NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING
DONATE TODAY


  August 14, 2013

Social Security Act Turns 78


Signed into law in 1935, the Social Security Act launched an integral social safety net program, but is it still sustainable?
Members don't see ads. If you are a member, and you're seeing this appeal, click here
   

Share to Facebook Share to Twitter


No sports, no celebrities, no paid stories, no agendas. Pure integrity. - Steve Dustcircle
Log in and tell us why you support TRNN


transcript

Social Security Act Turns 78JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore.

Today marks the 78th anniversary of the signing of the Social Security Act. In 1935, President Franklin Roosevelt signed the law, establishing a new form of economic security for seniors.

Here to discuss the history of Social Security and its health today is Nicole Woo. Nicole Woo is the director of domestic policy for the Center for Policy and Economic Research in Washington, D.C.

Thanks for joining us, Nicole.

NICOLE WOO, DIRECTOR OF DOMESTIC POLICY, CEPR: Oh, thanks for having me.

DESVARIEUX: So, Nicole, can you just give us a brief history of the Social Security Act? How did it come about, the signing of the act in 1935?

WOO: Well, people might remember that the Great Depression started with the stock market crash in 1929, and in the Great Depression there was poverty across this country. More than half of the elderly in this country were in poverty. And that was causing huge suffering.

So in reaction to people just being poor, starving in the streets, we came up with a number of safety net programs, and one of them is Social Security. It's really more of an insurance program, where workers were able to start putting money into, basically, a pension, but a government-run pension. And this way it's been keeping seniors out of poverty till this day. If we didn't have it, it would be a lot harder for all Americans. For example, we'd have to support our grandparents and parents in their old age.

DESVARIEUX: Okay. And let's talk about Social Security today. What is the current health of the system? Because you hear different views on this. Obviously, people more on the right, they tend to say, oh, we should be raising the retirement age [incompr.] security. You even hear that from President Obama at times. When there are talks about balancing the budget, Social Security is often brought up. What is the real health of Social Security today? And if you could, just provide some numbers for our viewers.

WOO: Oh, sure. So Social Security is often lumped in with other government programs to make it seem really scary. But the fact is that Social Security is facing a small shortfall in the future, but it's really not that serious and it's not unmanageable. For example, right now Social Security is perfectly able to pay 100 percent of benefits, and it's going to be able to do so for the next 20 years. After that, it'll be able to pay about 75 percent, three-quarters of the benefits of that are promised. And, you know, nobody likes to see that sort of shortfall, but it doesn't mean it's going to completely broke. We've been able to fix these sorts of problems in the past with changes in the payroll level, payroll tax levels, or how many people pay into the system.

What we're looking at right now is that Social Security takes up about 5 percent of our GDP, our economy, and these long-term 75-year projections show that it'll go up to about 6 percent. So we're talking about a gap of about 1 percent of our economy, which really isn't that much. And there are many ways that we can fix that gap.

DESVARIEUX: Okay. Can you give us some suggestions of how? What has been done in the past?

WOO: Oh, in the past they've raised the rate of the payroll tax. And they've also added more workers to qualify for the system, for example certain government employees.

One thing that is really important to know is that there is a cap on the amount of income that's taxed for Social Security. Right now the first $113,700 of a person's income are taxed, and then any income that people make above that is tax-free when it's for--in terms of Social Security. So, you know, someone who's making a quarter of a million dollars a year is paying only about half the rate into Social Security as the rest of us. Somebody who's making a million and a half dollars a year is only paying about 10 percent of the rate of the rest of us. So we could fix almost all of that gap that people talk about by simply raising that cap on the wages of Social Security, taking it away completely and taxing everyone, rich and poor, at the same rate and have them contribute the same rate into the Social Security system.

DESVARIEUX: So, Nicole, let's talk a bit about the people that say Social Security is unsustainable. What do you make of the argument that the amount of money that is going in is less than the amount of money that will be going out? And secondly, what do you make of those like CEO of Goldman Sachs Lloyd Blankfein that said that essentially Social Security is going to be unsustainable, we need to change the system entirely? Are you a bit skeptical about their motives?

WOO: Well, there are many parts to your question. The first part is whether or not Social Security is actually paying out more than it's taking in right now. And that's absolutely not true. Actually, in 2013, Social Security is projected to take in $28 billion--that's with a B--$28 billion more in than it pays out to retirees. And that's because back in 1983 a number of changes were made to the Social Security system, and they started to build up a surplus, because they knew the baby boomers were going to retire. Right now we have about $2.8 trillion--with a T--$2.8 trillion saved up in the Social Security Trust Fund.

