Dems Can't Hide From Social Security Truth
Ever since President Bush announced that he was making social security reform one of, if not the prime issue of his second term, Democrats have done nothing but attack the idea, and to hope that ignorace wins the day. Ever so slowly, however, the truth leaks out.
Last week USA Today writer Dennis Cauchon wrote a piece in the paper entitled: Can The Rich Save Social Security?
Cauchon reveals what I have been writing about and telling interviewers for some time now, that raising the ceiling on income subject to FICA will take care of most of the deficit and other solvency questions, while creating a fair and equitable situation.
Cauchon says: "If the wealthy paid 12.4% payroll taxes on all their income but kept their current benefits, Social Security's deficit immediately would become a projected $540 million surplus, the Social Security Administration estimates.
"Even if the rich got higher benefits to reflect their bigger tax bite, Social Security would close its long-term deficit by 93%."
So, it is clear here, that the deficit problem is not really that big of a deal. Well, then if the deficit problem, which seems to be the #1 hit song the Dems are singing, and in tune, can be taken care of, where is the problem?
Let's look at another hit song the Democrats are singing. How often have we heard that personal accounts are a scheme to help the rich and hurt the poor? Really? What scheme is that; I ask?
The funny thing about this is that the so-called friends of the poor, like Sen. Edward Kennedy, oppose the idea of raising the FICA ceiling. Mr. Kennedy's oppostion is allegedly because of a "fear it will undermine political support for the program and recast Social Security as a welfare system rather than a pension program." Are you kidding me? Opposed because it might recast social security as a welfare system? Now that is funny, I have never heard of Mr. Kennedy, or most other Democratic members of Congress concerned about any aspect of a welfare system. I believe the first part of his oppostion is more likely the the real reason for their concern.
I thought Kennedy, et, al, were strong supporters of the welfare system. So why would they be opposed to lifting the ceiling? Could the real reason be that they would finally have to pay their fair share and level the field? I think Kennedy is counting on the public not knowing the truth about who pays their "fair share" in social security taxes.
Let's look at the example Cauchon uses, of Tiger Woods, who made $80million in 2004 vs. another person that made $75,000. Based upon the 12.4% FICA (social Security) tax rate used by Cauchon, Tiger paid $11, 160 in Social Security while the person making $75,000 paid $9375.00. As a percentage of income, Tiger paid .014% of his income in FICA, while the person making $75,000 paid a full 12.4% of his or hers. In real dollars that means Tiger earned $79,925,000 more than the person making $75,000, but Tiger paid only $1785.00 more in FICA taxes. That's fair isn't it?
To get an even better idea of what this means, let's reverse the numbers. The 12.4% of Tigers $80 million is $10 million, while .014% of $75,000 is $10.50. Wow, now who's paying their fair share?
Do you think this might affect who could cares more about the issue? Do you think Ted Kennedy, and other wealthy Democrats and Republicans, who make as much or more than Tiger Woods might care more about reform if this scenario were true?
Let's play with this imaginary scenario some more and add to this the fact that under the present system Tiger could not touch this promised retirement benefit until he is 65. If he died prior to age 65 , with no surviving spouse or children under age 18, uncle Sam keeps the entire $10 million paid in annually. That means that, if Tiger should make this income for 20 years the Govt. would collect and keep $200 million of Tiger's income. Is the light coming on yet?
While, as mentioned in the USA Today article, lifting the ceiling on income subject to FICA could create a permanent federal surplus for these funds, there is a secondary and I believe even more crucial benefit to raising the ceiling. Imagine if the wealthy, like Ted Kennedy, Bill Clinton, George H.W. Bush, Tiger Woods, Peyton Manning or Michael Moore were taxed at a rate of 12.4% of their income. Do you think that these people would allow the system to continue to be run as it has been? I did not even go to Bill Gates and Warren Buffet. With real money involved, I can guarantee you that they would demand accountability and results. Those demands would fix the system and benefit everyone, not just the rich.
At the the present, however, the rich have no vested interest in the system and, therefore, are willing to accept that it is okay as it is. That is why they can say, "if it ain't broke, don't fix it." They have no perception of what "broke" is.
Cauchon asks the question, "can the rich save social security?" I say yes, they can. But a better question might be, will they?