America’s Richest 1% Won’t Contribute Another Dime to Social Security All Year
This week America’s wealthiest will make their last contribution to the Social Security system for 2015. The rest of us…middle class and the working poor…will continue to pay 6.2% of every dollar we earn to keep Social Security strong. How can this be?
So, the payroll tax cap means the wealthy will never have to contribute on all of their income, just the first $118,500 (in 2015). Because most Americans never earn that much in a year, many don’t even realize this unfair tax cap exists or the devastating effect it’s having on Social Security’s long-term fiscal outlook:
“… the Social Security trust fund, which currently holds $2.8 trillion, is projected to be drawn down by about 2033 (according to the Social Security trustees). After that point, if no changes are made to the program, retirees will receive only about 75 percent of scheduled benefits. One of the main causes of this projected shortfall is the growth in inequality over the last 30 years. Back in the 1980s, the last time changes were made to Social Security, Congress and President Reagan decided to build up the trust fund with workers’ payroll taxes in order to essentially pre-fund the coming retirement of the Baby Boom generation.
As a result, the trust fund has been steadily building up over the decades, but they weren’t able to predict how much income gaps would widen over that time. So while the payroll tax cap has been adjusted for inflation every year, the income of the richest workers has increased faster, allowing more and more earnings to escape the tax, and causing the payroll tax to collect less than needed.” Nicole Woo, Center for Economic and Policy Research
It’s no coincidence that conservatives who constantly clamor for cutting Social Security benefits never list raising or eliminating the payroll tax cap as an alternative solution to strengthening Social Security. Once again, for America’s 1% and their supporters in Congress, middle-class benefits cuts are always the preferred solution.
“I found an even more glaring example of the vast inequity of the Social Security tax system a couple of years ago when I was reading a report issued by an association of CEO’s here in Washington. The report made recommendation to “fix” Social Security by cutting benefits, cutting the Social Security cost of living adjustment, raising the retirement age…no mention of the payroll cap. I was curious about the membership of this group and after a little research I did the math and discovered that one member of their executive committee reached the cap and stopped paying FICA tax after lunch on New Years Day. Earning $54 million dollars a year allows you to do that…but doesn’t make it right.” Max Richtman, NCPSSM President/CEO
The National Committee proudly moderated a Capitol Hill event today with Senator Bernie Sanders (D-I), Rep. Jan Schakowsky (D-IL) and the Strengthen Social Security Coalition bringing attention to this Social Security payroll tax giveaway provide only to the richest people in America each year.
The Center for American Progress released a new report today analyzing what America’s income inequality has meant for Social Security’s funding. First, some historical background…when the 1983 Greenspan Commission passed its Social Security reforms 90% of American workers paid on all of their annual income. In other words, only 10% were exempted from the payroll tax cap. Since then, our nation has seen more and more income shifted to the wealthy meaning there are 6 times the number of millionaires and billionaires today compared to 1983 and more people above the tax cap. That’s means America no longer collects the Social Security payroll taxes from 90% of workers…today it’s only 83%. CAP reports that’s more than a trillion dollars lost.
“Had 90 percent of covered wages been taxed from 1983 to 2013, the OASDI trust funds would have been $1.1 trillion larger by 2013, shrinking the 75-year expected shortfall by 10.1 percent.
The simulation that we have modeled is retrospective; it addresses what would have happened had 90 percent of wages been taxed since 1983. In their annual report, the Social Security trustees answer a similar, but prospective, question: How would raising the cap to cover 90 percent of earnings starting in 2015 affect the trust funds’ shortfall? The trustees find that over the 75-year period, this change would close about 27 percent of the expected shortfall in the trust funds.”
As Center for Economic and Policy Research Co-Director, Dean Baker, told the crowd today, “Social Security isn’t broke…America’s economy is.” Contrary to the current GOP divide and conquer messaging, American seniors aren’t stealing money from children’s programs and the disabled aren’t bankrupting the Social Security retirement system. Conservatives don’t want average Americans to see the truth — our economic policies have shifted the nation’s wealth to the wealthy and away from everyone else.
What ACA Repeal Means for Seniors
House Republicans have voted more than 50 times to rollback or fully repeal the Affordable Care Act. They did it again yesterday. While it feels like Bill Murray’s movie “Groundhog Day” it’s not even close to funny for the millions of Americans this repeal would hurt.
