Article Date: 03/30/2008
By Scott Schmidt
Medicare and Social Security are considered the “Third Rail of American Politics” for a reason. No right-minded politician dare touch them. But the next President, if she or he serves more than one term, will be thrown on the tracks, if a new report from the program’s trustees is to be believed.
For gays and lesbians, the crises in these entitlement programs can be even more acute—but some proposed solutions might help move towards greater equality—so bear with me for a quick summary of how we got here, because very few people really understand how the system works.
Most Americans see a sizable chunk of their paycheck taken out every two weeks in payroll taxes, and then every so often get a “statement” at home from the Social Security Administration telling them how much they should get in benefits when they retire.
Many folks think that, somewhere in the ether, this money is being set aside for them. They’re wrong. The money you pay into the system today is going directly to your parents, grandparents or sugardaddies—and because there are fewer people working and more people hitting the retirement age, the system is about to collapse.
For the first time ever, spending on Medicare will exceed the revenues generated from payroll taxes. Starting in 2017, Social Security will start spending more money than it takes in.
In theory, both programs have a trust fund which will keep them solvent a little while longer—Medicare until 2014 and Social Security until 2041. These are what Al Gore called the “Lock Box”—but unlike a traditional lock box, these trust funds are as valuable as writing “IOU” on a cocktail napkin and sticking it in your wallet.
Back in the New Deal Era, Social Security and Medicare were created to be self-funded programs. Taxes went in from people’s paychecks, and benefits went out. With the post-World War II baby boom, there were plenty of workers to pay in to the system, and fewer senior citizens to draw from it. So when the general accounts of the federal government started going into the red, Congress started “borrowing” money from Social Security and Medicare. They established these “trust funds” in order to account for the money Congress had taken out of the systems, with the promise that the Federal Government would pay them back.
Well, starting in 2008, it’s payback time for Medicare. The cost of running the system is now draining money from general fund revenues—like personal income taxes—which go to pay for funding things like the Defense Department, subway construction and AIDS research.
Within the decade, Social Security will start drawing down on the general fund, too, and by the next visit of Haley’s Comet, those non-existent “lock boxes” will be empty.
Those like me who are halfway to collecting on Social Security will remember a Presidential Candidate named Ross Perot who bought 30-minute TV spots and stood around pointing at charts. This is what he was talking about!
For the gay and lesbian community, the crises in Social Security and Medicare hurts three-fold. First, programs that many of us hold dear can be endangered as the Federal Government scrambles to pay off its “debts” to these systems.
1) Programs for AIDS assistance and the arts will be cut from the federal budget long before, say, missile defense systems.
2) Because gays and lesbians must file income taxes individually, we are among the first to get thrust into higher tax brackets—which will get even higher as the government seeks to pay for these entitlements.
3) Because the federal government does not recognize marriage equality, the benefits of Social Security are not transferable between partners the way they are for heterosexuals.
None of these are particularly appealing, which is probably why one of the early pioneers in fixing Social Security was a gay Congressman.
Retired Congressman James Kolbe became the first out man to speak at a Republican Convention back in 2000—not because he was gay, but because of his passion for finding a solution to the entitlement tsunami. He worked across the aisle with Democrat Chuck Stenholm to put together a system that would keep Social Security solvent and create equality for gays and lesbians, without raising taxes.
Which of course means it went nowhere.
Kolbe-Stenholm was one of the first plans to introduce personal savings accounts into Social Security. What it proposed was that payroll taxes would go to pay current benefits, and whatever was left over, would go into a personal account. Then, once those people with personal accounts retired, their benefits would first be paid off from their personal accounts, then from the current payroll taxes.
In theory, people under 35 years of age could save enough money in their personal savings account that almost nothing would be needed to come from payroll taxes to pay their benefits—thus keeping the system solvent. And for gays and lesbians, there’s an added benefit. Because the personal accounts actually existed, and was your money—not the federal government—your domestic partner could benefit from it as well, unlike the current system where only married couples can get such benefits out of Social Security. While it’s not gay marriage, it is step towards equality!
Of course, once George Bush warmed up to the idea of personal accounts, they became stigmatized as “privatization” and the idea got shot down faster than a hunting partner on the Cheney ranch.
So far, the Presidential Candidates are treating Social Security and Medicare like a gay wedding. They’re staying far, far away.
Barack Obama promises to be honest with the nation about the “hard choices” in fixing the systems—which means either raising taxes or cutting benefits, while Hillary Clinton talks about “strengthening Social Security”. Republican nominee John McCain has called the current system “unsustainable”.
None of the Presidential candidates really wants to talk about just how bad things have gotten with Social Security and Medicare, because any solutions they propose will either offend senior citizens or people with jobs—which are both large voting blocks.
For them, it seems, it’s better to just have faith that hope alone can change the system.
>> Presidential hopefuls are mum on Medicare and Social Security woes
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