Shoring up Social Security and Medicare are among the issues Lisa McCormick has worked to emphasize as both a progressive leader and a candidate for the Democratic nomination for Senate in New Jersey, but her calls for action have been ignored by mainstream media and almost everyone associated with the political establishment.
Annual government reports on the solvency of the programs underscored the danger McCormick raised about the long-term viability of Social Security and Medicare but a new CBO study says things are worse than previously known.
While many in Congress simply ignore these concerns, one plan cited by Gray Panthers volunteer spokesperson Susan Friedman, “would raise the age of Social Security eligibility to 70—made all the more galling by lowering life expectancy largely due to COVID and drug overdoses.”
“The House Republican Study Committee’s 2022 budget blueprint – endorsed by more than 180 GOP members of Congress – contained outright benefit cuts,” said the National Committee is dedicated to protecting Social Security and Medicare. “It would raise the Social Security full retirement age to 70, slashing lifetime benefits for some seniors by more than 20%. The GOP blueprint also would reduce annual cost-of-living adjustments (COLAs) and means-test benefits. All of those are cuts, plain and simple.”
Painful reductions in benefits that seniors rely on could become a reality if lawmakers keep ignoring the problem, warns McCormick, who said there are smarter ways to fix the system fairly and quickly.
Following up on that warning, McCormick refreshed her proposal to ‘scrap the cap’ on Social Security taxes, so wealthy Americans would contribute on all their income just like the vast majority of workers.
The maximum amount of earnings subject to the Federal Insurance Contributions Act—the payroll tax imposed on both employees and employers to fund Social Security and Medicare—is $160,200.
The Social Security Board of Trustees released in August 2021, an annual report on the long-term financial status of the program that said asset reserves will be depleted in 2033. That was one year earlier than projected in past years.
The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays out benefits to Social Security recipients, were projected to become depleted in 2033, one year sooner than last year’s estimate.
Since payouts are greater than current income, the administration is faced with the prospect of paying only 76 percent of promised benefits at that time and retirees will endure a loss of 25 percent of their income.
“At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits,” said the Chief Actuary of the Social Security Administration on the agency’s website.
McCormick is warning that a variety of factors—including Social Security’s latest cost-of-living adjustment, the rising cost of medical services under Medicare, lower projected mortality rates for people age 65 or older, and greater participation rates in both programs as the last of the baby boomers become eligible for retirement benefits—have accelerated threats of insolvency.
“According to new estimates from the Congressional Budget Office, Social Security and Medicare are closing in on a disaster that Congress and the President have failed to address,” said McCormick, who would restore solvency to the system by making America’s richest people—the wealthy one percent who do not contribute to the nation’s retirement system—pay the same tax that everybody else pays.
“LeBron James is paid over $40 million to play 82 basketball games each year. LeBron’s FICA tax rate is 0.021 percent. That isn’t really fair,” said McCormick. “LeBron is done paying into Social Security during the first quarter of the first game. For the rest of that game, the next 81 games, right through baseball, football & even hockey season, he doesn’t pay another dime.”
About 70 million Americans rely on Social Security and the progressive New Jersey Democrat says that the super-wealthy can absorb the tax better than people who work for a living and now contribute a share of every dollar they make.
The plan for addressing Social Security solvency is one that she will introduce in Congress if voters elect her, but McCormick said she is not going to accept corporate money to fund a campaign.
“Without legislative action, the Social Security Trust Fund will run out of money in just 10 years,” said McCormick. “That would mean steep cuts that take away a quarter of the money senior citizens need to live, so it is irresponsible that Congress has not already dealt with this issue but it is equally reckless that America has allowed elections to be turned into auctions, that are for sale to the highest bidder.”
“As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted,” said the Social Security Administration’s website but new estimates show that insolvency may be closer than expected.
“While the first dollar earned by every American is subject to FICA, if you make more than that, all income above that level is not taxed,” said McCormick. “When you look at the extreme income inequality there is today, the unfairness becomes even more pronounced.”
McCormick was the only candidate in the 2018 Democratic Party primary with the courage to challenge US Senator Robert Menendez, New Jersey’s corrupt and vindictive power broker who was the target of a 2015 federal bribery indictment.
President Joe Biden is accusing Republicans of wanting to cut Social Security and Medicare, seizing on Florida Sen. Rick Scott’s fanciful proposal to require all federal laws to expire after five years if they are not renewed by Congress.
Republicans’ promise to make mathematically impossible spending cuts to justify the reckless tax reductions they gave the wealthy under former Presidents Ronald Reagan, George W. Bush Jr., and Donald Trump.
None of them have seriously discussed detailed plans to save Social Security or even mentioned the imminent funding crisis, said McCormick, who proposed a solution that got meager attention in 2020.
The trust fund that finances Medicare Part A hospital coverage will have a zero balance by 2028, which means the government has five years to change the equation.
McCormick noted that it is false to say that Social Security is “going bankrupt” despite arguments lodged by some Republicans.
“The tax collected from workers will always be there to pay at least some benefits, so you can’t say that something is bankrupt when it has more than $900 billion in revenue,” said McCormick. “Americans deserve universal health care and retirees deserve to know that our government will keep its promises, so voters must rise up to the responsibility of citizenship by holding elected officials accountable for letting things get so far out of control.”
In 2018, Social Security expenditures exceeded revenue for the first time since 1982, when the program took in $912 billion and spent $991 billion. Medicare will spend $3 billion more than it generates in revenue this year, with $412.6 billion in revenue and expenditures of $415.6 billion.
Social Security is a program that provides benefits for retirees, people with disabilities, and children of deceased workers. McCormick said the impact on the economy would be “disastrous” and the personal trauma inflicted on recipients would be “barbaric.”
McCormick said media outlets should ask Senator Menendez to explain why he never worked to fix the problem because “since 1983, everyone knew the Social Security Trust Fund will run out of money and this should have been done before we arrive at that date.”
McCormick said Social Security should actually be expanded because the average benefit of just over $1,500 a month doesn’t provide enough income to cover basic necessities.
“When Social Security spends all the surplus in trust funds, it may pay 75 percent of benefits with incoming even if Congress does nothing,” McCormick said in an October 17, 2018, post on Twitter. “If we ‘scrap the cap’ then Social Security could lower the retirement age, increase benefits & remain solvent indefinitely.”
Five years later, she says people are running out of time but too many Americans are still not listening.