Balancing Social Security Obama Style
Posted in: Social Services
It’s been clear for a long time that the feral rich are violently opposed to the idea that we might actually use the bonds held by the Social Security Trust Fund to pay benefits. Currently the Trust Fund holds about $2.59 trillion (note 3 here), and according to the Trustees, the number is expected to increase, because the total of interest income and FICA tax receipts is expected to exceed the amounts paid through 2020. But then, to the utter dismay of the likes of Peter Peterson and his co-conspirators @FixTheDebt, the Trust Fund will start to decline, and the world as we know it will end. As the TP Person tells us, the only possible alternatives are to end Social Security, or to do what the Great Balancer says.
Naturally, talk like this upsets a group of nominal Democrats, like this guy. They are on board with the GB, because:
The President’s proposal would create a minimum baseline for Social Security benefits so that no one who works their whole life has to live in poverty in retirement. The minimum benefit would be above the poverty line, for the first time fulfilling the promise of Social Security to end elderly poverty and actually boosting benefits for the lowest wage workers, which the protectors of the Entitlement Status Quo are effectively against. The president’s proposal would also boost benefits at age 85, making sure the people most at risk of running out of their savings are taken care of.
We haven’t seen an actual proposal yet, so we don’t know whether that is true, and it would be irresponsible not to speculate. Let’s pretend it means that minimum benefits for some group of old people will be increased. Right now, 46% of Americans die with less than $10,000 in assets. Those people are utterly dependent on Social Security. I assume that means that the GB plans to increase their benefits so that none of them are below the poverty line. The poverty line for a family of 2 is currently $15,510, about $1,292 per month. The average payout of Social Security is about $1,264 to retired workers. Chart 5.J6 here from December 2011 gives us the medians and benefit levels. You can see it will take a bunch of money to bring everyone up to the poverty level, though without knowing family make-up, we can’t tell how much. I’ll take a wild stab that it’s about $1 billion a month. Currently, we pay out about $48.6 billion monthly.
About 40 million people are currently receiving Social Security, and that number is going up as the baby boomers retire. We have to take at least as much as the increased benefits from the rest of the beneficiaries just to stay even, let alone save money.
People nearing retirement are less prepared than ever, so we can expect that 46% figure will increase over time. So what this plan means is that in order to raise benefits for the worst off, we are going to have to slash benefits for the rest of us. Let’s be crystal clear about what that means: if you aren’t already poor, the Great Balancer is going to cut your benefits. You get no income from your savings, so as you age, you will have to spend down your assets. That includes your house, the largest asset most of us have. I assume you’ll have to sell it or take out a reverse mortgage, screwing your heirs. Eventually a huge number of us will be so poor that we get the increase in benefits.
Let’s sum up. All these years, we paid trillions more in FICA taxes so that we would have Social Security in our old age. Turns out the real plan to raise our taxes, cut taxes for the feral rich, and screw us when we were old.
Balance that for us, Mr. Obama.
Return to: Balancing Social Security Obama Style