With the new GOP-led Congress setting their sights on dismantling Social Security, one earned-Benefit at a time -- we need to have our rhetorical "ducks in a row."
In case you missed it, the first benefit the GOP has already put into their cost-cutting cross-hairs is Disability Insurance:
[...]
"By putting this rule into effect, we are sending a clear indication that we're not just going to allow the raid of retirement Social Security to be used to bail out the disability trust fund," Reed said [Rep. Tom Reed, R-N.Y.]. "We need real reform. This makes that real reform that much more likely."
Advocates for older Americans are warning that the rule could be used to help push through benefit cuts, especially since House Republicans have opposed raising taxes.
"It is difficult to believe that there is any purpose to this unprecedented change to House rules other than to cut benefits for Americans who have worked hard all their lives, paid into Social Security, and rely on their Social Security benefits, including disability, in order to survive," said Max Richtman, president of the National Committee to Preserve Social Security and Medicare.
Nice huh?
Not very.
I got into a rhetorical discussion about this SS structural change, with an Independent voter today. He insisted this cut was necessary "because Disability Insurance was rapidly running out of funds and something needed to be done to balance it."
When I said it was an earned benefit, funded by our 'FICA Payroll taxes',
-- his answer was "No it's not -- Disability Insurance has no viable means of regular funding -- other that borrowing from Social Security (and the General Fund) -- and that's the problem!"
I was stunned. And insisted that "DI was funded by a sliver of our Payroll taxes -- that US workers pay into every week -- that's what makes it an Earned Benefit." I added for good measure: "All we need to do is raise the FICA ceiling, and Social Security becomes solvent, in the long run."
This Independent voter was having none of it, and kept politely insisting that some Social Benefits have to be cut. "It's sad."
Well, who was right in that rhetorical duck-and-cover debate ...
How is Social Security Financed?
Social Security
Official Social Security Website
[...]
Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $117,000 (in 2014), while the self-employed pay 12.4 percent.
In 2012, $590 billion (70 percent) of total OASI and DI income came from payroll taxes. The remainder was provided by interest earnings ($109 billion or 13 percent) and revenue from taxation of OASDI benefits ($27 billion or 3 percent), and $114 billion in reimbursements from the General Fund of the Treasury -- almost exclusively resulting from the 2012 payroll tax legislation.
The payroll tax rates are set by law and for OASI and DI apply to earnings up to a certain amount. This amount, called the earnings base, rises as average wages increase.
Tax rates for employees and employers each under current law:
Year OASI DI OASDI
2000 and later 5.30 0.90 6.20
SOURCE: 2013 OASDI Trustees Report.
Well,
0.90 % is
a sliver of 6.20% -- is it not?
Glossary of Social Security Terms
OASDI (Old Age Survivors and Disability Insurance)
The Social Security programs that provide monthly cash benefits to workers and their dependents when they retire, die or become disabled.
Chalk one up for the Facts.
Here's some more into the weeds details, about this vital program -- that we have paid for.
That Republicans simply want to take away ...
Social Security (Old-Age, Survivors, and Disability Insurance) Program Description and Legislative History
ssa.gov
The Old-Age, Survivors, and Disability Insurance (OASDI) program provides monthly benefits to qualified retired and disabled workers and their dependents and to survivors of insured workers. [...]
Contributions and Trust Funds
A person contributes to Social Security through either payroll taxes or self-employment taxes under the Federal Insurance Contributions Act (FICA) or the Self-Employment Contributions Act (SECA). Employers match the employee contribution, while self-employed workers pay an amount equal to the combined employer-employee contributions. (Self-employed workers receive a special tax deduction to ease the impact of paying the higher rate.) There is a maximum yearly amount of earnings subject to OASDI taxes -- $106,800 in 2011. There is no upper limit on taxable earnings for Medicare Hospital Insurance. Employees whose earnings exceed the maximum taxable amount because they worked for more than one employer can receive refunds of excess FICA payments when they file their tax returns.
Taxes are allocated to three trust funds: the Old-Age (retirement) and Survivors Insurance (OASI), the Disability Insurance (DI), and the Medicare Hospital Insurance (HI) Trust Funds. In addition to the taxes on FICA- and SECA-covered earnings, OASI and DI trust fund revenues include interest on trust fund securities, income from taxation of OASI and DI benefits, certain technical transfers, and gifts or bequests.
By law, the OASI and DI trust funds may only be disbursed for
• monthly benefits for workers and their families,
• vocational rehabilitation services for disabled beneficiaries,
• administrative costs (currently less than 1 percent of expenditures), and
• the lump-sum death payment to eligible survivors.
Revenue received from FICA and SECA payments is transferred to the U.S. Treasury. Revenue in excess of outlays is used to purchase special interest-bearing Treasury bonds. These securities remain assets of the trust funds until needed to cover Social Security costs.
[...]
And here are a few eye-opening facts about
Raising the FICA Ceiling -- and what good that policy would do in the long run:
Social Security: Raising or Eliminating the Taxable Earnings Base [pdf]
by Janemarie Mulvey, Specialist in Aging and Income Security
September 24, 2010
CRS Report for Congress -- Congressional Research Service
Prepared for Members and Committees of Congress
[pg 1]
Summary
Social Security taxes are levied on covered earnings up to a maximum level set each year. In 2010, this maximum -- or what is referred to as the taxable earnings base -- is $106,800. The taxable earnings base serves as both a cap on contributions and a cap on benefits. As a contribution base, it establishes the maximum amount of each worker’s earnings that is subject to the payroll tax. As a benefit base, it establishes the maximum amount of earnings used to calculate benefits.
[...]
Raising or eliminating the cap on wages that are subject to taxes could reduce the long-range deficit in the Social Security Trust Funds. For example, if the maximum taxable earnings amount had been raised in 2005 from $90,000 to $150,000 -- roughly the level needed to cover 90% of all earnings -- it would have eliminated roughly 40% of the long-range shortfall in Social Security. 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. [...]
I closed my conservation earlier today, by reminding that usually rational person, that:
"Republicans love to set one group of workers against another. They want us to debate each other on 'how much the Benefits should be cut'.
But have you ever noticed, that they never talk about raising FICA Ceiling -- because that would put the focus where it belongs ... on the Billionaires who our bilking us out of our Benefits.
Afterall, we've earned them. The Millionaires (with their unnoticed 110K cap on contributions) -- not so much."
Whew! ... Jamess, educating America, one voter at a time.
Oy vey. Just another day in the life.
(BTW, thanks for reading.)