Wednesday, January 4, 2012

Observations about Social Security

By Bob Confer

In the days leading up to Christmas, the White House unleashed a huge social media marketing campaign to get people involved in the political discourse surrounding the extension of the payroll (Social Security) tax cut for another 2 months. To fire up the masses, President Obama and his staff framed the activism with the basic premise of “What does $40 mean to you?”

The $40 in question was identified as being what Americans would continue to keep on a weekly basis were the cut prolonged. Believe it not, the number was a mistruth.

$40 is not the average amount Americans will receive. Rather, it’s the maximum. Most people won’t even come close to it. According to the administrators of Social Security, the average American income was $39,959 in 2010, or $768 per week. Under the 2 percent cut, the weekly benefit works out to be $15.

The $40 incentive certainly got a lot of people fired up, who subsequently tweeted in volume about the importance of that money in making ends meet in their homes. That, in turn, forced the GOP’s hand in agreeing to the 2-month extension. Now, if the White House had been genuine about it and used $15 as the value, would the campaign have been successful? I doubt it.

Gotta love propaganda.


The Associated Press, among others, have reported on the Social Security tax cut with some trepidation, saying that the previously unheard-of act of pulling SSI funding from the federal government’s general pool of revenues (to keep Social Security whole by making up for the loss of the payroll tax) puts the program at risk because, if the cut lingers, SSI will have to compete with other programs and various departments for funding in the future.

I, too, share some reservations, but mine are on the other end of the spectrum that the AP’s worries are founded in. I see this manner of funding as being the easy way out for Congress and the Executive Branch. They can fix Social Security without actually fixing it. By dipping into the universal kitty, the trustees now have access to nearly unlimited reserves and, ultimately, new means of funding (potential new excise and sales taxes). No longer will Social Security have to live within the means of the mythical trust fund that was created solely from payroll taxes (employee and employer contributions). When times get tough, they’ll just grab money elsewhere.

This tax cut sets an ugly precedent that will really take hold in my lifetime. Social Security is saddled $21.4 trillion in unfunded liabilities, all of which will, within the next 20 years, start to see substantial bailouts from alternative sources, thus harming the rest of the economy.


One of the fixes to Social Security – and Medicare for that matter – that keeps getting thrown around is means testing. This concept really gained popularity in the deficit reduction talks of 2011 and many on both sides of the aisle believe it will be discussed at length in 2012 as Congress gets serious - or as serious as they can be - about our long-term obligations.

Under means testing, the wealth of retirees will be taken into consideration in regard to their receipt of publicly funded benefits. If a senior is found to possess “too much” in the form of 401(k)s, IRAs, pensions, savings accounts, and their homes, they will receive less from Social Security and will have to contribute more to the care they receive under Medicare.

That is incredibly unfair because means testing will penalize those who planned for their future and reward those who didn’t. For a good many Americans there will be a lesser – or no - incentive to save and invest because what they would have forgone in their working years for betterment of life in their later years would be deducted from what they had already contributed to those social welfare programs (which, in most cases, is at the same amount the non-savers had contributed during their careers).

Because of that, means testing would only serve to drive more people to not put away for tomorrow and, therefore, rely on government for the full provision of their post-employment needs.

And people wonder why America is in decline.

Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at


This column originally ran in the 09 January 2012 Greater Niagara Newspapers

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