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April 22, 2013 5:09 AM Age: 7 yrs
If Congress Can’t Fix Social Security, Forget Medicare and MedicaidCategory: Larry Checco
Source: Larry Checco
Social Security is all the rage again—but in reality it has been since its inception.
Enacted in the 1930s when life expectancy for both men and women was around 60 years of age, people could start collecting Social Security at age 65. Even back then opponents raged that the system was socialistic and unconstitutional.
Nonetheless, Social Security became a reality and life went on—and on, and on!
In 1938, about 214,000 people collected about US$10.5 million in Social Security payments.
By 2008, nearly 51 million people collected more than US$615 billion—with full retirement benefits still available at around 65 or 66 years of age, depending on the year you were born—and life expectancy hovering somewhere around 80!
If you were lucky enough to be my father, who died two days before his 94th birthday, you too would probably collect Social Security nearly as many years as you worked.
And there’s a good chance that many baby boomers, now reaching retirement age and living longer due to improved health care, will do just that.
What we’re talking about here, folks, is a system that in its present form is obviously unsustainable, yet Social Security remains politics’ third rail.
To his credit, President Obama seems willing to take it on by offering a new way of measuring Social Security’s cost of living adjustments (COLA), called "chained consumer priced index," or chained CPI. Making this change would reduce benefits by 0.3 percentage points per year.
The 0.3 percent adjustment seems miniscule, but according to a recent article in The Washington Post, it would save enough to wipe out as much as 20 percent of the programs 75-year funding gap.
Over the years, it will also result in the lose of thousands of dollars in benefits to retirees. And, of course, those who will feel the pain the most are those who can afford it the least—seniors who depend on Social Security as their major source of income in retirement, many of whom come from the “service class” that makes wealthy life styles possible.
A Fix: Lift the Cap
There’s an easy way to fix the program, and that is by simply lifting the ceiling on income subject to Social Security taxes, which currently is about $114,000 a year.
Right now, everyone making $114,000 a year (or less) pays the 7.5 percent Social Security tax on all of his or her income. For everyone earning more than that amount, once they reach the $114,000 cap—regardless of when that occurs during the tax year—they in essence receive a 7.5 percent increase in their paychecks by not having to pay the tax for the remainder of the year.
For example, if you earn $228,000 a year, you stop contributing to Social Security six months after the start of the tax year. Billionaires like Warren Buffet and Bill Gates probably reach their $114,000 earning’s cap within minutes, if not seconds, after the new tax year begins.
Many argue that the formula used for making Social Security payments—with lower income people receiving a higher percentage in benefit payments compared to those who contribute the maximum—already makes the system progressive.
Theoretically it’s a reasonable argument to make.
But in reality, if no changes are made to rein in the cost of this entitlement program—mind you, we haven’t even mentioned those entitlements that dare not speak their name, namely Medicare and Medicaid, which will be far more difficult to bring into alignment with our looming fiscal restraints—it’s only a matter of time before no one will receive Social Security. The system will go bust.
Bottom line: If Congress can’t find the political will to do something, anything, to rein in Social Security, Medicare and Medicaid don’t stand a snowball’s chance in Hades.
Somehow Congress needs to suck it up and restructure these programs in ways that will not throw grandma off the cliff in her wheelchair, but will ensure something is still there when our kids need to call on these programs.
In short, we need to replace rage with reason, and self-interest with a sense of what’s right for us as a community and society—and for our kids!
Contents © 2013 by Larry Checco - All Rights Reserved
Larry Checco is president of Checco Communications. His latest book is entitled Aha! Moments in Brand Management: Commonsense Insights to a Stronger, Healthier Brand.
Checco Communications is a consulting firm that specializes in branding. It helps organizations clearly define who they are, what they do, how they do it and, most importantly, why anyone should care enough to support them.
Where most branding professionals focus on making sure an organization has an attractive logo, catchy tagline and perhaps a marketing plan, Larry’s take is different. His message is that good branding is far less about marketing, advertising and public relations and far more about quality leadership and staff, appropriate and ethical behavior, and an organization’s willingness, ability and commitment to live up to the promises, or covenant, its brand represents.
In Larry’s words: “A brand is not a cosmetic you apply to your organization to make it look pretty. A brand is nothing less than your organization’s DNA. It’s a true reflection of who you are and what you do. You can spend untold sums on marketing, and say anything you like about yourself. But if you don’t live up to your ‘brand’ in everything you say and do, then what you have is all sizzle and no substance, and it won't take long for your target audiences to find that out.”
He firmly believes that good branding principles are universal and apply to all companies and organization, including for-profit, not-for-profit, government agencies, academic and religious institutions, alike.
In his more than 25 years of communications experience, Larry has helped to raise the brand visibility, fundraising capabilities, recruitment efforts, membership levels, and impact of some of the nation’s largest—and smallest—organizations and government agencies, including the American Red Cross, National Institutes of Health, the U.S. Postal Service, U.S. Department of Energy, and NeighborWorks America®.
Larry speaks, and conducts courses and workshops on branding around the country and is a faculty member of the NeighborWorks® Training Institute -- an adjunct of Southern New Hampshire University -- and a facilitator for the Weinberg Fellows Program.
Larry’s first book, Branding for Success: A Roadmap for Raising the Visibility and Value of Your Nonprofit Organization has sold thousands of copies worldwide. His articles on branding and leadership are referred to and reprinted on countless Web sites.
Larry holds a degree in economics from Syracuse University, as well as an MA in journalism and public affairs from American University.
For more information on Larry and his work, visit his Web site: www.checcocomm.net
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