Chicken Little, Social Security

Chris Kok

The sky is falling on Social Security.

At least that is what the Bush Administration would have Americans believe.

This exaggerated problem is based on the fact that the baby boomers are about to retire. This will result in fewer workers supporting those who have retired. In 1950, there were 16 workers for every recipient of Social Security, but now there are only 3.3. So, yes, these numbers do look bad, and there is a need for change in how the program is operated. The problem is in figuring out what changes are needed.

One option that has not been offered by the government is eliminating the maximum taxable wages for Social Security. The maximum taxable wage in 2005 was $90,000. Anything more than $90,000 goes untaxed by Social Security.

In 2005, Robert Keegan, CEO of Goodyear, received $7.7 million. That means that roughly $7.6 million goes untaxed. Social Security taxes both workers and employers at 6.2 percent. If Keegan’s entire employment benefits were taxed, that would add $944,000 to Social Security. Ultimately, Keegan ends up paying .08 percent of his income to Social Security.

Because of the income cap, Social Security is a regressive tax, meaning that the poor pay a larger percentage of their income than the rich do. The maximum taxable wage should be eliminated. Eliminating that in itself might eliminate any financial problems that Social Security has. If that does not solve the problem, then benefits should be given to those who need them before they are given to those who don’t. Essentially, they should help the poor first.

The Bush Administration wants to privatize Social Security, which would allow workers to invest in the stock market. At first, this sounds like a good idea, but upon further investigation, it is obvious who stands to benefit and what problems could arise.

When people buy or sell stocks, they must pay a service fee. Adding billions of dollars of Social Security funds to the stock market will result in massive profits for major investment firms. According to Austan Goolsbee at the University of Chicago, $940 billion would be paid to investment firms through a privatized Social Security. Also, management costs under a privatized plan would be much higher than they are currently under the government-run Social Security.

This “reform” is not about helping afford Social Security or about giving retirees the benefits they deserve. Instead it is about giving more money to the rich.

Democrats can typically be described as invertebrates. They have backed down from protecting abortion, gay marriage and opposing the Iraq war. Fortunately, the Democrats have shown a little backbone on this issue. They have shown opposition to the plan, and may have stopped Social Security reform for many years. Unfortunately, they have not been willing to propose any alternatives. They are still evolving a backbone, a process that takes years.

If we can’t rely on the Democrats, we must take action. We should be demanding an end to the income cap on social security. Republicans have transferred wealth from the poor to the rich with the cooperation of the Democrats. This must be stopped.

Chris Kok is a senior international relations major and point/counterpoint columnist for the Daily Kent Stater. Contact him at [email protected]