Social Security could be cut to cover debt
By G. Michael Dobbs
SPRINGFIELD -- It was a birthday party of sorts but the guest of honor had no cake. The Springfield chapter of the Massachusetts Senior Action Council noted the up-coming 75th anniversary of Social Security with a call to arms at its meeting on July 28.
President Franklin Roosevelt signed Social Security into law on Aug. 14, 1935. The 45th anniversary of Medicare was also noted at the meeting as it was made law by President Lyndon Johnson on July 30, 1965.
"These two successful federal programs have rescued seniors out of poverty," John Bennett, president of Massachusetts Senior Action Council, said.
Conducted at the offices of teamsters Local 404, local President Frank Rossi told the approximately 50 people gathered for the event that Social Security is "in the bulls eye for federal funding."
Cutting funding for Social Security may be one of the recommendations made by a presidential commission charged with dealing with the nation's public debt. Both House Majority Leader Steny Hoyer and House Minority Leader John Boehner have recently suggested raising the retirement age to aid in the solvency of Social Security.
Speaking at the event, Western New England College Economic Professor Anita Dancs said the concept that Social Security is under funded and in jeopardy has "little basis in reality."
She said that projections about the solvency of the trust fund have been based on a number of assumptions and those assumptions have shifted. In 2001, she said the prediction was the trust fund would be depleted in 2038. In 2006, that forecast was changed to 2046 and in 2008 it was revised once more to 2049.
The Congressional Budget Office has reported the trust funds are directly affected by the country's economic condition. The idea has been that more people who are working, the healthier the trust fund becomes, she explained.
Dancs said the real issue, though, is not the number of workers but the wages of the current workforce.
"Wages have been stagnating," she said.
Also adding to the issue is that lower and middle class economic groups pay more into Social Security, she said. Currently the amount one pays, based on earnings, is capped at $106,000. Those making more than that amount do not pay more Social Security tax above that earnings level.
Dancs advocated for lifting that cap, which would require all Americans to pay according to their actual income.
"Lifting the cap would solve the shortfall," she said.
She said Social Security isn't the cause of the federal deficit, but rather military spending, the bailout of banks and the stimulus funding have all contributed to it.
She recommended the tax cuts aimed at the wealthy established during the Bush Administration be allowed to lapse as a way to address the deficit.
Dancs noted Social Security has proven to be "a great retirement program" as it is totally portable from one job to another, it has low management fees and "for the most part has kept up with the cost of living."
"Just keep your hands off of Social Security -- that's a message we need to spread far and wide," Bennett said.