Fighting Words on Social Security: Apply the FICA Tax to All Income Including Investment Income and Lower the Retirement Age
by Dave Lindorff
It's time for us progressives to stop playing defense on Social Security.
We've watched the retirement system suffer years of attacks by conservatives and by class traitors in the Democratic Party. We have seen the retirement age raised since 1983 from 65 to 67, and the cost-of-living calculation altered so that our benefits have declined in value over time, while the tax rate on working people has risen.
It's time to stop fighting rear-guard actions and to go on the offense.
Beginning next year, the Baby Boom generation born after 1945 is going to start retiring en masse. That means the size of the retiree portion of the population is about to double. Far from being a threat to the Social Security system though, as conservative critics falsely claim, this new wave or retirees will actually strengthen the system, because soon there will be a far larger voting population of retirees and pending retirees who will all have a vested interest in preserving and improving Social Security.
That is precisely why the Obama Administration, ever solicitous of the wishes of the corporate elite and Wall Street, together with bought-and-paid Republicans and treacherous Democrats in Congress, are attempting through the latest so-called Deficit Commission, to push through more cuts to weaken the Social Security system now, while they still can.
If we Baby Boomers, who are just about to start collecting Social Security, would recognize our own (and our children's) interests, we could put a stop to this betrayal of the New Deal's greatest legacy immediately.
There is no Social Security "crisis."
In fact, it is time to demand a return to 65 as the age for retiring with full benefits, and to demand a restoration of the original methodology for calculating cost-of-living adjustments.
It is all the more important that we lower, and not raise the retirement age, because with the unemployment rate now stuck at close to 10% officially, and with one- in-five Americans either unemployed, working part-time involuntarily, or "out of the labor force" (meaning they gave up trying to find work in an economy where there are six workers chasing each job opening), the last thing we should be doing as a nation is forcing older workers stay on the job against their will, keeping those positions filled and unavailable for younger workers.
By fighting to restore and improve Social Security, we kill three birds with one stone--solidifying Social Security's funding, improving life for retirees, and helping open up jobs for younger workers.
How to perform this triple miracle?
Easy. Just eliminate the cap on income subject to the FICA Social Security tax (currently set at just the first $106,800 of wages or net income from a business or profession), and end the exclusion of investment income, so that people who earn their money by sitting on their butts trading stocks at home or by sitting in fancy offices buying and selling companies, pay Social Security taxes on their profits, and bingo, there's no more risk of burning through the Trust Fund during the wave of Baby Boom retirees. (A Senate report found that by just taxing all earned income, the Social Security Trust Fund would be flush indefinitely, right through the Baby Boom retirement era, but Congress didn't even look at what happens if we also applied the FICA tax to investment income.)
So listen up Boomers. It's time to get back to our roots. This time it's not the draft and a criminal war in Southeast Asia. It's our retirement! The banksters have destroyed our IRAs and 401(k) plans, and have stolen our home assets. Social Security is all we've got left, and they're trying to steal that now, too.
Are we going to let them? Hell no! We won't let it go!
And remember, it's an election season.
Time to demand that all candidates for Congress pledge to end the regressive nature of the Social Security tax. For starters, let's simply make it a flat tax on all income, including investment income. (We can talk later about making it progressive so that the rich pay a higher percentage than low-income workers.)
Time to demand that candidates for Congress also pledge to lower the age for retirement with full benefits back to 65, where it was originally before President Reagan and the wretched Greenspan Commission got Congress to start raising it in installments, beginning in 1983. If enough money comes in from the tax on higher incomes and investment, maybe we can talk about even lowering the age for full benefits to 64 or younger.
The vultures who are trying to weaken Social Security, raise the retirement age to 69 or 70, and cut the benefits--which means most Republicans and all too many Democrats--claim it's appropriate to raise the age of retirement because we're all living longer, but that's not the point.
If someone is healthy and wants to work into their late 60s, or early 70s or beyond, nobody is stopping them, and such people are not going to start collecting Social Security until 70 anyway, because they don't need it.
But many people are burned out at 66, or 65 or even 62. Think of nurses, teachers, miners, fire-fighters, sanitation workers, bus drivers, store clerks, etc. These are hard, grinding jobs, and nobody should have to do them into their mid or late 60s, much less until they are 70, unless they want to.
Besides, we are a wealthy society. We should allow our elderly citizens to enjoy their grandchildren, to volunteer in their communities, to create things. Sure they should be able to work as long as they want to, but the operative word is "want." Not "need."
Besides, the longer we make the elderly worker stay on the job, the longer we keep that job filled, and unavailable for some younger person who is desperate for a paycheck.
The truth is younger workers could use some of the jobs that older workers are filling, not because they want to, but because they cannot afford to retire yet. So let's allow those people to leave the workforce and retire on the Social Security checks that they have earned.
And let's watch our unemployment rate fall.
Those new workers, by the way, will be paying into the Social Security system, further strengthening it.
So here's the deal. No more playing defense on Social Security! We go offense!
Demand that candidates for Congress promise to make everyone pay Social Security taxes in full on every dollar earned, whether in wages or from investing.
Demand that candidates for Congress support lowering the age for retiring on full Social Security benefits back to 65.
And give the boot to any member of Congress, and any President, who talks about privatizing Social Security, or about "tinkering" with the system by raising the retirement age, cutting benefits or reducing the cost-of-living adjustment formula.
And if the vultures win election anyhow, and try to cut Social Security, or if a lame-duck Congress and a lame president try to screw us out of our retirement during the interim between Election Day and the start of a new Congress in January, we go back to our old street politics and take the fight to Washington!
Of course, we Boomers should be marching on Washington again anyhow, because there are also two criminal wars underway again, too. And if the Deficit Commission really wants to cut the nation's huge budget deficit, that is where they should be pulling out the knives: the military budget, which is the real "discretionary" item in the national budget, taking almost half of every tax dollar collected, and stealing it from schools, health care, environmental protection, parks, alternative energy research, housing programs and all the other things this nation desperately needs.
Copyright © 2010 This Can't Be Happening.
Dave Lindorff is a founding member of ThisCantBeHappening, the new independent, collectively-owned, journalist-run online newspaper. His work, and that of colleagues John Grant, Linn Washington and Charles Grant, can be found at www.thiscantbehappening.net
