Democratic Senator Introduces Bill To Lift Social Security’s Tax Cap, Extend Solvency For Decades

[Mass]

This looks interesting, but, given that the media wants something dramatic like raising the age for SS and Medicare, you can be sure they will ignore this.

http://thinkprogress.org/economy/2012/11/16/1208701/democratic-senator-introduces-bill-to-lift-social-securitys-tax-cap-extend-its-solvency-for-decades/

...

This week, however, Sen. Mark Begich (D-AK) put forward a reform package that goes in the opposite direction, while still financially securing the program’s trust fund for roughly the next seven decades. The Washington Post’s Dylan Matthews laid out the details:
The Begich bill would lift the current payroll tax cap, which exempts wages in excess of a certain amount ($110,100 this year) from the tax. In turn, it would give high earners, who would pay more, additional benefits upon retirement, just as benefits increase as wages do for workers below the cap. […]
It also increases benefits across-the-board. While Bowles-Simpson and Domenici-Rivlin adopt a stingier “chained CPI” measure for inflation, Begich adopts “CPI-E,” or a measure that specifically captures inflation in goods that seniors buy.
Due to deteriorated health and other considerations, goods seniors buy tend to be more expensive than those younger people purchase. Begich’s CPI-E change would mean, effectively, a 4.5 percent benefit increase for the program’s beneficiaries, including not just seniors but their designated survivors and disabled Americans as well.
...

[ProSense]

1. Good stuff. Thanks for posting. n/t

[DonViejo]

2. Yes. Thanks very much for this!! nt

[forestpath]

3. I will be contacting my 2 Senators about this. Both are Democrats, but I trust neither on this.

[Freddie]

4. I'm a payroll administrator

And I don't really care what people earn but it still pisses me off when the highly paid get an even bigger paycheck when they go over the cap. If I have to pay that 4.2% (normally 6.2%) on every penny I earn, so should everyone. And lifting the cap would allow the FICA tax rate to stay low.

[jberryhill]

32. First time it happened to me, I thought I had gotten a raise

It was like being welcomed to a secret club.

I'd bet most people don't even know about it.

[Freddie]

49. Correct, they don't

It's a pretty well-kept secret and I think we'd hear a lot more howling about this if people knew.
A couple times employees called me when it happened to them for the first time ("why is my check bigger?&quot and after I explained the comment was "that's not fair!" My response: yup.

[jberryhill]

62. I was wondering if you got feedback on it

It's a really weird feeling to find out about it that way.

[silverweb]

5. About time!

[font color="navy" face="Verdana"]Time to mobilize, people! Let's swamp every single senator and congressperson, Democrat or otherwise, with our demands to cosponsor and support this legislation!

[bvar22]

6. Now THIS is what I'm talking about!

Lets help get THIS approach (lifting the cap) EXPOSURE.

Social Security is NOT the problem.

Military Spending, Exporting our Jobs due to "Free Trade", declining wages of the Working Class, Union Busting, Downsizing and Defunding the government (especially the Watch Dog agencies), Too Big to Fail Concentrations of Wealth, Hoarding of Wealth by the 1%, and historically LOW taxes on the RICH, ARE The Problems.

[emmadoggy]

23. AMEN!!!! nt

[AAO]

26. bRAVO!

[flamingdem]

7. There's a good petition I just heard about on KPFA

not sure which though

[silvershadow]

8. K&R

[Kaleva]

9. Rec'd & bookmarked

So I can refer to this again when I write to both of my Senators, Levin & Stabenow, asking them to support this.

[yourout]

10. Raise the cap and tie it to inflation so it keeps ratcheting up.

[HiPointDem]

14. it already keeps ratcheting up to keep up with inflation.

[freshwest]

39. Why tie it to inflation? This is tying it to income, a sure measure.

[JKingman]

11. 100% of Dems in Senate and House should favor this....

Let the few Republicans in the House vote against it, those who want early retirement from their jobs.

This should pass... with some restrictions... maybe only the first 1/2 million taxed at the rate of ordinary, half that rate for every one else, exceptions for sports stars who only earn millions for a few years, etc.

But we could fix this for 100-150 years by just taxing high earners and asking them to pay their fair share, and maybe even reducing the taxes on low income earners by 20% for those earning under $25K.

[hrmjustin]

15. Welcome to DU!

[JaneyVee]

12. Common sense.

[HiPointDem]

13. it's already solvent for decades.

