Let’s be brutally frank today: The claim by some of those Wall Street money changers and politicians like Wisconsin’s own Paul Ryan and many of his Republican colleagues that Social Security is contributing to the national debt and therefore needs to be “fixed” is nothing more than an outright lie.
Because the late President Franklin D. Roosevelt wanted to make sure that the Social Security Trust Fund was protected from the ever-changing political winds, it was set up as a separate self-financed system that gets its revenues from three sources — roughly 80 percent from the payroll tax of 6.2 percent for both the employee and employer (the 6.2 was reduced to 4.2 for employees to help provide relief during the recession and went back to 6.2 percent on Jan. 1), another 15 percent from interest earned by the trust fund, and the other 5 percent from taxes that Social Security recipients wind up paying at income tax time. In Social Security’s 75-year history, it has collected $15.5 trillion and currently has $2.6 trillion in the bank, enough money to pay full benefits until about 2037.
It cannot borrow, but the government itself can borrow from it and always does. The Social Security Trust Fund currently holds roughly 18 percent of the federal government’s debt, twice as much as China, the country Republicans like to claim is holding our debt. Former Michigan Sen. Donald Riegle, who believes the government ought to repay Social Security, has pointed out that President George W. Bush borrowed heavily from the trust fund to mask the budget costs of his two wars and the tax reductions he engineered in his first term.
And now it’s the congressional Republicans and Wall Street financiers who are spreading the lie that we can’t tackle the national debt problem without changing Social Security.
In a recent op-ed, Riegle named Wall Street insider Pete Peterson as a leading advocate of this lie. He has dedicated a billion dollars of his fortune to destroy the system as we know it.
“Peterson is joined in his efforts by other wealthy special interests that have much to gain if Social Security is cut or eliminated,” the retired senator said. “The same Wall Street firms that needed the taxpayers to bail them out — and individuals like Peterson who took advantage of a tax loophole that enabled him to pay taxes on his Wall Street profits at the same rate as a janitor cleaning his office — are conducting a massive lobbying campaign to reduce Social Security protections” by claiming it’s a way to lower the deficit.
In fact, Riegle points out, Wall Street ought to be reimbursing the system for the money it lost when workers lost their jobs and interest rates plummeted thanks to the reckless behavior of Wall Street banks and other financiers.
“Social Security did not create the economic problem or the budget deficit,” he adds. “Wall Street and other government spending did. But the opponents of Social Security don’t want to pay back all the money that was borrowed from Social Security. Instead they want to cut Social Security benefits.”
That, of course, would be a hard hit for millions of older Americans, many of whom rely on Social Security to keep them out of poverty. And all for the benefit of those who least need it, but are willing to lie to get it.