KRISTEN WELKER: “Americans could see their Social Security benefits drastically cut in the next decade because the program is running out of money. Former President Trump has said quote, ‘Under no circumstances should Republicans cut entitlements.’ Governor Christie, first to you, you have proposed raising the retirement age for younger Americans. What would that age be specifically, and would you consider making any other reforms to Social Security?”
The simple reality is that if a person earns $160,200 a year or less, they pay a 6.2% tax on all of their income. In other words, a person making exactly $160,200 pays $9,932.40 (6.2%) in Social Security taxes.
If you earn $12,000 a year, $56,000 a year, $98,000 a year, or anything under $160,200 a year, you also pay 6.2 cents of tax toward Social Security on every single dollar you earn. If you made $10,000 last year, you pay $620 in Social Security taxes: 6.2 percent. Like the old saying about death and taxes, you can’t avoid it.
BUT those people who make over $160,200 a year pay absolutely nothing — no tax whatsoever — to fund Social Security on every dollar they earn over that amount. After Warren Buffett or Mark Zuckerberg or Jeff Bezos pay their $9,932.40 in Social Security taxes on that first $160,200 they took home on the first day of January, every other dollar they take home for the rest of the year is completely Social Security tax-free.
If somebody makes $1,602,000, for example, it would seem fair that, like every other American, they’d pay the same 6.2% ($99,324) in Social Security taxes. But, no: they only pay the $9,932.40 and after that they get to ride tax-free.
If somebody earned $16,020,000 it would seem fair that they’d pay the same 6.2% to support Social Security as 96 percent of Americans do, but no. Instead of paying $1,004,400 in taxes, they only pay $9,932.40.
Hedge fund guys who make a billion a year — yes, there are several of them — can certainly afford to pay 6.2% to keep Social Security solvent. At that rate, they’d be paying $62 million on a billion-dollar income in Social Security taxes as their fair share of maintaining America’s social contract.
But, because the tax rate is capped to “protect” the morbidly rich while sticking the rest of us with the full bill for Social Security, those titans of Wall Street pay the same $9,932.40 as the doctor who lives down the street from you and earns $160,200 a year.
This is, to use the economic technical term, nuts.
And, while every wealthy person in America knows all about this because it’s such a huge benefit to them, I’ll bet fewer than five percent of Americans know how this scam for the rich works. (I searched diligently, but couldn’t find a single survey that asked average folks if they knew about the cap.)
There is no other tax in America that works like this. Most have loopholes designed to promote specific socially desirable goals, like the deductibility of home mortgage interest or children, but no other tax is designed so that anybody earning over $160,200 is completely exempt and no longer has to pay a penny after their first nine thousand or so dollars.
And here’s where it gets really bizarre: if millionaires and billionaires paid the exact same 6.2% into Social Security that most of the rest of us do (and paid it on their investment income, which is also 100% exempt today), the program would not only be solvent for the next 75 years, but it would have so much extra cash that everybody on Social Security could get a significant raise in their monthly benefit payments.
But because America’s morbidly rich don’t want to pay their share for keeping Social Security solvent, Republicans are having a debate about how badly they can screw working class retirees.
They ask:
“Shall we cut the Social Security payments?”
“How about raising the retirement age from 67 (Reagan raised it from 65 to 67) to 70 or even 72?”
“Or maybe we should just hand the entire thing off to JPMorgan or Wells Fargo and let them run it, like we’re doing with Medicare? We could call it Social Security Advantage!”
“Or how about turning Social Security into a welfare program by ‘means testing’ it, so rich people can’t draw from it and every budget year it can become a political football for the GOP like food stamps or WIC?”
Responding to Welker’s severely incomplete question, Chris Christie hit all four:
GOVERNOR CHRISTIE: “Sure, and we have to deal with this problem. Now look, if we raise the retirement age a few years for folks that are in their thirties and forties, I have a son who’s in the audience tonight who’s 30 years old. If he can’t adjust to a few year increase in Social Security retirement age over the next 40 years, I got bigger problems with him than his Social Security payments.
