payroll tax cap is high. According to a National Academy of Social Insurance Survey conducted in 2012, 68 percent of Americans favor eliminating the cap.

Only the top 5.2 percent income earners would pay more in payroll taxes if the cap were completely eliminated; if the cap were eliminated for income over $250,000, only the wealthiest 1.3 percent would pay more. Both estimates come from the Center for Economic and Policy Research.

Nevertheless, these routes to ensuring the promises made to workers that they could rely Social Security benefits are kept is little discussed on Capitol Hill. And even though the national Democratic Party has presented itself as the defender of Social Security, Remapping Debate discovered a profound unwillingness among most Democratic senators to identify their position on the issue.

Granted that from BuzzFlash's experience, non-mainstream reporters don't always promptly hear back from Senate offices, it is still telling the number of Democratic Senate offices that did not have a stated position on eliminating the cap.  That is probably because they don't want to be undercutting the position of their party's president.

Yet, here is an option that would end the Social Security funding debate right quick. Then create a progressive tax structure on payments into Social Security and you could raise benefits.  And BuzzFlash would add that the barely livable Social Security payments for many could be bolstered even further with a modest Social Security tax on capitol gains.

But the Obama White House has, once again, chosen Wall Street over Main Street in the Social Security funding debate: "austerity" over livable incomes for those on Social Security.  Given the recent soaring stock portfolios of the wealthy, what this amounts to is lavish profits for the rich and Spam for many elderly, including Veterans, who have given so much to this nation.

In The Nation, William Greider developed an interesting theory that Obama and the "austerity" champions are actually playing a shell game with Social Security that is insidious:

In fact, there is an even bigger lie concealed by the fiscal scolds and ignored by witless media, too. Again and again, self-righteous critics have portrayed Social Security as the profligate monster borrowing from the Treasury and sucking the life out of federal government.

Guess what? It's the other way around. The federal government borrows from Social Security. The Treasury has been borrowing from the Social Security Trust Fund for 30 years, and the debt to Social Security beneficiaries now totals nearly $3 trillion. The day is approaching when that money will be needed for its original purpose: paying Social Security benefits to the working people who contributed to the fund.

That is the real crisis that makes the financial barons and their media collaborators so anxious to cut Social Security benefits. They would like to get out of repaying the debt—that is, giving the money back to the people who earned it. The only way to do this is cut the benefits—over and over again. Count on it. If the president and Congress succeed in this malicious scheme, they will come back again and again to cut more and more. If the politicians join this sordid conspiracy, voters should come after them with pitchforks and torches.

To be blunt, the White House is leading the way in boldness indeed.  What it is, however, is not "the audacity of hope"; it's the boldness of a scam on the senior citizens of America.

(Photo: Rainforest Action Network)