Published: Wednesday, August 18, 2010
75 years later, Social Security still keeping its promise
When Franklin Delano Roosevelt signed the Social Security Act 75 years ago, he became the godfather of a rebirth of economic security in the midst of the Great Depression. This one act put the words of the Constitution into action, enabling our society to "promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity."
Social Security was a promise for freedom -- freedom from want and freedom from fear, two grim reapers in an economy with double digit unemployment and widespread poverty. It made good on this promise, establishing a system, insulated from the private market, which guaranteed economic security for the elderly, the disabled, and widows and their children.
And it still does. One out of every six men, women and children in our state is a Social Security beneficiary. In Snohomish County, more than 92,000 people receive their monthly Social Security checks. More than 70 percent are 65 or older; 6,500 are children with disabled, retired or deceased parents. All told, their benefits pump more than $100 million into the Everett-area economy.
When I ask young people about Social Security, they answer with a quizzical expression. Push them a little more, and they will think of close family members who get Social Security. But 30 years of propaganda funded in large part by the people who brought us the Wall Street meltdown have taken their toll. Contrary to the facts, many young workers don't think Social Security will be around when they retire.
What they don't realize is that they are already covered under Social Security. If they have been working and become disabled, they are eligible for Social Security benefits for the rest of their lives. If their working spouse dies, they get Social Security benefits as survivors, as do their kids. And of course, when they do retire, Social Security will be there for their retirement.
The Social Security Trust Fund totals $2.5 trillion. Workers have been adding to that trust fund since 1983, when Social Security was tweaked so that there would be enough funding for the retirement of the baby boomers.
What's the trust fund composed of? U.S. Treasury bonds, much like the ones bought by China and other countries. These are considered the safest investments in the world. Medicare also depends on its own trust fund. There is not enough money coming in from workers' payroll taxes for Medicare, but Medicare bills keep getting paid, with checks drawn down from the Medicare trust fund. That money is real, which means that the Trust Fund is real as well.
The Social Security Trustees just issued their financial report card for Social Security. Projecting ten years into the future, Social Security gets an "A" for fully funding benefits. Even peering out to 2037, the people with the green eyeshades in Social Security's administration predict that either
Social Security will never run out of money and will still be paying out benefits averaging 40 percent greater than current benefits, or
Incoming receipts of payroll taxes by themselves, even with Social Security trust funds spent down, will enable payments of almost 10 percent greater than current benefit payments.
Either way, the future for Social Security looks good. Compare the certainty of getting your Social Security check with the upheavals in private retirement accounts. You might want to look at your 401(k) this month compared to two years ago. Then again, you might want to avoid it. And then you could look at your savings which might be available for retirement, but perhaps you might want to "forget" about that as well. As we all know, the private financial markets have not been good to us the past few years. It seems they are only good to themselves.
Now think about Social Security. It is good for all of us. You don't have to check the stock market to know that it will be there. Perhaps that is why young people don't think it will be there for them -- it is so automatic, for their grandparents, for their retiring parents, that they don't have to think about it.
But we should think about and appreciate Social Security. It is as American as apple pie. It is fundamental to the American Dream. It gives all of us our social security. It's got our back!
John Burbank is executive director of the Economic Opportunity Institute (www.eoionline.org ). His e-mail address is john@eoionline.org.
Social Security was a promise for freedom -- freedom from want and freedom from fear, two grim reapers in an economy with double digit unemployment and widespread poverty. It made good on this promise, establishing a system, insulated from the private market, which guaranteed economic security for the elderly, the disabled, and widows and their children.
And it still does. One out of every six men, women and children in our state is a Social Security beneficiary. In Snohomish County, more than 92,000 people receive their monthly Social Security checks. More than 70 percent are 65 or older; 6,500 are children with disabled, retired or deceased parents. All told, their benefits pump more than $100 million into the Everett-area economy.
When I ask young people about Social Security, they answer with a quizzical expression. Push them a little more, and they will think of close family members who get Social Security. But 30 years of propaganda funded in large part by the people who brought us the Wall Street meltdown have taken their toll. Contrary to the facts, many young workers don't think Social Security will be around when they retire.
What they don't realize is that they are already covered under Social Security. If they have been working and become disabled, they are eligible for Social Security benefits for the rest of their lives. If their working spouse dies, they get Social Security benefits as survivors, as do their kids. And of course, when they do retire, Social Security will be there for their retirement.
The Social Security Trust Fund totals $2.5 trillion. Workers have been adding to that trust fund since 1983, when Social Security was tweaked so that there would be enough funding for the retirement of the baby boomers.
What's the trust fund composed of? U.S. Treasury bonds, much like the ones bought by China and other countries. These are considered the safest investments in the world. Medicare also depends on its own trust fund. There is not enough money coming in from workers' payroll taxes for Medicare, but Medicare bills keep getting paid, with checks drawn down from the Medicare trust fund. That money is real, which means that the Trust Fund is real as well.
The Social Security Trustees just issued their financial report card for Social Security. Projecting ten years into the future, Social Security gets an "A" for fully funding benefits. Even peering out to 2037, the people with the green eyeshades in Social Security's administration predict that either
Incoming receipts of payroll taxes by themselves, even with Social Security trust funds spent down, will enable payments of almost 10 percent greater than current benefit payments.
Either way, the future for Social Security looks good. Compare the certainty of getting your Social Security check with the upheavals in private retirement accounts. You might want to look at your 401(k) this month compared to two years ago. Then again, you might want to avoid it. And then you could look at your savings which might be available for retirement, but perhaps you might want to "forget" about that as well. As we all know, the private financial markets have not been good to us the past few years. It seems they are only good to themselves.
Now think about Social Security. It is good for all of us. You don't have to check the stock market to know that it will be there. Perhaps that is why young people don't think it will be there for them -- it is so automatic, for their grandparents, for their retiring parents, that they don't have to think about it.
But we should think about and appreciate Social Security. It is as American as apple pie. It is fundamental to the American Dream. It gives all of us our social security. It's got our back!
John Burbank is executive director of the Economic Opportunity Institute (www.eoionline.org ). His e-mail address is john@eoionline.org.
Comments
(