Awhile back I wrote a column entitled "The Truth About Social Security," and a number of the 'regulars' who write letters to the editor came down on me like a ton of bricks. They called me a liar among other uncomplimentary names such as 'stupid', etc. Taking this criticism seriously, I contacted several experts in Washington, D.C., including the Center on Budget and Policy Priorities; The National Committee to Preserve Social Security and Medicare; plus a group called Strengthen Social Security. On one site, I found a "Frequently Asked Questions" piece about Social Security that I want to share with you so that you can decide for yourselves what to believe. It is way too long for this column, so I will just hit the highlights. Anyone wishing for a full copy can request one by calling me at 687-4680, ext.2, and I'll send you one. You can also find it online at this address: http://strengthensocialsecurity.org/sites/default/files/FAQ%20Final.pdf
Here are the highlights from the online document above:
How is Social Security funded?
Social Security's revenue was about $800 billion in 2010. The program has three sources of income. The largest source comes from workers and employers who contribute 6.2% each on wages up to $106,800 a year; this raises about 80% of the total. The second source is investment income from Social Security's reserves, which are held in Trust and invested in interest-bearing U.S. treasury bonds; this raises about 15% of total revenue. Finally, Social Security gets about 5% of its revenue from the taxes that beneficiaries pay on their Social Security benefits.
Isn't Social Security the cause of our large federal deficit?
Not even close. Social Security does not contribute a penny to the federal deficit. In fact, it currently enjoys a $2.6 trillion surplus that will grow to $4.3 trillion by 2025. Social Security has its own dedicated revenue stream described above. And Social Security is forbidden by law from borrowing, so it cannot deficit spend.
Isn't the trust fund just a bunch of IOUs?
No, unless you consider U.S. savings bonds mere "IOUs" or the green stuff in your wallet worthless because it, too, only has value because it is backed by the full faith and credit of the United States of America. The Social Security trust fund is invested in U.S. treasury bonds, which are backed by the full faith and credit of the federal government. The government is just as obligated to pay back Social Security as it is to pay back Wall Street investors, to pay off those U.S. savings bonds we buy as gifts for newborns and those notes purchased by China and other foreign countries that invest in U.S. treasury bonds.
Is Social Security going bankrupt?
Social Security will never go bankrupt. Its major source of income comes from the contributions of workers and employers; as long as there are workers, Social Security will have income. Even if Congress took no action, Social Security can pay 100% of promised benefits for the next 25 years and more than three-quarters of benefits after that. Around 2037, there is a modest funding gap requiring modest increases in revenues to guarantee everyone 100% of promised benefits. Social Security has faced far worse financial problems in the past, but Congress has never failed to act to ensure full funding of benefits.
If Social Security is for protecting Americans, why aren't we talking about how to do that?
We should be talking more about it. Today's debate is indeed upside-down. A discussion of how to better realize Social Security's "ends" - providing widespread protection to the American people - has been overtaken by a hyper-focus on the "means" - how to provide the financing that achieves the program's core purposes. A discussion of the values our nation wants to achieve through Social Security are all but forgotten - that we have obligations to our families and neighbors; Americans should live in dignity when retired, disabled or as a survivor; and Americans should work hard and, in turn, have a right to a fair return on their hard work.
Important questions about the kind of protections Americans need in a changing and challenging economy are not being discussed. The presumption that benefits must be cut fails to acknowledge the serious retirement savings shortfalls facing most Americans. A discussion about Social Security that focuses more on, well, social security, would allow for a more serious debate about increasing Social Security's benefits for adequacy, rather than needlessly cutting them.
I hope seniors are making their wishes known to our Congressional delegation as there are seats up for grabs of the people we have won't listen to us. Be vigilant! Stay Tuned!
• Janice Ayres is president of Nevada Senior Corps Association.