Seniors have probably been the most demagogued group when it comes to what the ACA actually means to their health care. Remember those fake “death panels” you were assured were a part of health care reform? They weren’t. The ACA also didn’t “destroy Medicare” as promised by opponents. Quite to the contrary, seniors in Medicare have benefitted from a number of important improvements since its passage. This success is exactly why the conservatives in Washington remain desperate to repeal health care reform before evidence of the ACA’s success can no longer be buried in a mountain of their false claims and political hysteria.
Medicare beneficiaries will save, on average, $5,000 over the next ten years thanks to health care reform provisions. Here are just a few of the real-life benefits millions of seniors in Medicare would lose immediately if Republicans have their way and repeal the Affordable Care Act. You can see even more in our NCPSSM brief.
- No out-of-pocket costs for preventive services like colorectal and mammogram screenings and annual wellness visits
- 50% discount for brand name drugs purchased while in the Part D donut hole, leading to the closure of the donut hole entirely
- $700 in covered drug costs for the average senior would be lost and the sickest seniors would face $3,600 in additional out-of-pocket costs
- Reduction of billions in overpayments to private insurers in Medicare and a new requirement that 85% of every dollar is spent on healthcare rather than costs/profits
- $200 per year in premiums and $200 in out-of-pocket costs to be saved by seniors by the year 2018
- $350 million in fraud-fighting investment
- Medicare Trust Fund will lose years of solvency
Of course, seniors in Medicare aren’t the only ones this repeal would hurt. Here’s a list of what losing the Affordable Care Act means for Americans of every age.
The President’s Budget Plan -Good News and Bad News for America’s Seniors
Reaction from National Committee to Preserve Social Security and Medicare President/CEO, Max Richtman on the President’s Budget:
“We’re glad to see President Obama respond to the GOP majority’s Social Security hostage-taking by including language in his 2016 budget allowing the routine rebalancing of the Trust Funds. Threatening people with disabilities with a 20% benefit cut unless there are broader Social Security benefit cuts plays politics with the livelihoods of 11 million Americans and their families rather than resolving this imminent funding issue. We applaud the President for taking a stand against this Social Security ploy. The President also included increased funding for the Social Security Administration which is desperately needed by an agency that’s been forced to reduce local office hours, cut back on consumer services, and increase the wait time for disability hearings. We urge Congress to approve this Social Security Administration budget.
While the President’s budget thankfully no longer includes cuts to Social Security, through the Chained-CPI proposal, his 2016 plan unfortunately still targets seniors by shifting more costs to Medicare beneficiaries through increased means-testing, premium hikes and co-pays. While some tout increasing means testing in Medicare as a way to insure ‘rich’ seniors pay their share, the truth is, the middle-class will take this hit as well.
Medicare has been means-tested since 2007 and the number of beneficiaries subject to higher premiums has been increasing. If passed, the President’s means testing proposal will hurt middle-class individuals and flies in the face of his budget theme of ‘middle-class’ economics. The economic realities facing America’s middle-class retirees are ignored by these provisions which shift even more costs onto seniors and exacerbate the retirement deficit gap millions of Americans face now and into the future. These Medicare proposals are especially worrisome given the fact that with the new GOP majority in Congress, passage of these cost-shifting plans can happen with a simple majority vote in the Senate posing a serious threat to millions of American seniors.” …Max Richtman, NCPSSM President/CEO
Chained CPI Will Cut Benefits Immediately
Quote:“…economists say you really have to do things like reform Social Security and Medicare and the President’s budget doesn’t do that.”
“Switching to this other way of calculating inflation, it’s called chained CPI, blah, blah, blah…whatever that means. But…it’s basically a way of calculating the cost of living increases for Social Security.”
Source: NPR’s “Here & Now”
Senior Business Editor: Marilyn Geewax
Correction:
ally, all economists don’t suggest cutting Social Security and Medicare to pay down the deficit. Far from it. Clearly NPR needs to work on expanding its sources beyond Washington’s billion dollar anti-Social Security, fiscal hawk lobby. Here are just a few respected economists and their writings to help get NPR started: Nobel Prize Economist, Paul Krugman, Center for Economic and Policy Research Economist, Dean Baker, and Economic Policy Institute Economist, Monique Morrisey, Center on Budget and Policy Priorities Economist, Paul Van De Water, and Henry Aaron, Social Security Advisory Board and the Brookings Institute.
It’s also very discouraging when a major media outlet’s Senior Business Editor doesn’t understand even the basics of a proposal which would cut billions of dollars in benefits to both current and future retirees, veterans, people with disabilities and their families. In the same time it took to tell its listeners “blah, blah, blah…whatever that means” NPR could have given them the truth about what the Chained CPI does mean — benefit cuts starting immediately for millions of Americans still struggling in this economic recovery.