[SomeGuyInEagan]

21. Ding, Ding, Ding .... winner! Solvent for decades, unlike, say, everything else.

With Medicare/Medicaid a close second ... and also solvent.

[newfie11]

16. Worked well when done before

I am all for it.

[protect our future]

17. This is the only fair solution. K&R. nt

[stopbush]

18. Sen Begich has wisely included language that will diffuse the usual RW argument against lifting

the cap.

That argument is that the rich shouldn't be asked to pay extra for benefits they will never get, ie: they will pay so much into the system that they will never come close to reclaiming in SS benefits the amount of money they paid in.

Begich addresses that by giving them an increase in their benefits.

BTW - this RW argument has always been a BS argument. It implies that rich people would be ill used by lifting the cap because they would be paying a lot more money into the system and not seeing added benefits, while people below the cap who live longer eventually draw more benefits than they paid into the system.

But this ignores the fact that many people pay into the system for years and die before they ever draw a penny in SS benefits. It also ignores the fact that some people draw benefits for only a few years before dying, never collecting all the money they paid in.

I have read that lifting the income cap on paying into SS would make the system solvent in perpetuity. That alone should be enough reason to lift it.

[Auntie Bush]

19. Great idea...but why not make it more simple by just raising the payroll cap as much as needed.

[MessiahRp]

65. Why not uncap it entirely?

It's not like there's a floor that prevents the poorest from paying in based on income so why is there a ceiling protecting rich people from paying the proper proportion of their income?

[Blanks]

70. How about it increases with income.

Like income tax.

[WillyT]

20. HUGE K & R !!!

[Cynicus Emeritus]

22. All income should be considered ordinary income

and taxed equally, and for Social Security purposes too, since Social Security cash flow has been withdrawn to fund all Americans and wage our wars and provide foreign aid.

All income (dividends, cap gains, muni bonds, 401K/IRA withdrawals, carried interest given to the hedge fund guys, and even estate income and taxes) should be taxed at ordinary income rates and the rates could then be made more progressive and lowered for most.

[jerseyjack]

24. You mean, "earned income."

I agree, except for the caveat that unearned income be progressively taxed. For Christ's sake, Social Security is taxed. Why shouldn't income to hedge fund managers be taxed at a higher rate?

[Cynicus Emeritus]

57. Thanks, you are correct

What I meant to say was all income should be taxed progressively just as ordinary income.

[AzDar]

25. K & R

[ekimline]

27. save our security

Good post, and a financial transaction tax on high speed stock trades would be swell too.

[fascisthunter]

28. Do We as a People Want to Invest in Our Country or Not?!

We the little people created this country... never allow those who benefit most from your labors, think otherwise. We all did it together.

[mountain grammy]

29. This is really a no brainer, the answer!

[Not Sure]

30. I have never understood why there is a cap

Rich people don't always stay rich. Bad investments, fraud, major medical issues and accompanying costs, etc. can make a rich person poor in no time at all. When your retirement funds are gone, you have to rely on Social Security. That's why SS is often referred to as a safety net: it catches you when you fall and keeps you alive. I think that kind of fall is one of the only ways you can get these jokers to understand what this system is for.

I'm no scholar, but in my opinion, Social Security enabled companies to eliminate pensions as a component of compensation. Eventually pensions became a 401K accounts, which are volatile and subject to losses. Bankruptcies and liquidations have resulted in companies defaulting on pensions or paying pennies on the dollar toward their pension obligations. The workers who stuck it out for that compensation deserve to collect it - it was part of what kept them at the job. In my case, there's no way I'd work for a railroad if it weren't for railroad retirement.

And over the past few years we hear the same greedy bastards telling us that we aren't going to even be able to afford the safety net. First pensions, then 401K accounts, now Social Security. I'm getting awful tired of having the downside socialized so that we all pay for it and the reward privatized so only the rich reap the benefits.

This proposed legislation is a common sense step in the right direction. The rich will bear the costs one way or another. Better to have it up front. As Ben Franklin once said, "an ounce of prevention is worth a pound of cure."

[on point]

31. FINALLY!! A step in the right direction.

Next is to treat all income the same, regardless of source (wages, dividends, capital gains)

[TheKentuckian]

33. This is kind of a step in the right direction but I think there needs to be some way

of not creating a bigger trust fund that politicians can waste on tax cuts an wars and work like the devil to screw us out of.