“And the fact is we need to be realistic about this. There are only three things that go into determining whether Social Security can be solvent or not. Retirement age, eligibility for the program in general, and taxes. That’s it. We are already overtaxed in this country and we should not raise those taxes. But on eligibility also, I don’t know if out there tonight and if you’re watching Warren, I don’t know if Warren Buffett is collecting Social Security, but if he is, shame on you. You shouldn’t be taking the money.”
Christie was the only one of the five Republicans on the stage who even dared mention taxes.
Nikki Haley said:
“So first of all, any candidate that tells you that they’re not going to take on entitlements, is not being serious. Social Security will go bankrupt in 10 years, Medicare will go bankrupt in eight.”
Neither of those assertions are even remotely true, but, of course, this was a GOP debate. She continued:
“But for like my kids in their twenties, you go and you say we’re going to change the rules, you change the retirement age for them. Instead of cost of living increases, we should go to increases based on inflation. We should limit benefits on the wealthy.”
Her other solution, apropos of nothing, was to end government responsibility for Medicare and privatize the entire program by shutting down real Medicare and throwing us all to the tender mercies of the health insurance billionaires:
“And then expand Medicare Advantage plans. Seniors love that and let’s make sure we do that so that they can have more competition. That’s how we’ll deal with entitlement reform and that’s how we’ll start to pay down this debt.”
Ramaswamy’s answer was so incoherent and off-topic I won’t repeat it here. Suffice it to say he rambled on about the cost of foreign wars (Ukraine, Israel) “that many blood-thirsty members of both parties have a hunger for.” Apparently, Vivek doesn’t realize that Social Security isn’t part of our government’s overall budget but has its own segregated funds and trust fund.
Since it’s creation in 1935, Social Security never has and never will contribute to the budget deficit or influence any other kind of government spending.
Tim Scott said we should take a cue from Reagan, Bush, and Trump and just cut billionaires’ income taxes again because that does such a great job of stimulating the economy (not) and then claw back the inflation-based raises people on Social Security have received the past three years.
“Number two, you have to cut taxes. … So what we know is that the Laffer Curve still works, for the lower the tax, the higher the revenue. And finally, if we’re going to deal with it, we have to take our annual appropriations back to pre-2020, pre-COVID levels of spending, which would save us about a half a trillion dollars in the next budget window. By doing that, we deal with Social Security and our mandatory spending.”
DeSantis was equally incoherent, also refusing to answer the question about raising the retirement age and completely avoiding any mention of the sweetheart deal his billionaire donors get on their Social Security taxes. Instead, he said we needed to get inflation under control and stop Congress from “taking money from Social Security,” something Congress has never done and legally never will be able to do.
All this incoherence aside, Republicans appear to have a plan to deal with Social Security.
House Speaker MAGA Mike Johnson has been pushing a “Catfood Commission” just like Reagan’s 1983 commission that raised the retirement age to 67, reaffirmed the cap on taxes, and made Social Security checks taxable as income. He no doubt expects his commissioners will provide “recommendations” Republicans can run with to cut benefits without raising taxes on their billionaire donors, all while blaming it on the commissioners just like Reagan did in 1983.
When Johnson said that his “top priority” was creating such a commission “immediately” and that his Republican colleagues had responded to the idea “with great enthusiasm,” Democrats on the House Ways and Means Committee responded on Xitter:
“A week into his tenure, MAGA Mike Johnson is ALREADY calling for closed-door cuts to the Social Security and Medicare benefits American workers have earned through decades of hard work.”
But back to the original question. I understand why Republicans refuse to even consider lifting the cap on Social Security taxes so their morbidly rich donors won’t have to start paying their fair share of Social Security to keep the program solvent.
What baffles me is why a TV news personality who earns $2.9 million a year would go to such lengths to avoid even mentioning a solution that’s been signed onto repeatedly by virtually every Democrat in Congress for over a decade.
I’ve been watching Kristen Welker on television for years, and she’s generally been a pretty straight shooter as a reporter. Ditto for Lester Holt, who sat right beside her. This, frankly, astonished me.
Were they afraid Republicans would exact revenge on them if they raised the question of the tax cap?
Or was it precisely because they’re making millions, just like most of the executives they answer to?
More broadly, is this why we almost never hear any discussion whatsoever in the media — populated with other news stars who also make millions a year, managed by millionaire network executives — about lifting the cap?
One hopes the answer isn’t that crass...