Social Security Will Exist for Future Generations
Quote:
“ ‘President Obama’s plan provides no hope of balancing the budget, no plan to save Social Security or Medicare, and no realistic ideas to grow the private economy or create jobs,’ U.S. Sen. Marco Rubio”
“’He ignores Social Security and Medicare, but we need real reform or these programs won’t exist for future generations of Americans,” (Rep. Tom) Rooney said’.”
Source: On Obama budget, Florida Republicans critical of lack of reforms to Social Security
Reporter: Jeremy Wallace
Correction:
Reporters have a responsibility to hold their sources, even Members of Congress, accountable to the truth. Unfortunately, the Sarasota Herald-Tribune did none of that in its coverage of the President’s budget.
It’s certainly no surprise that Congressional Republicans hope to use their new majority to cut benefits to millions of middle-class seniors who depend on Social Security and Medicare. The Sarasota Herald-Tribune, unfortunately, gave its local lawmakers free reign to make up their own facts in support of that agenda.
Rep. Tom Rooney is flat-out wrong when he claimed “these programs won’t exist for future generations” without reform. There isn’t a single actuarial projection that Social Security and Medicare won’t exist for future generations. In fact, the Social Security Trustees report that with $2.76 trillion in the Social Security Trust Fund the program will be able to pay full benefits for decades to come – until 2033. At that point, there will still be enough revenue coming into the program to pay 77 percent of all benefits owed. Won’t exist? Hardly.
In the Herald-Tribune story, Senator Mark Rubio claimed the President’s budget offers “no plan” for Social Security or Medicare. Truth is this budget includes $400 billion in Medicare savings including, unfortunately, increased means-testing, premium hikes and co-pays for seniors. While these cuts apparently aren’t enough for Senator Rubio that doesn’t make them non-existent. This budget also addresses the more immediate Social Security disability shortfall with a simple administrative move, done 11 times before, that the House GOP refuses to consider.
As the old adage goes, “we’re entitled to our opinions but not our own facts.” Journalists owe it to their readers to report those facts not merely parrot one party’s political spin.
America’s Richest 1% Won’t Contribute Another Dime to Social Security All Year
This week America’s wealthiest will make their last contribution to the Social Security system for 2015. The rest of us…middle class and the working poor…will continue to pay 6.2% of every dollar we earn to keep Social Security strong. How can this be?
So, the payroll tax cap means the wealthy will never have to contribute on all of their income, just the first $118,500 (in 2015). Because most Americans never earn that much in a year, many don’t even realize this unfair tax cap exists or the devastating effect it’s having on Social Security’s long-term fiscal outlook:
“… the Social Security trust fund, which currently holds $2.8 trillion, is projected to be drawn down by about 2033 (according to the Social Security trustees). After that point, if no changes are made to the program, retirees will receive only about 75 percent of scheduled benefits. One of the main causes of this projected shortfall is the growth in inequality over the last 30 years. Back in the 1980s, the last time changes were made to Social Security, Congress and President Reagan decided to build up the trust fund with workers’ payroll taxes in order to essentially pre-fund the coming retirement of the Baby Boom generation.
As a result, the trust fund has been steadily building up over the decades, but they weren’t able to predict how much income gaps would widen over that time. So while the payroll tax cap has been adjusted for inflation every year, the income of the richest workers has increased faster, allowing more and more earnings to escape the tax, and causing the payroll tax to collect less than needed.” Nicole Woo, Center for Economic and Policy Research
It’s no coincidence that conservatives who constantly clamor for cutting Social Security benefits never list raising or eliminating the payroll tax cap as an alternative solution to strengthening Social Security. Once again, for America’s 1% and their supporters in Congress, middle-class benefits cuts are always the preferred solution.
“I found an even more glaring example of the vast inequity of the Social Security tax system a couple of years ago when I was reading a report issued by an association of CEO’s here in Washington. The report made recommendation to “fix” Social Security by cutting benefits, cutting the Social Security cost of living adjustment, raising the retirement age…no mention of the payroll cap. I was curious about the membership of this group and after a little research I did the math and discovered that one member of their executive committee reached the cap and stopped paying FICA tax after lunch on New Years Day. Earning $54 million dollars a year allows you to do that…but doesn’t make it right.” Max Richtman, NCPSSM President/CEO
The National Committee proudly moderated a Capitol Hill event today with Senator Bernie Sanders (D-I), Rep. Jan Schakowsky (D-IL) and the Strengthen Social Security Coalition bringing attention to this Social Security payroll tax giveaway provide only to the richest people in America each year.
