With the leading Republican aspirant for the presidency, Rick Perry, denouncing Social Security as a "Ponzi scheme," and the "gang of six" U.S. senators on the national debt commission considering harsh downsizing of Social Security and Medicare, Sen. Bernie Sanders' solid proposal for keeping Social Security in the black for another 75 years comes as a breath of fresh sanity against the GOP fright agenda. His proposal: eliminate the cap on income for Social Security payroll taxes.
Except for the misguided political opposition of Republicans, that wouldn't be hard to accomplish. A positive vote in the House and Senate on a bill to remove the cap would do the trick. President Obama surely would approve. Though he hasn't advocated it lately, he proposed the same thing in his 2008 campaign.
The present salary cap for Social Security tax deductions is $106,800. Earnings above that level are exempt from the Social Security payroll tax. That means that all but a few percent of America workers and households pay Social Security taxes on 100 percent of their income (the nation's media household income dropped in 2010 to $49,445), while multi-billionaires like Warren Buffet pay Social Security taxes on less than 1 percent of their income.
Buffett himself understands the vast wealth gap and tax inequity between ordinary Americans and the super-rich that is hollowing out America's middle class while concentrating ever higher proportions of the nation's wealth in the hands of the top tenth of the top 1 percent of households. Indeed, he has become a strong vocal advocate of raising taxes on the ultra-wealthy back to at least the Reagan-era rates to mitigate the imbalance, bring down the federal debt and strengthen the economy.
In the broad moral view of social equity, the income-cap for Social Security payroll taxes and the vast disparity of burden sharing avoided by the ultra-wealthy for tax equity generally is indisputably unfair. The mechanics of wealth formation in America and other industrialized nations' economies spring from the common tax base for infrastructure and the productivity and labor generated by the nation's broad and overburdened middle class. It's only fair to tax the ultra-wealthy proportionally relative to the higher tax rates paid by working Americans across the board.
As it is, however, the bulk of the tax breaks lavished on the ultra-rich by George W. Bush and his GOP majority from 2000 to 2006 have dramatically exacerbated the nation's exponentially exploding wealth gap. The top one-tenth of one percent of households, for example, got the lion's of the benefits of cuts in capital gains, dividends, estate and income taxes. Their current share of the nation's wealth is higher than it's been in 80 years.
Viewed through this lens, even a flat-rate tax, with no caps and no deductions that would chiefly benefit the nation's ultra-wealthy, could be seen as a godsend for ordinary Americans.
The deceit now being advanced by Republicans against Social Security and Medicare has derided the very nature and purpose of these core social security programs, and even the label -- entitlements -- by which they are described. Ordinary workers are entitled to the benefits of these programs because they have loyally paid their payroll taxes for decades to support them.
While it's true that changing demographics and a decline in the relative number of workers to retirees require occasional tweaking of the programs' guidelines, there's no need to radically change or diminish them. Fixing Social Security to ensure its long-term viability is a matter of minor adjustments, not wholesale slashing. Even now, its trust assets will cover all currently projected costs through 2035. Lifting the salary cap for its payroll deductions alone would ensure its financial stability for 75 years.
Medicare is more difficult to fix, but needed reforms -- including giving Medicare authority to negotiate prescription drug costs with the pharmaceutical industry, and a shift in focus and payment schedules to emphasize preventive care -- would go a long way toward getting Medicare's costs in line.
What isn't needed is a scare-talk push into deep cuts -- promoted by the contrived fright of Obama opponents -- that would needlessly harm the core safety net programs on which the vast majority of working Americans will reasonably depend for decades to come.