2011 Luzerne County Elections

By Sarah Hite shite@timesleader.com
Staff Writer
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When she was 50 years old, Kingston resident Genevieve Keefe was forced to go on disability after working for 35 years. Her husband passed away, and for a while, Keefe lived off a $199 monthly Social Security check.

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Marie Ancin, Genevieve Keefe and Marie Jarnot discuss Social Security while at the senior center in Wilkes-Barre.

Aimee Dilger/the times leader

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Now, Keefe is in her 80s and retired, and she receives more in benefits but still depends solely on her monthly Social Security check to survive. She’s getting by, but she’s concerned for her grandchildren’s later years.

“I feel sorry for them,” Keefe said, worrying her grandchildren may never receive Social Security benefits if the program runs out of money. “I think it’s going to be hard for them.”

While the major party presidential candidates have very different ideas on how to finance one of the government’s most widely used entitlement programs, each proposes to work in a bipartisan way to ensure that future generations receive Social Security benefits.

Republican Sen. John McCain, Arizona, feels partial privatization – putting some retirement funds into the financial markets – along with possibly raising the full-benefit retirement age to 68, would secure the future of the program.

Democrat Sen. Barack Obama, Illinois, does not support privatization of Social Security and would not raise the retirement age. Instead, he has suggested requiring more payments by high-income individuals into the system, although at a reduced rate.

Obama does not support applying the full Social Security (FICA) payroll tax of 12.4 percent to all earnings. Instead, he is considering plans that would ask those making $250,000 or more to pay in the range of 2 percent to 4 percent more in FICA payroll taxes (both employer and employee).McCain has also said he would consider reducing cost-of-living adjustments to retirees and other Social Security beneficiaries.

For a large employer, taxes paid into the Social Security system can add up.

Alex Fried, public relations manager for Procter & Gamble’s Mehoopany plant, says the plant pays about $12.4 million in taxes to Social Security annually. The plant employs 2,000 workers and has an annual payroll of $200 million. Though some employees earn more than the taxable FICA income cap of $102,000, most do not, Fried says.

But Fried says the company does not take the employer tax rate into consideration when hiring a new employee – for two reasons.

“It’s a benefit required by law and P&G pays the same percentage of wages that is required of everyone else,” he said. “It’s a small percentage of the total decision to hire an employee. The wages, training, and other benefits (especially health care benefits) are a much larger portion of total compensation.”

Scott Sanfilippo, co-owner of Shavertown-based Solid Cactus, said his company will pay a projected $260,000 into Social Security by the end of the year and takes that into consideration when hiring new employees.

“We don’t just look at what their annual salary would be, but we look at the ‘loaded’ salary, which includes taxes, health benefits, 401(k), etc. Those ‘extras’ add up quickly and increase the base salary significantly,” Sanfilippo said.

Even if it would cost him more, Sanfilippo would like to see Social Security get the funding it needs.

“Social Security needs to have greater contributions going into it to ensure that it remains a viable source of retirement funds for many, many years to come,” Sanfilippo said.

Retired senior citizen Ted Grohoski, of Kingston, said Social Security doesn’t do what it was originally meant to do, and worries for the future of Social Security for his grandchildren.

“It was established to make your old age secure,” Grohoski said. “They’ll be old someday like me. Who will take care of the old?”

Grohoski receives a small company pension, but most of his income comes from Social Security. He does not favor privatization because he believes that could hurt people during poor economic times.

Margarita Rose, Ph.D., a professor of economics and chairwoman of the economics department at King’s College, opposes privatization because she says money could be lost in falling financial markets, survivors and the disabled would not be accounted for and the “social” would be taken out of Social Security.

Most of The Times Leader voter panel members agree.

“I don’t think the average American knows how to invest and make money, and with the financial crisis as it is, investing doesn’t make money at this point, except if you put your money in CDs,” said Evelyn O’Hara-Stine, a 61-year-old Democrat who recently switched from undecided to leaning toward McCain.

But 28-year-old panel member Paul Stebbins Jr., who is voting for McCain, feels differently.

“I believe that privatization is the way for younger workers like myself to somewhat guarantee it might still be around,” Stebbins said. “It also (gives me) the option of knowing that what I work for will influence how I spend my retirement.”