The Fast Approaching False Narrative About Entitlements
For once the Democrats weren't lying. The Republicans really are coming for your Social Security and Medicare, and they aren't shy about it.
House Republicans have started to weigh a series of legislative proposals targeting Social Security, Medicare and other entitlement programs, part of a broader campaign to slash federal spending that could force the new majority to grapple with some of the most difficult and delicate issues in American politics.
In recent days, a group of GOP lawmakers has called for the creation of special panels that might recommend changes to Social Security and Medicare, which face genuine solvency issues that could result in benefit cuts within the next decade. Others in the party have resurfaced more detailed plans to cut costs, including by raising the Social Security retirement age to 70, targeting younger Americans who have yet to obtain federal benefits.
“We have no choice but to make hard decisions,” said Rep. Kevin Hern (R-Okla.), the leader of the Republican Study Committee, a bloc of more than 160 conservative lawmakers that endorsed raising the retirement age and other changes last year. “Everybody has to look at everything.”
That's a HUGE lie. "Everybody" has absolutely no intention of looking at "everything".
For starters, the GOP has absolutely no intention of making major cuts in defense spending. This is despite the fact that the military budget is at an all-time high, even though the Pentagon has never passed on audit. If they were sincerely concerned about waste then they would start with the department that can't pass an audit.
Then there is the issue of paying taxes.
The top statutory tax rate on investment income is just 23.8%, but it’s 43.4% on income from work. Put another way, the tax code penalizes poor people who work, while rewarding lazy, rich people who don't work.
The 400 wealthiest U.S. families paid an average income tax rate of just 8.2 percent from 2010 to 2018.
Between 2014 and 2018, the 25 wealthiest Americans collectively earned $401bn, but paid just $13.6bn – about 3.4%.
The average billionaire pays a lower income tax rate than you do. Does that seem fair?
At least 55 of the largest corporations in America paid no federal corporate income taxes.
Will the new Congress raise income taxes on the wealthy? Hell no! There is zero chance of that happening.
But none of this will save Social Security and Medicare, amirite? Well, there is a problem. Social Security will only be able to pay 76% of promised benefits by 2033 if nothing changes.
However, the solution is really easy and obvious.
Here’s how the system works. To help pay for Social Security, a tax of 12.4% is split between employees and employers; a worker is subject to a 6.2% tax assessed on earnings up to a certain amount — $160,200 in 2023.
...An easier solution would be to eliminate the earnings cap while leaving benefits as is. The extra revenue would solve the financial gap for 35 years, according to a report by the Congressional Research Service.
About 180 million Americans contributed a total of $943 billion to Social Security in 2021. Ending the cap for the 5% of US workers who earn more than $160,200 would increase revenue by more than $150 billion.
It's that simple. You solve the Social Security problem by turning the regressive payroll tax into a flat tax. Even West Virginia Democratic senator Joe Manchin supports this option. Will Congress consider this option? Not likely.
How about Medicare? Well, you raise the payroll tax cap for Medicare too, but you also take another badly needed step - Medicare-For-All. Congress found that expanding Medicare to everyone would actually save money.
Modeling the cost of a single-payer program is relatively straightforward. You begin with the status quo health care system and then make educated guesses about the following questions:
How many more units of health care services will be demanded and supplied when price barriers are removed?
How much more efficient will health insurance administration be after the enrollment and payment systems are radically simplified?
How much money will be saved by reducing the payments rates for health care providers and drug companies?
The CBO answered these questions for four different single-payer designs and found that a single-payer system would save $42 billion to $743 billion in 2030 alone.
Scrapping corporate, for-profit health care and creating a government-sponsored medical system would boost the economy, help workers, and increase longevity. But that's not something that you will hear in Washington, nor in the corporate media.
Instead of creating a more fair tax system that rewards work instead of speculation, that cuts waste instead of badly needed programs that people have paid into their whole lives, you will hear that working people are lazy and spoiled, while the super-wealthy will lead us to a dystopian Promised Land and that's the best we can hope for.