Colman: AN 85TH BIRTHDAY

In just 3-5 years both Social Security and Medicare will run out of money.  This did not happen over night or in the last three years—it has been gone on since 1965—the founding of Medicare.  Neither program was adequately financed.  Plus, people are living much longer—and the cost of health care has exploded.  For instance in 1965, no one had triple bypass surgery.  Today it so common, with the cost of just the surgery at over one million dollars.  There is not enough payroll tax money to finance that, Altzheimers, cancers and other major diseases.

Unless there is real reform, in ten years, or less, these systems go belly up.  It is a crisis and has been for many years.  This article should be a reminder to the public that government is never the answer.

AN 85TH BIRTHDAY

By Richard Colman, Exclusive to the California Political News and Views,  8/14/20 

 An important birthday occurs on August 14, 2020.  What is it?

 Do you give up?

On August 14, 2020, Social Security reaches age 85.  Signed into law by President Franklin D. Roosevelt on Aug. 14, 1935, Social Security provides individuals over age 65 with monetary benefits.  To obtain the benefits, a person has to be over age 65.

For 85 years, Social Security has been extremely popular with Americans.

Now, President Donald Trump has plans to alter the funding of Social Security. If history is any guide, any tampering with Social Security is loaded with political risks.  Ask any politician if he or she is open to altering Social Security, the likely answer is a firm “no.”

 Currently, Social Security applies only to wage income.  Any person earning up to $137,700 in annual wages in 2020 has to pay into Social Security.  The current pay rate for a worker is 6.2 percent.  The employer has to match the 6.2 percent.  On $100,000 in wages per year, the worker has to pay $6,200, and the boss has to match that $6,200.

 Rental, dividend, and interest income are exempt from Social Security taxation.

 What Trump is proposing is deferral, for an unspecified number of months, of the worker’s contribution to Social Security.  Trump has said that the funds deferred will have to be repaid at a later time.

Trump believes that temporarily eliminating the worker’s Social Security contribution would stimulate the American economy. 

 One defect in the president’s plan is that an unemployed person, a person who has no wage income, would not directly benefit from any deferral of Social Security tax obligations.

 Another defect is that Trump has not asked for Congressional approval of his plan.

 A third defect is that reducing a worker’s contribution to Social Security depletes the Social Security system of incoming funds.  At some future time, Social Security is expected to be insolvent, meaning that any cut in contributions could mean that today’s worker might not receive, at age 65, the amount of money he has been promised.

 When Ronald Reagan ran for president in 1980, he was asked if he had any plans to alter Social Security.  Reagan, who was age 69 at the time, replied that he, if elected, had no plans to alter a federal program from which he himself benefited.

 Social Security is a flat-rate tax on wages.  A flat-rate tax bears down more heavily on lower-income people than on higher-income people.  Thus, a person earning $60,000 a year in wages pays $3,720 into Social Security.  (The boss matches this $3,720.) 

 A person earning $137,700 in wages a year pays $8,537.40 into Social Security.  (Again, the boss has to match this amount.)

If a worker’s Social Security contribution could be converted into cash, the person paying $3,720 in tax might need the $3,720 more than the person paying $8,537.20.

 Here is another comparison.  Someone earning $800,000 a year in wages pays only $8,537.40 in Social Security because of Social Security’s wage cap of $137,700. 

 The wage cap has changed over the years.  From 1937 to 1950, the wage cap was $3,000.  In 1980, the wage cap became $25,900. 

 Some people argue that eliminating Social Security would give a person an opportunity to earn more money for retirement by investing in the stock market, real estate, or commodities like silver or gold.

 The defenders of Social Security argue that any investments to replace Social Security are too risky.

 Since its 1935 inception, Social Security has proved to be a very durable program.  If Trump wants to tamper with Social Security, he may find himself looking for a new job on Jan. 20, 2021.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. Rico Lagattuta says

    Richard Colman freally needs to update his article. No one is promissed anything at age 65 (?) from Social Security. Full entitlement age is now 67 and the amount of money anyone gets is based on a formula of years earnngs. Social Security was enacted under a Democrat administration, Rosevelt, Medicare under a Democrat administratin, Johnson and both programs have been expanded too incljde individuls who never paid a dime into the program junder Democrat administrations to gain votes for the Democrat canidates. Now we have a mess which means working people (mostly Republicans) must pay more in taxes to bail out both programs. Sucks! As an aside, there were no tripple bypass surgeries in 1965 becaues medical science had not figured out how to do them yet. Cost had nothing to do with it.

  2. Another article from a Libitard . Trump is the dumb one because he is trying to take care of the people who work and support this country first and is not a Socialist sympathizer . This article smacks of free for everyone . I have been hearing about Social Security going broke since is was in middle school and let me tell you that was a long long time ago. Yep SS is going broke but there is money for every single illegal that can smuggle themselves into the country and as if that is not enough , they are FIRST IN LINE FOR BENEFITS AHEAD OF AMERICAN CITIZENS in every Demoncrapicly run state. Want to know how to solve the SS problem , do just like Trump and cut off the people who do not contribute by choice not nessity . They we get rid of every single Political Figure that does not put AMERICA FIRST . And in closing , those remaining political figures shall participate in the Social Security System JUST LIKE THE REST OF AMERICA. NO more full salary for life with raises and card Blanche medical for them and their families while the rest of us have to go without or choose between making medical payments or paying the mortgage , this is of course if you still have a house to live in after the fine leadership of our traitorous government officials and I do mean BOTH PARTIES.
    From the Sword of –

  3. Fran Freedle says

    The simple act of raising the wage limit really high could help immensely. We should cut back and completely eliminate social security payments to anyone who has not paid into the system – no more “disability” payments, etc.
    Medicare was originally established to begin at age 65 when 65 was the usual age of death – the government thereby planning never to pay anything but have a program that gave them brownie points. Now that we live longer, and are more dependent on medical care, and costs are increasing far above the inflation rate, it is a recipe for failure. Until we get a handle on medical costs, and reduce unnecessary tests that do nothing but protect doctors from law suits, costs will continue to erode the small amount available for Medicare payments. Do I hear any support for TORT Reform?

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