Class Warfare Blog

October 9, 2012

Social Security Solvency Bunkum and Fairness (A Black and White Analysis)

One of the “fixes” that has been proposed for Social Security is to raise the retirement age up to 70 from the current 65 to 67 years (depending on birth date). It is important to note that Social Security taxes are capped at about $110,000 in income and essentially constitute a flat tax (not progressive as are income taxes). Also, it is important to note that if you make money from stocks and bonds, that money is not taxed at all! Nor is it held against you when your benefits are calculated (as my pension is). This is another massive benefit the rich have bestowed upon themselves.

The so-called “Social Security problem” would essentially disappear if the cap were removed or if dividends were taxed. The “problem” is widely misunderstood, in that Social Security currently has a $2.6 trillion dollar surplus! This is the so-called Trust Fund. This is not just a pile of cash sitting somewhere (picture Scrooge McDuck’s Money Bin) because the Congress passed a law requiring the Social Security Administration to buy Treasury Bonds with any surplus funds, so it owns 2.6 trillion dollars of our national debt. The Social Security system is not in any immediate danger and is not the cause of any federal budget deficit because its tax revenues and expenditures are kept separate from those in the federal budget. But the Baby Boomers started retiring in about 2006 and are expected to stress the ability of the system to pay out benefits down the road, so some action will be needed.

The usual response by conservatives is to cut benefits, directly or through raising the retirement age. They have always opposed Social Security and have scorned those who need it as inferior because they didn’t become wealthy enough to not need it. Realize that Social Security is currently estimated to keep roughly 40 percent of all Americans age 65 or older out of poverty and is the biggest cause of senior citizen solvency ever created.

Let’s seriously consider the proposal to raise the benefit age to 70.

Start with the consideration that the life expectancy for black men in 2008 (the most recent year for which statistics are available) was 70.8 years, 5.4 years below the 76.2 years for white men. Life expectancy for black women was 77.5 years, while the life span for white women was 81.2 years. So, if these were the actual figures, the average Black man would receive benefits for 0.8 years and the average White woman would receive benefits for 11.2 years.

This means that half of all Black men born today would not live long enough to collect a SS benefit! Realize also that that statistic is for Black men born today. The life expectancy of Black men born previously was much lower. In just 2003 it was 68.8 years and in 1990 it was 64.5 and in 1935 it was 51.1 years. People born in 1935 would be expected to retire in 2000 (when 65 years old) and would then be eligible to collect a SS benefit, but by then a large majority of the American Black men born in that year were dead.

Chris Rock jokes that Black men should get Social Security at age 50, but maybe he has a real point there. We have a system that doesn’t take into account that women live much longer than men and Whites much longer than Blacks. We all pay at the same rate (except the Mitt Romney’s of the world who have set the tax rules in their favor), but we don’t all receive at the same rate.

If we are going to reform the system, let’s reform it to make it more fair, not less.

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