Bernie Sanders Cons the Suckers on Social Security's Massive Deficit
From 2012.
A recent story in the Washington Post began with this:
WASHINGTON — Now that Social Security is paying more in benefits than it collects in taxes, there is a fierce debate among politicians, academics and advocates about whether those shortfalls are adding to the federal budget deficit.
This means red ink. It means that FICA taxes, called “contributions,” no longer provide a nice official surplus to the admitted on-budget budget. This accounting deception has gone on for over 40 years. Deficits in the off-budget deficit are ignored, while the money from Social Security’s “surplus” was counted as black ink in making the assessments of the size of the official deficit.
The Social Security Administration must now hand over non-marketable IOUs from the Treasury to make up the difference. Congress must borrow this money. This adds to the official on-budget deficit.
Congressman Xavier Becerra (D-CA) repeats the accounting deception. “Over 77 years and now through 13 recessions, Social Security has not added one penny to our deficit or our debt.” It has added trillions of dollars to our debt, but the debt is hidden off budget. It is part of the $222 trillion in unfunded liabilities reported by Prof. Lawrence Kotlikoff of Boston University. I have written about this here.
Rep. Becerra’s deception was reinforced by Senator Bernie Sanders of Vermont. “I believe that Social Security has not contributed one nickel to the deficit because it is funded by the payroll tax.”
The Post now admits what we critics of the system have been saying for 40 years.
Here’s how it works: For nearly three decades Social Security produced big surpluses, collecting more in taxes than it paid in benefits. The government, however, spent that money on other programs, reducing the amount it had to borrow from the public, including foreign investors. That’s why some advocates complain that Congress has “raided” Social Security.In return, the Treasury Department issued special bonds to Social Security. The bonds are now valued at $2.7 trillion. They are accounted for in two Social Security trust funds, one for the retirement program and one for the disability program.
The bonds pay interest. This was one of my points in my video. This has added to the official debt. The government must borrow the funds to pay this interest.
What is the projected on-budget deficit for this year? $166 billion.
Becerra denies all this. Social Security is just spending money generated by its “investments.”
What were these “investments”? IOUs from the government.
The voters don’t know what is going to hit them.
Continue reading here.
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Published on August 13, 2012. The original is here.
He has introduced the Social Security Expansion Act this year. This is his office's summary.
Extend the solvency of Social Security for about 52 years to the year 2071 by requiring the wealthiest American households to pay their fair share of taxes. Today, because of the earnings cap on Social Security taxes, a CEO making $20 million a year pays the same amount of money into Social Security as someone who makes $132,900 a year. This legislation would lift this cap and subject all income above $250,000 to the Social Security Payroll tax. Under this bill, 98.2 percent of wage earners would not see their taxes go up by one penny.Expand Social Security benefits across-the-board. Under this bill, Social Security retirement benefits for low-income workers would go up by about$1,300 a year.
Increase Cost-Of-Living-Adjustments (COLAs). This bill would more accurately measure the spending patterns for seniors by adopting the Consumer Price Index for the Elderly (CPI-E). Older Americans, by and large, are not going out on spending sprees buying big screen TVs, laptops, or the latest high-tech gadgets. Rather, they spend a disproportionate amount of their income on health care and prescription drugs and that would be reflected in the formula for calculating COLAs under this legislation.
Improve the Special Minimum Benefit for Social Security recipients. This bill will help low income workers stay out of poverty by updating the Special Minimum Benefit to make it easier for them to qualify and by increasing and indexing the benefit level so that it is equal to 125 percent of the poverty line. Restore student benefits up to age 22 for children of disabled or deceased workers, if the child is a full-time student in a college or vocational school. This legislation restores student benefits that were eliminated in 1983 to help educate children of deceased or disabled parents.
For Sanders' comments on Social Security since 2015, go here.