‘Criminal Theft’ From You and Me
As a former Social Security Administration employee, I was thrilled to see William Greider’s "Looting Social Security" [Jan. 25]. The massive surplus figures are readily available, but the mainstream media seem unable to find them. I would only quarrel with the tendency to define Social Security as an entitlement. It’s the Federal Insurance Contribution Act (FICA)–an insurance program paid out of wages. Benefits are distributed according to the amount paid in and years worked.
A looting issue Greider didn’t address is the outright criminal theft from lower- and middle-class workers. Social Security is a flat tax, so deductions begin with the first dollar of wages each year. Deductions continue up to a ceiling. In 1981, when Ronald Reagan became president, that ceiling was $29,700. When Reagan left office it was $48,000. Today it is slightly over $100,000. When that ceiling is reached, which happens only to the richest Americans, it’s like receiving a huge tax cut. The exception is Medicare, for which there is no wage ceiling. That deduction is about 1.5 percent plus a matching amount from the employer. Healthcare for our oldest, sickest, neediest citizens costs 3 percent in the public sector. For the younger, healthier segments of society, it is 17 percent of GDP.
Under Reagan the percentage of deductions increased by 25percent. In effect, there was a 55 percent tax increase on lower- and middle-class workers. That is the largest tax increase in history and the largest redistribution of wealth upward. The mainstream media missed that one too.
The final turn of the knife is the interest paid on the bonds bought by surplus Social Security contributions. Reagan used the bond money to conceal the costs of tax cuts for the wealthy and a massive military buildup to spend the Soviet Union into the Stone Age. Since nothing substantial or revenue-generating was acquired with the funds, that interest plus the principal must be paid back out of current income taxes. Part of a worker’s income taxes goes to replacing his own previous Social Security contributions.