Sunday, February 22, 2009

Liberal Plan to Save Social Security

The San Francisco Chronicle ran an article by a particularly ignorant writer entitled, Federal waste we can end, by Susan Alexander, January 28, 2009. I don’t know how her article could have gotten through an editing process, so I’m assuming The Chronicle’s editors are equally ignorant.

Ms. Alexander used Senator John McCain collecting Social Security payments as an example of what she considers Federal waste. Ms. Alexander admits her essential ignorance of the system she is writing about when she states: “How many working Americans are even aware that wealthy retirees receive Social Security checks? I didn't know until the 2008 presidential campaign, when one very prominent "retiree" revealed that he cashed a hefty Social Security check every month.”

Before I go on, I assume Ms. Alexander realizes that many wealthy Americans now contribute 6.2% of their income (12.4% if self-employed), and have contributed to Social Security all their working lives.

I shouldn’t assume too much about Ms. Alexander’s awareness of what I thought was common knowledge of Social Security. She further paraded her ignorance of Social Security when she continued:

(Senator McCain’s) earnings in the Senate, where he contributes 6.2 percent of his income into Social Security, apparently entitled him to this handsome sum on some bureaucrat's chart, but isn't there something wrong with this picture?

Ms. Alexander, Senator McCain contributed from 3% to over 5% of his income into Social Security during each of his many years of military service. I guess I shouldn’t be too surprised if you didn’t know that military members pay into Social Security.

For many years Congressmen didn’t pay into Social Security, even when military members like Senator McCain did.

Under a law enacted in 1983, all members of Congress both contribute to and receive benefits from the Social Security system. Apparently all of them, not just Senator McCain, are what you, Ms. Alexander, consider too wealthy to receive Social Security.

Where would you draw the line, Ms. Alexander? The top one percent of American households make over $350,000 a year, or about $175,000 per person, which is roughly a Senator’s salary. In the wealthiest one percent there are approximately 380,000 Americans over 65 drawing Social Security, receiving a total of about one billion dollars per year (assuming each wealthy recipient received at least the Social Security maximum of $2,323 per month starting at age 66).

Would stopping Social Security payments to the wealthiest one percent of households save Social Security? The $1 billion saved would be almost 0.2% of the over $600 billion paid out in 2008, or an extra $2 per month to each of the less wealthy recipients.

Do you really consider that meaningful progress towards saving Social Security, Ms. Alexander? Your answer has to be “yes,” or why would you write your article? Or perhaps you assumed that The Chronicle editors and readers would be too dumb to do the numbers. It appears you got that right. Thousands will have read your erroneous article and, like The Chronicle editors, not be able to make a common sense evaluation of your position.

A few will read my blog post and realize the truth, but most of them will be conservatives too. To us it is obvious that Social Security is an enormous waste and, by the way, its unfunded liability is roughly $16 trillion (a couple of trillion dollars more than the United States annual GDP).

If the United States was a business, the government of the United States would take it to court for misstating its liabilities, and shut it down for insolvency.

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