I think that is where it gets complicated because by law Social Security as to by Treasury Bonds which makes the treasury look flush. I think we need "the lock box" or something along those lines or we run the risk of fake fixing the the fake problem and next thing you know fuckers are screaming about the 100 trillion dollar Social Security problem in a generation kinda like now. About 30 years ago we took a "balanced approach" which raised the cap, raised the revenue to the point where we are supposed to be effectively paying for our seniors and ourselves as is, and raised the retirement age for future beneficiaries for the exact same known and accounted for issue, yet here we are again.

I think that is a problem that raising the cap or raising the age just works as a bandaid bridge to the next hijacking.

If it is what we have to do to get over the hump with our benefits intact while increasing economic fairness then fine but I think we have to long term fix the looting trap so we can broaden the net and give it greater substance instead of living in a mix of fear and anger that the knife (or the scalpel) is coming from all sides.

We badly need to lower the retirement age, I think there is potential for dynamic action.
Imagine folks in their fifties with decades of know how free to take wise risks without fear of destitution and lack of health care. Combine that with more opportunity in the labor market which puts some upward pressure on wages.

There are no projections no matter how far in the future that indicate an increased need for labor on the whole, none. Some fields, possibly. Overall, no way. We need to deal with that reality and allow people some choices that potentially allow an orderly transition rather than an automatic and cruel trainwreck like we are heading to now.

At least start in that direction, eventually the demand for labor will be far too small to maintain the population under the current system. In fact, we have passed the event horizon already. Productivity, automation, and efficiency are too far along and are gaining steam.

I know folks want to project out and see themselves as 70 and hale, more afraid of boredom and disuse than bouncing out of bed to a productive and well paying day and that is fine if that turns out to be your story but we can't pretend that has any real chance of being anywhere near the norm for many different reasons but most crucially, lack of plausible opportunity.

[Kaleva]

38. Invest the surplus in state, municipal and school bonds.

[dreamnightwind]

40. Excellent post

The huge productivity increase is mostly ignored, and the benefits of it have gone only to the ownership class, not to workers.

People over 50 are having a tough time in this economy. If you don't already have a job at that age, good luck. They need more options, one of which could be a subsistence-level early retirement.

I remember when I was a kid, we looked forward to the days when our work could be done in half the time with the advance of technology. Somehow we thought we'd have more leisure time! What we didn't realilze was that it was our future EMPLOYER'S work that could be done in half the time, or with half of the employees. With few individual salaries able to support a household (requiring both spouses to work in a married household), we need twice the jobs to survive, not half the jobs. The numbers don't add up for the labor pool.

[TheKentuckian]

47. Absolutely

Anyone talking about adding to the labor pool is a part of the problem.
Anybody talking about reducing it without a living for those out of it is a monster so our business leaders, politicians, clergymen, and talking heads just pretend it is the same as it ever was least folks wake up to the reality that game can't go on without some considerable and ongoing misery for the vast majority for the great benefit of the few.

The quicker folks wake up to this dynamic, the better off all of us will be for generations to come.

[democrattotheend]

46. I agree - we need the lockbox

It seems like such a simple solution, yet nobody has pursued it since Gore. Is there something I am missing?

[Blue_In_AK]

34. Good for Mark.

I'm glad to see him stepping up like this.

[patrice]

35. Good news!

[rocktivity]

36. CUE THE VONAGE THEME!

And keep in mind that EVERYONE will get to pay a LOWER rate!


rocktivity

[BlueDemKev]

37. Finally, some common sense!

I've been saying for nearly 20 years that Congress needs to raise (or better yet, eliminate) the income-exemption threshold on Social Security. My favorite bumper sticker reads "Social Security: Shut Up and FUND It!".

[dreamnightwind]

41. K & R

Thank you Senator Begich.

[penndragon69]

42. It's a good start.

Next, we need to STOP paying social security to millionaires.

SSI was not meant to be a retirement / investment program but
a saftey net for the POOR, not the rich.

If the elderly have more money to spend in their golden years, they will
stimulate the economy like crazy while they purchase their round the world
cruises and enjoying their life instead of struggling just to survive.

It's a win / win for everyone.

[democrattotheend]

45. Just the opposite, actually

Social Security was designed to be like a retirement annuity for ALL retirees. Everyone pays in, everyone gets back.

If you turn it into a welfare program it will lose popular support and make it a lot easier politically to cut in the future. If you take away the benefits from more well off beneficiaries the program won't have the solid support of a strong senior lobby behind it, which has thus far been successful at warding off cuts even as other programs get the ax.

