RETIREES IN ACTION A message from PEF Retirees President Jim Carr Two approaches to Social Security I recently contacted U.S. Sen. Kirsten Gillibrand about Social Security. She promptly responded, saying in part: “After decades of service and hard work, seniors deserve economic security in their retirement. Keeping Social Security and Medicare solvent for generations is one of my top priorities in Congress.” I also recently visited my new congressman, Tom Reed, at the invitation of PEF Region 2 Coordinator Bonnie Wood. Reed’s response to my concerns for Social Security were just the opposite! I suggested Congress eliminate or gradually raise the current cap on earnings of $106,800 as a way to better fund Social Security. Reed said he preferred to reduce benefits for anyone younger than age 49. I respectfully informed him Social Security does not add, and never has added, a single dime to the deficit. Wars, tax breaks for billionaires, subsidies for big oil and gas corporations, and bailing out Wall Street when big investors and banks made shady deals, caused a financial crisis and almost ruined the world economy – they add to the deficit. But Social Security cannot be blamed for the federal budget deficit. Social Security is funded through the payroll tax (FICA) and that raises more money than Social Security is paying in benefits and is projected to do so until 2017. So, starting in 2018, Social Security must start drawing on the current $2.4 trillion surplus to pay promised benefits that exceed the payroll taxes then coming into the fund from workers.   In 1983, the payroll tax was raised so that surplus would be there when retired Baby Boomers drawing from Social Security outnumbered the workers paying into it. Why do some people want you to believe Social Security is going broke? Consider: • The Social Security surplus exists on paper as U.S. Treasury bonds that constitute a loan to the federal government from the Social Security Fund. In 2018, when the Social Security Administration starts cashing in those bonds, the federal government must pay the real cash it owes with interest and it would likely need to raise taxes; • Eliminating the Social Security earnings cap would force wealthy and influential people to pay FICA on all of their earnings; and • Privatizing Social Security would force all of the payroll tax funds into individual stock market accounts that would yield billions of dollars in commissions for Wall Street investment firms and run up stock values.  Send your email address to jtropiano@pef.org to get PEF Retirees news alerts

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