As a result, beneficiaries have faced serious delays in receiving assistance and an average disability hearings backlog of days. There are currently 1 million people waiting for a hearing and sadly, some people will die waiting for their earned benefits. I recently spoke up in the Ways and Means Committee to defend the program. After visiting senior centers in Newington, Wethersfield and West Hartford, my conversations with our local seniors further confirmed the importance of this vital program and why we need to continue to expand and enhance Social Security, and fight any cuts.
Current retirees and those who will retire in the future will, on the average, receive benefits worth no more than the taxes they have paid, cumulated at a modest real rate of return. Thus, Social Security will not be generating new unfunded liabilities for future retirees.
Whether or not one thinks that the payment of comparatively generous benefits to early Social Security retirees was a good or a bad idea, that action cannot now be undone. The reserves not accumulated to support benefits of future retirees is an obligation that we must meet, one way or another. The question is: who should meet it? Under current law, the cost of paying for this unfunded liability falls on workers, in proportion to their earnings. The rationale for this policy is difficult to comprehend.
They will be receiving in benefits no more than they and their employers will be paying in taxes. The unfunded liability, like the national debt, should be recognized as a general obligation of the American people. To be sure, workers are a large part of the American people and their earnings are a large part of the overall tax base.
This view is simply wrong. One should begin by acknowledging that government accounting provisions contain many arbitrary conventions and that if different conventions had been adopted, budget accounts would look different from the way they do now.
Professor Laurence Kotlikoff, among others, has contributed greatly to our understanding of these anomalies by pointing out these problems in a series of articles in economics journals. But the issue here is not whether government accounts are logically consistent constructs.
The accumulation of reserves also shifts the asset position of the federal government. By paying more in taxes today, we shall have to pay less taxes in the future. To be sure, some form of financial transaction will be necessary to pay for those future benefits, but that is true everywhere and always when savers cash in assets to pay for something they want to buy.
Private savers must reduce future saving or increase borrowing when they cash in assets they have accumulated. The Social Security administration will have to do the same. Both hold IOUs—paper promises of some private or public entity to pay interest or dividends. In each case, the assets are only as good as the willingness of someone to redeem the assets or buy them before maturity. In each case, any future need to cash in reserves to meet current obligations would reduce national saving.
Social Security reserves are as real as the reserves of any private pension fund, personal brokerage account, or corporate reserves. This view that Trust fund assets are not real confuses two distinct questions: whether trust fund accumulation adds to national saving, investment, and the capacity to pay future pension benefits; and whether government budget operations on accounts other than Social Security add to national saving, investment, and the capacity to pay future benefits.
As noted, additions to Social Security reserves add to national saving and the capacity of the government to meet future pension obligations in precisely the same sense that additions to private savings accounts add to national saving and the capacity of savers to meet their debts. On the other hand, simultaneous deficits in the non-Social Security budget can subtract from national saving.
From fiscal year through fiscal year , Social Security ran surpluses—thereby adding to national saving—but deficits in the rest of government operations subtracted from national saving.
From through , the deficits on non-Social Security accounts exceeded Social Security surpluses so that the federal government as a whole ran deficits, thereby reducing national saving. In the Social Security surpluses exceeded the deficit on the rest of government operations. And starting in the federal government began to run surpluses both in Social Security and in the rest of government operations.
The revenues were to be transferred to the Medicare trust fund. There would be no income thresholds below which Social Security income would be exempt. The rules applied to taxing Social Security are patterned on, but are more lenient than, those applied to taxation of contributory private pensions. Pensioners are required to include private pensions in income subject to tax pensions only to the extent that they represent the repayment of contributions out of previously taxed income.
If the same rules were applied to Social Security, workers would be required to include in income subject to tax all Social Security benefits in excess of a portion equal to their own payroll tax payments, but the rest of benefits would be subject to tax.
In , I chaired the Advisory Council on Social Security which reported that if that rule were applied to workers retiring at that time, less than 15 percent of benefits would be excluded from income subject to tax for any worker and the percentage would be lower for most workers.
That meant that 85 percent or more of Social Security benefits should be included in income subject to tax if they were to be treated in the same way as contributory private pensions. Even after the legislation, Social Security benefits are treated more favorably than are contributory private pensions. On grounds of tax policy, there is no basis for repealing the tax enacted in It is needed for the proper definition of an income tax base.
To be sure, there is no particular reason for allocating revenue from the taxation of Social Security benefits to either the Social Security or the Medicare trust fund any more than there is justification for transferring revenues from taxing private pensions to private pension funds. But, as I have noted, there is a good case for general revenue transfers to Social Security; and the same logic applies to Medicare. Since both programs face projected long-term deficits and since the current tax treatment of Social Security is still more favorable than that of contributory private pensions, I believe that there is no analytical justification for reducing this tax at this time.
Chairman: Thank you for the invitation to testify today on entitlement reform. First, current long-run projections indicate that neither Social Security nor Medicare will have enough revenue under current law to pay for all the benefits promised under current law.
Each faces a long-term financing problem, and the sooner Congress acts to deal with those problems the better. Second, the long-run projections of both programs have improved in recent years—dramatically in the case of Medicare and significantly, but less dramatically in the case of Social Security. An "entitlement," as a type of federal spending, is a government program in which recipients automatically receive benefits that they're eligible for based on the applicable legislation.
Social Security is an entitlement because everyone who meets the eligibility criteria 40 "quarters" of eligible earnings is entitled to a benefit. No one is dependent on Congress to appropriate spending every year in order to receive their Social Security checks.
SNAP food stamps is also an entitlement program. SNAP is a federal entitlement program. This means anyone who is eligible will receive benefits. You will not be taking away benefits from someone else if you apply. By comparison, Section 8 housing vouchers are a government program that is not an entitlement. This doesn't have anything to do with whether or not it's a "welfare" program but simply because Congress appropriates a certain sum of money for the program regardless of whether it's enough to give benefits to everyone who meets the eligibility criteria.
Those hoping to receive benefits end up on waiting lists because the number of people seeking benefits far outstrips the funds available. Why, then, do Republicans say things like, "we have to consider entitlement reform in order to reduce the federal deficit? That's from , as featured in a handy Wikipedia infographic. And as a reminder, spending on these programs is forecast to grow dramatically over the next several decades.
Instead, it seems to have become what you might call a dog whistle, except in reverse.
0コメント