June 2010 Social Security: The American Promise

June 2010 www.socialsecuritymatters.org

Social Security:

The American Promise.


Workers contribute 6.2% of pay up to a maximum of $106,800 in earnings.

Employers match this contribution, for a total of 12.4%.

Today’s contributions cover today’s benefits – basically a pay-as-you-go system.

Social Security is an insurance policy that protects both workers and their families. Benefits replace a portion of lost wages due to death, disability or retirement.

How Does Social Security Work?


The American Promise.


Americans depend on Social Security!


Where Americans get their income after 65


• Benefits for low-wage workers replace a larger percentage of their earnings, in order to give them a more adequate retirement income.

• Higher-wage workers get a smaller percentage, but more money, reflecting larger contributions.

• All beneficiaries get a full Cost of Living Adjustment (COLA) – 100% of the annual increase in the Consumer Price Index (CPI).

• Once your benefits start, they’re paid monthly for as long as you live. They can never run out!

Social Security: It’s A Good Deal!


Social Security currently has a surplus of $2.6 trillion (after paying all benefits). Trustees say all benefits can

be paid in full through 2037, even if no changes are made.

The surplus may be gone (the over payments in taxes) in 2037, but payroll contributions alone will cover of all benefits.

This manageable shortfall, 2% of taxable wages, can be corrected over time.

Source: 2009 Report from the Social Security Trustees.

Social Security - 2010 Snapshot


• Today, Social Security benefits are about 4.4% of GDP.

• In 2034, when most baby boomers are retired, total benefits will rise to 6.2% of GDP (an increase of just 1.7% over 25 years).

• The impact on GDP was much greater when the boomers were children (to cover education expenses, costs went up 2.8% over 25 years).

• The US paid to educate the biggest generation in history; surely we can afford a smaller increase to pay for the boomers in old age.

Social Security - 2010 Snapshot -cont-


1. Social Security has a dedicated revenue source: payroll contributions. It’s self-sustaining and doesn’t depend on the government’s general fund.

2. By law, Social Security is prohibited from borrowing in order to pay benefits.

3. Revenue that exceeds annual benefit payments (the trust fund) is invested in U.S. Treasury Bonds at market interest rates; Social Security can draw on the principle and interest as needed.

Social Security Does NOT

contribute to Federal Deficits


• Costly wars in Iraq and Afghanistan.

• Tax cuts in 2001 and 2003 for the wealthy (High-income households in top 1% of income: those making over $350,000/year).

• Recovery Measures (economic stimulus).

• Bank Bailouts/TARP/ Housing Market Collapse.

• The Recession.

The Real Reasons for the Deficit


• High unemployment = lower tax revenue and increased federal spending for unemployment insurance, Medicaid, food stamps, etc.

• Some in Washington are using this short-term fiscal problem to build support for long-range federal budget cuts.

• Under pressure, the President created the National Commission on Fiscal Responsibility and Reform (or “fiscal commission”) – to come up with a broad vision for a deficit reduction.

The Great Recession is Driving up the Deficit


Comprised of 18 Commissioners: 12 Members of Congress (6 Democrats/6 GOP), 6 appointed by the President.

A vote of 14 Commissioners is required to send recommendations to Congress.

Recommendations to Congress are scheduled to happen in the beginning of December 2010.

President’s Fiscal Commission on Fiscal Responsibility and Reform


Former GOP Senator Alan K. Simpson and Former Dem White House Staffer Erskine Bowles

“We’re going to mess with Medicare, Medicaid and Social Security because, if you take those off the table, you can’t get there.” – Erskine Bowles

This country is going to the bow-wows unless we deal with entitlements – Social Security and Medicare. - Alan K. Simpson

The Commission Co-Chairs


Why Target Social Security?

It doesn’t add to the deficit, and it’s so

important to American families and individuals.


As the notorious Willie Sutton said, when asked why he robbed banks: “Cause that’s where the money is!” This quote has been

repeated when talking about cuts to Social Security by both Commissioner and Senator Judd Gregg and by Fed. Chairman Ben Bernanke

Are they saying they want to steal from American workers?

Tell them HANDS OFF of your SOCIAL SECURITY!

That’s right!

“Cause that’s where the money is”


Peterson is referred to as a longtime “deficit hawk” and was a Nixon Commerce Secretary and Social Security privatizer.

He donated $1 billion to his own foundation in order to: Build public support for deficit

reduction. Push his message that started in his

newspaper, sponsored forums, and funded town hall meetings.

Sponsor “unbiased” AmericaSpeaks events across America on June 26, 2010.

Peterson’s #1 Target is Social Security.

I’ve made BILLIONS on Wall Street. Who needs Social Security when you have so much money? Not me!

Meet Peter G. Peterson, Wall Street Billionaire


Definitely, YES! The cost of making the 2001 & 2003 Bush tax

cuts permanent is 3 times the amount of Social Security’s shortfall over 75 years.

The very same people who championed those tax cuts for the rich are now threatening the retirement security of average Americans.

Can the U.S. Afford Social Security?


“For over 70 years, Social Security has been a pillar of our national economy, providing income to millions, even when the job market and the stock market have failed us miserably. Why would anyone want to change it now?”

- Gerald W. McEntee

Quote by AFSCME President


1. Raising the retirement age to 70. An increase in the retirement age is a reduction in lifetime benefits, and many workers, like nurses, teachers, and construction workers, cannot continue in physically demanding jobs into their seventies!

2. Stop indexing the benefit formula to wage increases; instead, use prices, which rise more slowly. This will further reduce the average benefit in real dollars, making it progressively harder for retirees to support themselves.

3. Reduce the annual COLA. Another benefit cut that will hurt beneficiaries already struggling to get by on dollars that don't go as far as they used to.

4. Means testing. Social Security is not a welfare program. It is designed to provide retirees with a baseline retirement income, according to what they paid in.

We will not stand for CUTS to Social Security!

Proposals to Cut Benefits


1. Be aware2. Get the facts3. Stay engaged

Pick up the phone,send an e-mail or letter,and tell Congress thatSocial Security Matters to you!

www.socialsecuritymatters.org

Documents

June 2010 Social Security: The American Promise