Last week, Huntsman, a co-host on MSNBC’s “The Cycle” and the daughter of former Utah Governor Jon Huntsman, went off on what she said was the biggest issue facing her generation: Social Security. The program, she said, is going “bankrupt,” and will need serious fixes over the next few decades to make sure it lasts for generations to come. You know, serious fixes like raising the retirement age to 75.
Take a look:
If Abby’s rant sounds familiar, that’s because it’s pretty much a carbon copy of every Social Security scare piece put out by Beltway deficit “hawks” over the past few years. Like Abby Huntsman, those deficit hawks say that while Social Security was nice while it lasted, it just won’t be able to keep up with our aging population and will therefore run out of money soon.
Saying that Social Security will go bankrupt has become so popular it’s easy to believe that it’s true. But it’s actually one big lie.
Here’s why: When people like Abby Huntsman talk about Social Security running out of money, what they actually mean is that the Social Security trust fund is going to run out of money. And believe it or not, they’re actually right about that. The Social Security Administration estimates that the trust fund will empty out by 2033. This isn’t a bad thing, though - it’s how the trust fund is supposed to work.
From when it was created in 1935 up until the 1980s, Social Security was paid for by taxes coming in from people who were currently working. In other words, people currently in the workforce paid for the Social Security benefits of people who had already retired and started collecting Social Security checks. But in 1983, the Reagan administration changed things around. It raised Social Security taxes so that, in effect, working people from the Boomer generation would pay for both their own retirement and the retirement of people older than them.
The Reagan administration did this so that Social Security could afford the benefits surge that would come about once all the Boomers retired. The extra money it got from raising Social Security taxes was invested in government bonds. Today we call that extra money the Social Security trust fund. And right now, that fund is working just swimmingly. In fact, it’s running at a $2.6 trillion surplus!
As a result, Social Security, will continue to pay out 100 percent of its scheduled benefits, until 2033, when the trust fund runs out of money. Again, though, this isn’t a problem. It’s part of the plan. The trust fund was created to pay for Boomers’ retirements, and since by 2033 most Boomers will be well into their eighties and nineties, it makes sense that the fund will run out by then.
It’s important to point out, though, that after the fund runs out, Social Security will only be able to pay out 75 percent of its benefits. But while this sounds scary, we can easily make up for it by eliminating the cap on Social Security taxes so billionaires like Bill Gates have to pay Social Security taxes throughout the year just like everyone else does.
If everything I just said sounds shocking to you, that’s because people like Abby Huntsman and all the deficit hacks, excuse me, hawks, have conflated the Social Security trust fund with the Social Security program in the minds of the public. The Social Security trust fund is running out of money; Social Security is not.
So why do the deficit hacks spend their time lying about Social Security? Money, of course! The biggest backers of Social Security “reform,” are people like Pete Peterson of Fix the Debt, Wall Street bankster types who want to get their hands on the $2.6 trillion in the Social Security trust fund. People like Pete Peterson think that if they can convince enough people that Social Security is going bankrupt, the government will do crazy things like raise the retirement age or, as George W. Bush tried to do, privatize Social Security altogether.
If the government does go ahead and privatize Social Security, Peterson and his bankster friends will make billions leaching off the retirement savings of working Americans that otherwise would gone to fund Social Security. They want you to think Social Security is going bankrupt so they can skim the top off your retirement account and toss it into the stock of companies owned by friends of theirs.
Abby Huntsman really does seem like a nice person. I just hope she knows who she’s shilling for.