Their Favorite Lie

The federal fiscal year just ended, and with it came the news that the federal deficit increased 17%, or $113 billion, from the previous year.

"In a life filled with uncertainty, there are a few things you can count on.  First, that death comes for everyone.  Second, that the current president of the United States will call a porn star to whom he paid hush-money a 'horseface' on social media.  And third, that after passing a $1.5 trillion tax cut they insisted would pay for itself and then some, Republicans would blame social services like Medicare, Medicaid and Social Security for exploding deficits and debt and insist that such 'entitlements,' sadly, have got to go." -- Bess Levin, for Vanity Fair 

Mitch McConnell, the Gravedigger of Democracy, said, "It's disappointing, but it's not a Republican problem.  The real drivers of debt are Medicare, Social Security and Medicaid."

Oh bullshit, Mitch!  Nothing significant has changed with those programs over the past year.  What did change in the past year?  Trump's tax cut scam, a.k.a. the wealth transfer to the GOP Donor Class -- rich people and big business.  The large corporate cuts are permanent.  The much smaller individual cuts are temporary.  The average wage earner gets an additional $17 a week.

We were warned by any number of experts that huge deficits would result from these tax cuts.  And we were warned that the Republicans would use rising deficits to attack Social Security and Medicare.  Because that's what they always do.  "Like clockwork," said Nancy Pelosi.  It's their favorite lie.

Let's get clear about these important and popular programs.
They're not entitlements.  They're paid insurance programs.  We, the taxpayers, pay for them one way or another.

Here's how they're funded:

• Social Security and Medicare are funded via Federal Insurance Contribution Act (FICA) payroll taxes.  Both employee and employer pay a rate of 7.65% in FICA tax, or 15.3% total.  
• Of that 7.65% contribution rate, 6.2% goes to Social Security, 1.45% goes to Medicare.
• In the 53 years from 1937 to 1990, the contribution rates for Social Security and Medicare increased 23 times.
• In the 28 years from 1990 to 2018, the rate has not increased once.  It's been 7.65% for almost three decades.
• The Medicare portion of FICA does not have an income cap.  All earnings are taxed at the 1.45% rate.
• The Social Security portion is capped at annual income of $128,400 currently.  Income over that limit is not subject to the 6.2% tax rate.  (The limit inches up a little each year.)
• Medicaid is a joint federal/state insurance program for low income individuals administered by each state.  It is not funded by FICA payroll taxes, but by a combination of general fund income, sales and other taxes from both federal and state governments.
• Based on income and medical service rendered, the federal government guarantees states at least a dollar-for-dollar match for state Medicaid expenditures.  All states currently receive at least a 50% federal match. 
• The federal government pays for 62% to 96% of Ohio's Medicaid expenses, depending on person and service.

These programs are sufficiently funded and solvent, and will remain so in the near term.  Longer term, the bubble of aging Baby Boomers like me will put a strain on them, but solutions are easy and obvious.  (And pointed out by your humble correspondent back in 2011.  See the link below.  Nothing has changed.)

The FICA Social Security contribution rate must increase, at least a little.  Name another thing which hasn't gone up in cost, at all, in the past 28 years.  The GOP's Norquistian refusal to deal with reality is absurd.  A bump from 6.2% to, say, 6.5% would be a huge help.  A little increase in the Medicare rate would also be wise.

The income limit for the Social Security contribution must rise significantly, or like the Medicare portion, be eliminated.  The income limit is a regressive tax with inordinate benefits to high incomes.  Any income up to $128,400 is taxed on 100% of that income.  But a wealthy person with income of $1,248,000 is taxed on just 10% of that income.  Increasing the income cap to $250,000 annual income would be great.  Removing the cap altogether would be perfect.

Either or both of those ideas would be effective, popular and virtually painless, so of course Republicans would be adamantly opposed.  The R's are always trying to tell us they're "financially responsible" and "protecting" us from awful, evil tax hikes.  No, what they're really trying to do is destroy Social Security and Medicare, give even larger tax cuts to their wealthy patrons, and thoughtlessly balloon the deficit in the process. 

The notion of GOP financial responsibility is laughable -- they haven't been financially responsible in a long, long time.  The goddam hypocrites have been the exact opposite.  Vote 'em out!   

https://bustergammons.blogspot.com/2011/09/buster-fixes-social-security.html