After a relative posted a link to Bernie’s plans and encouraged me to read it, I took it up and started performing an analysis on what Bernie proposes and what questions he answers … and what he doesn’t, at least in his published data. There is a lot there. Today I’ll just focus on one section of his plan – I’ll take up the rest later.
Preface: Bernie talks a good talk. Funding for his proposals appear to be grounded in good math, at least on the surface. His wording is well-rehearsed to prepare for people like me, who operate on facts, verifiable numbers, a fair amount of experience, and a smidge of common sense. His words do tend to resonate for a large movement, however, especially those who fit into the category of “SHIEPLE” (pronounced ‘shee-pull’ – Students, Hipsters, and Impressionable Everyday People Liberally Educated – and yes, I just made that up). This group, as far as I have been able to observe, appear to be looking for some beacon of hope after Obama. Unfortunately, I’m not convinced this is the message they should jump onboard and support; of course, that’s my opinion, and I understand many of you will vehemently disagree (and may not agree with the SHIEPLE acronym…if so, then fine, you are not one of them).
So, what’s in Bernie’s plans? Frankly, a lot of interesting ideas: With healthcare, for instance, I have always maintained that everyone of sound reasoning would/should want great healthcare for all; that’s never been the question. What has been the question is how to make it financially affordable and sustainable. Bernie’s plan, much like Obamacare, takes an aggressive stand through massive, diverse taxation. In fact, ALL of his plans do that very same thing.
Let’s just focus today, however, on his plan to expand Social Security. Bernie’s numbers are as follows: He proposes to raise the benefits paid to elderly and disabled that depend on Social Security (alone) by $1,300/year. Basically a 10% increase. He also wants to slash drug prices.
Side note: Democrats have accused Trump of wanting to slash Social Security. This is false. Even as recently as his trip to Davos, when asked about whether Entitlement Programs would ever be “on his plate”, he responded that “at some point they will be”. Now – that immediately turned into Schumer saying “Trump has casually said he will slash your social security while at a Swiss Ski Resort with elites”. He was at an economic conference, Chuck. And his whole statement included talking about the high rate of economic growth that might enable changes to those programs. But that didn’t get published. Trump has, however, said he would like to look at limiting entitlement programs being given to non-citizens, and undocumented residents.
Other side note: Trump is going after drug prices and has asked Nancy to send him a drug price bill. He even did it again in the SOTU address (the one she tore up on TV). Nothing new here, Bernie. But I digress.
Back to Bernie and Social Security. His funding is based on the rhetoric of saying that the “rich should pay their fair share” and “they should pay what everybody else pays”. Here’s the actual facts on Social Security funding:
- For those of you that may not know this, Social Security is paid via employee and employer tax contributions; 6.2% for both parties (12.4% total), paid on every check.
- EVERYONE pays it. Even the rich. We all pay our fair share. All of us. However (and this is Bernie’s rhetoric jumping in), once your payroll exceeds $137,700 in a year, Social Security no longer taxes you for the remainder of that year. That is the 2020 number; for 2019 it was $132,900 – which is Bernie’s number on his website. Net net: Bernie wants to eliminate the cap.
Social Security is basically a pension program. Most of us have seen statements sent to us every so often from the Federal Government that talks about what we should expect to receive for benefits based on our current contributions. That’s an important point: This program pays participants based on a formula that is heavily based on your 35 highest income years.
What’s that all mean? Simple: If you contribute more, you are eligible to get more back later. Like any other pension program. But Bernie wants to use that extra money to pay people more that didn’t contribute to that level. Bernie wants to raise the cost-of-living adjustments using that extra money. Put more simply: Bernie wants to redistribute that contribution, which, by definition, makes it unavailable later to those that put it in.
Summary: Bernie wants to “lift people out of poverty who are making less that $16,000/yr on Social Security”. Okay… $1,300 net increase gets us to $17,300/yr. That doesn’t lift anyone out. Bernie wants to remove the Social Security cap. Fine. No argument there. But (and this is a big but) – the contributors will not ever see that money they put in; Bernie will redistribute it.
I don’t disagree with raising the cap. I do disagree with taking my contribution and giving it to someone else. Sorry… I do. If I wanted it redistributed, I would, um, move to a socialist country. I already pay income taxes that go to general fund programs that benefit all of us. Social Security was absolutely not designed that way, for good reason. Today, according to Bernie’s own site data, Social Security has over $2.9T in surplus. But keep in mind that we also have far more people starting to reach retirement age, and far less contributors by ratio. It was 160 workers contributing to the program for every 1 benefits recipient in 1940 (signed into law in 1935). Today it is 3 (2.8, actually) workers for every 1 benefits recipient. The balance sheet is negative for Social Security. Bernie will spend it faster, even though he will plow more into it via cap elimination. He also does not address the increased burden on the payable formula when he eliminates the cap. This is a glaring mistake, and is extremely misleading.
That’s all for today’s Bern.
