Social Safety Net

Many decades ago it became clear to most Americans that a safety net would be a wise addition to our form of life. At the time social security was born. It was not meant to be a program that provided full retirement income needs, but a supplement. Over the ensuing decades, congress sweetened the pot for political purposes. Many other social programs were overlaid social security – disability, death of primary provider with underage children, and much more. Expense grew exponentially. As long as the benefit pool was young and growing, the actuarial numbers never outgrew the demand for benefit checks. Cash was available and the cash cow kept giving.

Then actuaries did sound their warning. The program would either have to be pared down, or premiums would have to be raised. The latter was the answer over and over again. Eventually other decisions were made to tweak the math of the program to extend financial liquidity into far future years.

As the economy grew, so did social security. And then the benefits began to make more sense and provide more financial support to those who truly needed it. Social security is an insurance program and run on actuarial mathematics. It pays for itself by FICA taxes, or premiums, paid equally by the employer and the employee. Benefits are based roughly on how much has been paid into the system by and for the employee. And that is based solely on the earner's earnings.

In recent years defined benefit pension programs have been increasingly eliminated with employee paid plans producing far less retirement benefit. Social security has thus been of increasing importance to retirees. Slowly but surely workers have learned to reduce their living expenses in retirement to live within the social security benefits.

For some reason social security has become a political football of deep ideological importance. It is seen by some as a ‘public dole.’ It isn’t, of course; it is paid for through the efforts of the employee, with premiums shared by employers. It is the cost of doing business. And it is a discipline enforced on workers to prepare for their retirement as well.

Conservatives have taken up the banner that social security must go. With their champion trump at the lead, suspending FICA tax deductions from paychecks will starve social security of its income. Thus it will be bankrupt in no time at all. Cash reserves of the program are low because the congress has borrowed from the cash cow continuously to fund national debt. A growing crisis is pending for social security and the financial security of every American.

Add to this Medicare. It too is an employment benefit for healthcare paid for by both the employer and the employee. With rising medical expenses, the program has always been in crisis mode financially. FICA payments are its lifeline.

So, without FICA payments, both Medicare and Social Security may be doomed.

Conservatives applaud this development and hope to keep it so. Without congressional action, both of these programs will be ended and the full misery of financial doom for the American people will be realized.

It is wondrous to consider why fellow Americans hate each other so to produce this result.

August 10, 2020