[Logical]

43. Increase in retirements payments too I Assume?

[Bluenorthwest]

53. No need to 'assume' if you read the OP...which says....

"In turn, it would give high earners, who would pay more, additional benefits upon retirement, just as benefits increase as wages do for workers below the cap."

[democrattotheend]

44. This seems fair to me, if benefits increase also

I know this probably puts me at odds with some here, but given that Social Security was designed to be an insurance/retirement savings program and not a welfare program, it does not seem fair to me to remove the cap entirely, since benefits are capped. I think if you are going to raise or eliminate the cap on how much is paid in you also have to adjust the cap on how much retirees get. Otherwise it becomes a redistribution system that it wasn't designed to be, which in the end will hurt the program more by making it a lot easier politically to cut.

[Bluenorthwest]

54. Did you read the OP?

"In turn, it would give high earners, who would pay more, additional benefits upon retirement, just as benefits increase as wages do for workers below the cap."

[democrattotheend]

55. I did, that is what I was responding to

Saying that the proposal seemed fair because of that feature.

[rudycantfail]

61. I agree.

[Hekate]

48. This is what will actually fix the problem

It should have been done long ago.

[MrModerate]

50. I'm one of those who'd be paying more than I do now . . .

And I think it's a great idea.

[louis c]

51. I have favored this approach for years

[Bluenorthwest]

52. I fully support this and have for years. Obama talked about lifting the cap in 08

primaries and it was the single most important factor that won my support for him. I've earned on both sides of the cap and there should not be a cap at all. Period.

[Liberalynn]

56. This is what should be done

but probably won't be done.

[myrna minx]

58. K&R - This is a step in the right direction.

[4dsc]

59. Let the battle begin

Now this is what I call leadership. Its a good move but I can only hope that others follow his lead.

[rudycantfail]

60. It sounds like common sense liberal fix

for SS and medicare that would be popular with the public if they were aware of it. What is the Democratic Party leadership doing to promote this?

[judesedit]

63. Many benefit receivers need this.They have to live on less than $25,000. a year & that's if you are

able to work. If you can't it can be under $12,000. a year or less. You can't go to the grocery store anymore without spending $70. with no meat and no dependents. Wake up, country. The wealthy get all of the perks in America. They should not get any more. It's time to get back to the Clinton era tax rates and raise the caps on this tax, raise the rates on capital gains, and estates, get rid of all the loopholes their lawyers are so good at finding for them. Also, fine or double tax the money found in foreign banks. It's only there to avoid paying their fair share here. Thankfully, other countrys are starting to divulge the owners of the money they are keeping.

[judesedit]

64. Also, just fyi.Food stamp usage is highest in republican dominated towns, cities, countys and states

[JohnnyRingo]

66. It's about time...

This is the easiest and most painless way to fix SS.

People like Rush Limbaugh pays all his yearly donation to Social Security by one o'clock AM. It just upsets those people because they'll never live long enough to get all their money back.

That's why they want to privatize the program. They'd like to invest in their own retirement, and the rest of us can do the same. The wealthy will be better off, and we can eat cat food in our golden years.

Sounds fair to me.

[WHEN CRABS ROAR]

67. Been saying this for years.

Raise the cap.

[dchill]

68. K & R

[duhneece]

69. Most common sense solution I can imagine nt

[Overseas]

71. K&R. Yes please! I emailed my Senators in support of this bill.

Last edited Thu Nov 22, 2012, 01:17 PM - Edit history (1)

I am very glad he includes the increases in benefits for those who contribute more too. That maintains its status as an insurance program.

It also increases benefits across-the-board. While Bowles-Simpson and Domenici-Rivlin adopt a stingier “chained CPI” measure for inflation, Begich adopts “CPI-E,” or a measure that specifically captures inflation in goods that seniors buy. Due to deteriorated health and other considerations, goods seniors buy tend to be more expensive than those younger people purchase. Begich’s CPI-E change would mean, effectively, a 4.5 percent benefit increase for the program’s beneficiaries, including not just seniors but their designated survivors and disabled Americans as well.

The Congressional Research Service ran the numbers back in 2010 and concluded that eliminating the payroll tax cap — while also paying out the new benefits to wealthier Americans in accordance with their new taxes — would eliminate 95 percent of the trust fund’s shortfall over the next 75 years.

from this article http://thinkprogress.org/economy/2012/11/16/1208701/democratic-senator-introduces-bill-to-lift-social-securitys-tax-cap-extend-its-solvency-for-decades/