How to save Social Security
Recently I came upon a warning from Alan Greenspan, chairman of the Federal Reserve Board that rules the cost of borrowing money through setting interest rates nationally, that Social Security would land in the ashcan in just four years when the avalanche of baby boomers began to retire. He said that today only 3.5 workers support each retiree, and these workers would start to be overwhelmed by 2008. His doomsday talk is misleading, and the mainstream news media do nothing to correct him.
Greenspan failed to note that these 3.5 workers ante up a Social Security payroll tax of 7.65 percent on the first $87,900 they earn, up $3,000 from two years ago and up $900 in 2004. No tax is owed on any money earned beyond $87,900. According to census data, almost 92 million of the nation’s 111 million working families earn less than $90,000 a year. The other 19-plus million families (17 percent of total) control 83 percent of the nation’s wealth. Thus 83 percent of the working families who control only 17 percent of all wealth support the nation’s Social Security recipients. These workers also pay their regular federal income taxes.
Obviously the richest folks don’t pay a proportional amount into the retirement pot. For example, Bill Gates, the founder of Microsoft and the world’s wealthiest man, satisfies his Social Security obligations in the first 60 seconds of the new year by paying 7.65 percent tax on the first $87,900 he earns, leaving untouched the other countless millions of dollars he makes. Is this fair? Of course not.
Adam Smith, the famous 18th-century Scottish economist who in his Wealth of Nations defined the free-market philosophy that the rich, skybox Republicans love, said taxes should be based upon the ability to pay. In other words, Bill Gates in fairness should be paying not 7.65 percent but at least 10 percent on all his income. If the top 17 percent paid not 7.65 percent but only 0.65 percent of their total wealth into Social Security, they would save the system, and they wouldn’t even miss the money!
Why don’t the wealthiest folks step forward and pay a smidge more? Well, as seniors they will never need a Social Security check, so they couldn’t care less. Also, like all taxes, the payroll tax favors the rich. They’ve used their influence and money to make it that way, and they use their influence and money to keep it that way. Let the 83 percent of poor-slob working families who control only 17 percent of all wealth pick up the tab—as always. For shame, Mr. Greenspan.