August 13, 2020

Donald Defunds Social Security

By Glenn

Donald Trump issued an Executive order defunding Social Security of the next 4 months.  In 1936 President Franklyn D. Roosevelt signed the Social Security Act into law.  It was the first permanent piece of social welfare legislation. It has stabilized the lives of our seniors ever since.

The Social Security Administration, an agency of the federal government, runs Social Security.  It is publicly owned, which means it is socialism.  Every working American, except teachers in states like Texas, collects Social Security when they can no longer work.

Social Security is a federally mandated, socialist entitlement.  Republicans have hated it since its creation.  They have sought to undermine it every step of the way.  Democrats fought to expand it.

In 1965 Lyndon Baines Johnson signed the biggest expansion into law.  Republicans like Ronald Reagan tried to scare Americans into rejected it. 

Reagan had narrated a recording in 1961 for the American Medical Associations.  He warned “From here it’s a short step to all the rest of socialism, to determining his pay and pretty soon your son won’t decide when he’s in school where he will go or what he will do for a living. He will wait for the government to tell him where he will go to work and what he will do.”

Thankfully, voters, LBJ and Congress ignored fear mongers like Reagan.  Medicare has been a blessing for millions of Americans.

From the beginning, however, Progressives have highlighted one major drawback of Social Security and Medicare.  It is funded by a payroll tax, not an income tax.   In 1936, Abraham Epstein, the founder of the American Association for Old Age Security, criticized the funding mechanism for the new law.

“This transfers the entire burden of old-age dependency after 1942 to the backs of the young workers and their employers, to the exclusion of the well-to-do….No other nation has ever put into operation a plan of this nature without government contributions derived from the higher-income groups.”

How does this work?  Only workers and the employers pay FICA taxes.  Wall Street Bankers don’t pay on their trades.  Real estate investors don’t pay when they flip a property.   The most profitable parts of our economy don’t support Social Security and Medicare.

Today, we are in the middle of a global pandemic.  Both the contagious nature of the disease and the drop in consumer spending forced millions of our American neighbors into the unemployment lines.

Donald has failed to cut a deal with Congress.  He can’t even get Republicans on board.  Instead he ordered the Social Security Administration to stop collecting FICA taxes until 2021. 

This Executive Order does nothing for the unemployed.  Just as important, it defunds Social Security.  Do we really want a President undermining the tax base for Social Security and Medicare?  

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