The Truth About Social Security

Posted by | April 22, 2011 18:55 | Filed under: Top Stories

By Yashwanth Manjunath

Politicians in both political parties who cannot wait to cut Social Security love to fear-monger on the issue and propose deep cuts to the program. Meanwhile, most people who follow Social Security propaganda closely know that based on much publicized current projections the program is expected to remain solvent until 2037, at which point there would need to be a 22% reduction in benefits in order to keep the system in balance. But it turns out that even those numbers are nonsense propaganda.

Thanks to some outstanding work on the part of Manny Goldstein at Democratic Underground, we know that current Social Security projections we take as fact are based on overly pessimistic accounting. His research shows that the current numbers are based on a long-term growth rate of 2.1% for the US economy.

The problem with that garbage accounting is that since 1960 the US economy has grown at a rate of 3.2% of GDP. In 2010 the economy grew at 2.9%, during an absolutely horrific year for unemployment and job creation. If the economy were to continue to putter along averaging 2.9% growth, Social Security would have more than enough cash to pay full benefits with no modifications for the next 75 years.

Goldstein argues that we would not even need to lift the $106,000 Social Security cap on taxable income to keep the program solvent for the next 75 years, as long as the US economy does not completely meltdown. But based on his more realistic and accurate growth rate projections, I think we should lift the cap anyway. It would make the payroll tax a true flat tax, as opposed to the regressive tax it is now, and it would allow us to expand Social Security benefits beyond current payouts.

The truth is that politicians in both parties cannot wait to steal our Social Security money and hand it over to the rich through tax cuts and defense contracts. And they are willing to tell whatever lie it takes to do so.

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