The Center for American Progress released a new report today analyzing what America’s income inequality has meant for Social Security’s funding. First, some historical background…when the 1983 Greenspan Commission passed its Social Security reforms 90% of American workers paid on all of their annual income. In other words, only 10% were exempted from the payroll tax cap. Since then, our nation has seen more and more income shifted to the wealthy meaning there are 6 times the number of millionaires and billionaires today compared to 1983 and more people above the tax cap. That’s means America no longer collects the Social Security payroll taxes from 90% of workers…today it’s only 83%. CAP reports that’s more than a trillion dollars lost.
“Had 90 percent of covered wages been taxed from 1983 to 2013, the OASDI trust funds would have been $1.1 trillion larger by 2013, shrinking the 75-year expected shortfall by 10.1 percent.
The simulation that we have modeled is retrospective; it addresses what would have happened had 90 percent of wages been taxed since 1983. In their annual report, the Social Security trustees answer a similar, but prospective, question: How would raising the cap to cover 90 percent of earnings starting in 2015 affect the trust funds’ shortfall? The trustees find that over the 75-year period, this change would close about 27 percent of the expected shortfall in the trust funds.”
As Center for Economic and Policy Research Co-Director, Dean Baker, told the crowd today, “Social Security isn’t broke…America’s economy is.” Contrary to the current GOP divide and conquer messaging, American seniors aren’t stealing money from children’s programs and the disabled aren’t bankrupting the Social Security retirement system. Conservatives don’t want average Americans to see the truth — our economic policies have shifted the nation’s wealth to the wealthy and away from everyone else.
What ACA Repeal Means for Seniors
House Republicans have voted more than 50 times to rollback or fully repeal the Affordable Care Act. They did it again yesterday. While it feels like Bill Murray’s movie “Groundhog Day” it’s not even close to funny for the millions of Americans this repeal would hurt.
Seniors have probably been the most demagogued group when it comes to what the ACA actually means to their health care. Remember those fake “death panels” you were assured were a part of health care reform? They weren’t. The ACA also didn’t “destroy Medicare” as promised by opponents. Quite to the contrary, seniors in Medicare have benefitted from a number of important improvements since its passage. This success is exactly why the conservatives in Washington remain desperate to repeal health care reform before evidence of the ACA’s success can no longer be buried in a mountain of their false claims and political hysteria.
Medicare beneficiaries will save, on average, $5,000 over the next ten years thanks to health care reform provisions. Here are just a few of the real-life benefits millions of seniors in Medicare would lose immediately if Republicans have their way and repeal the Affordable Care Act. You can see even more in our NCPSSM brief.
- No out-of-pocket costs for preventive services like colorectal and mammogram screenings and annual wellness visits
- 50% discount for brand name drugs purchased while in the Part D donut hole, leading to the closure of the donut hole entirely
- $700 in covered drug costs for the average senior would be lost and the sickest seniors would face $3,600 in additional out-of-pocket costs
- Reduction of billions in overpayments to private insurers in Medicare and a new requirement that 85% of every dollar is spent on healthcare rather than costs/profits
- $200 per year in premiums and $200 in out-of-pocket costs to be saved by seniors by the year 2018
- $350 million in fraud-fighting investment
- Medicare Trust Fund will lose years of solvency
Of course, seniors in Medicare aren’t the only ones this repeal would hurt. Here’s a list of what losing the Affordable Care Act means for Americans of every age.
The President’s Budget Plan -Good News and Bad News for America’s Seniors
Reaction from National Committee to Preserve Social Security and Medicare President/CEO, Max Richtman on the President’s Budget:
“We’re glad to see President Obama respond to the GOP majority’s Social Security hostage-taking by including language in his 2016 budget allowing the routine rebalancing of the Trust Funds. Threatening people with disabilities with a 20% benefit cut unless there are broader Social Security benefit cuts plays politics with the livelihoods of 11 million Americans and their families rather than resolving this imminent funding issue. We applaud the President for taking a stand against this Social Security ploy. The President also included increased funding for the Social Security Administration which is desperately needed by an agency that’s been forced to reduce local office hours, cut back on consumer services, and increase the wait time for disability hearings. We urge Congress to approve this Social Security Administration budget.