When people say that Social Security's paying out more than it's taking in, they're not counting the interest that Social Security is making on those over two and a half trillion dollars in savings. And I know that I have to pay taxes on my interest income, you know, when I do my taxes every year. Interest counts. But the people who want to scare us about Social Security just don't count that. And that's really not fair, because, you know, the interest income is significant, and it will build up our payroll taxes that we're paying in, and the interest will continue to accumulate, so that by 2020 we'll have about almost $3 trillion in the trust fund. So that is not an issue. And when you do hear people say that we're in the red, they're simply not counting the interest. And I just don't think that's good accounting.

In terms of folks who say that it's a problem and they want to have it in these deficit and budget discussions, that's another sort of red herring. By law, Social Security cannot contribute a dime to the deficit. The law says that Social Security can only pay out what it has in its trust fund. And that's why I was saying that in about 20 years it'll be able to pay out only 75 percent rather than 100 percent of benefits. So there's no way that Social Security can contribute to the deficit, 'cause the law says that when it, you know, doesn't have enough to pay the full benefits, it simply doesn't. And it's never contributed to the deficit in the past, because that's how the law has always been.

DESVARIEUX: Okay. Let's switch gears a little bit and talk about unemployment and the high unemployment that we're seeing today. How is that going to have an effect on Social Security?

WOO: Well, it reduces the amount of workers who are paying into the Social Security system. So it does exacerbate, you know, the small shortfalls that we will see in the future. If we had more workers working, there'd be more workers contributing into the system, saving up for their retirement. So, certainly, you know, any time we talk about jobs programs and reducing the unemployment rate, that would also help Social Security.

DESVARIEUX: Okay. Thanks so much for joining us, Nicole.

WOO: Thank you.

DESVARIEUX: And thank you for joining us on The Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.



Comments

Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

latest stories

Climate Catastrophe Is Here: 2016 Hottest Year on Record
Baltimore Public School Funding Pales in Comparison to Private Education Spending
Rattling the Bars: Women and Incarceration
Trump-Republican Alliance in Disarray?
Defending the Climate in the Age of Trump
"Wealthcare" Defeated: Health Care For All Back on the Agenda
Baltimore Mayor's Veto of $15 Wage Protects Policy of Subsidizing Wealthy, Councilperson Says
The Truth Behind the War on Immigrants
Were Haitian Police Behind Assassination Attempt on Aristide?
New Provisions Eliminate Healthcare From GOP 'Wealthcare' Bill
Why Further Revelations on Trump's Russian Connections Might Fail to Bring Him Down
18 Million U.S. Citizens Exposed to Lead-Contaminated Water Systems
Russia vs. USA: Who is the Threat, Who is the Aggressor? (2/2)
Should Sanders Continue the Fight Outside the Democratic Party?
Fed Inflation Target Keeping Wages Low, People Out of Jobs
Is Trump Dangerous for Russia?
Was the Georgian Conflict Started to Elect John McCain President in 2008? Pt.1
Will the NDP Adopt Pro-BDS Platform?
Massive Cuts to EPA Threaten Communities Already Suffering From Pollution, Climate Change
Whistle Blower Teacher Says Charter Schools Draining Students, Resources from Public Education
Trump's Budget Targets Climate Change Spending Across All Federal Agencies
US Has Interfered in More Elections Than Any Other Nation
Maryland Democrats Push Back Against Gov. Hogan's Support for ACA Repeal
Russia vs. USA: Who is the Threat, Who is the Aggressor? (1/2)
Democrats Fail to Dig into Trump's Shady Financial Ties During Hearing
Why is the Capitalist West Fighting with Capitalist Russia?
Baltimore City Council Passes Historic $15 Minimum Wage
UN Report Finds Apartheid Exists Within Israel
Neil Gorsuch's Woeful Record on Civil Rights
Federal Judge Orders Civil Rights Lawsuit Against Pocomoke, State of MD to Move Forward

TheRealNewsNetwork.com, RealNewsNetwork.com, The Real News Network, Real News Network, The Real News, Real News, Real News For Real People, IWT are trademarks and service marks of Independent World Television inc. "The Real News" is the flagship show of IWT and The Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Managed Wordpress Hosting