While the President’s budget thankfully no longer includes cuts to Social Security, through the Chained-CPI proposal, his 2016 plan unfortunately still targets seniors by shifting more costs to Medicare beneficiaries through increased means-testing, premium hikes and co-pays. While some tout increasing means testing in Medicare as a way to insure ‘rich’ seniors pay their share, the truth is, the middle-class will take this hit as well.
Medicare has been means-tested since 2007 and the number of beneficiaries subject to higher premiums has been increasing. If passed, the President’s means testing proposal will hurt middle-class individuals and flies in the face of his budget theme of ‘middle-class’ economics. The economic realities facing America’s middle-class retirees are ignored by these provisions which shift even more costs onto seniors and exacerbate the retirement deficit gap millions of Americans face now and into the future. These Medicare proposals are especially worrisome given the fact that with the new GOP majority in Congress, passage of these cost-shifting plans can happen with a simple majority vote in the Senate posing a serious threat to millions of American seniors.” …Max Richtman, NCPSSM President/CEO
Chained CPI Will Cut Benefits Immediately
Quote:“…economists say you really have to do things like reform Social Security and Medicare and the President’s budget doesn’t do that.”
“Switching to this other way of calculating inflation, it’s called chained CPI, blah, blah, blah…whatever that means. But…it’s basically a way of calculating the cost of living increases for Social Security.”
Source: NPR’s “Here & Now”
Senior Business Editor: Marilyn Geewax
Correction:
ally, all economists don’t suggest cutting Social Security and Medicare to pay down the deficit. Far from it. Clearly NPR needs to work on expanding its sources beyond Washington’s billion dollar anti-Social Security, fiscal hawk lobby. Here are just a few respected economists and their writings to help get NPR started: Nobel Prize Economist, Paul Krugman, Center for Economic and Policy Research Economist, Dean Baker, and Economic Policy Institute Economist, Monique Morrisey, Center on Budget and Policy Priorities Economist, Paul Van De Water, and Henry Aaron, Social Security Advisory Board and the Brookings Institute.
It’s also very discouraging when a major media outlet’s Senior Business Editor doesn’t understand even the basics of a proposal which would cut billions of dollars in benefits to both current and future retirees, veterans, people with disabilities and their families. In the same time it took to tell its listeners “blah, blah, blah…whatever that means” NPR could have given them the truth about what the Chained CPI does mean — benefit cuts starting immediately for millions of Americans still struggling in this economic recovery.
Social Security Will Exist for Future Generations
Quote:
“ ‘President Obama’s plan provides no hope of balancing the budget, no plan to save Social Security or Medicare, and no realistic ideas to grow the private economy or create jobs,’ U.S. Sen. Marco Rubio”
“’He ignores Social Security and Medicare, but we need real reform or these programs won’t exist for future generations of Americans,” (Rep. Tom) Rooney said’.”
Source: On Obama budget, Florida Republicans critical of lack of reforms to Social Security
Reporter: Jeremy Wallace
Correction:
Reporters have a responsibility to hold their sources, even Members of Congress, accountable to the truth. Unfortunately, the Sarasota Herald-Tribune did none of that in its coverage of the President’s budget.
It’s certainly no surprise that Congressional Republicans hope to use their new majority to cut benefits to millions of middle-class seniors who depend on Social Security and Medicare. The Sarasota Herald-Tribune, unfortunately, gave its local lawmakers free reign to make up their own facts in support of that agenda.
Rep. Tom Rooney is flat-out wrong when he claimed “these programs won’t exist for future generations” without reform. There isn’t a single actuarial projection that Social Security and Medicare won’t exist for future generations. In fact, the Social Security Trustees report that with $2.76 trillion in the Social Security Trust Fund the program will be able to pay full benefits for decades to come – until 2033. At that point, there will still be enough revenue coming into the program to pay 77 percent of all benefits owed. Won’t exist? Hardly.
In the Herald-Tribune story, Senator Mark Rubio claimed the President’s budget offers “no plan” for Social Security or Medicare. Truth is this budget includes $400 billion in Medicare savings including, unfortunately, increased means-testing, premium hikes and co-pays for seniors. While these cuts apparently aren’t enough for Senator Rubio that doesn’t make them non-existent. This budget also addresses the more immediate Social Security disability shortfall with a simple administrative move, done 11 times before, that the House GOP refuses to consider.
As the old adage goes, “we’re entitled to our opinions but not our own facts.” Journalists owe it to their readers to report those facts not merely parrot one party’s political spin.