Sometimes the most basic of problems -- ones where the solution is fairly simple -- linger for decades in Washington, primarily for protection of status quo reasons. A good example is Social Security -- the huge, bedrock entitlement program, often portrayed as facing a dire circumstance, when, in fact, as former U.S. Labor Department Secretary and current Berkeley Professor Robert Reich pointed out, the solution is fairly basic.
The American people have been reading about Social Security 'running out of funds to pay beneficiaries,' since the 1970s; perhaps since the program was launched by FDR and Congress in the 1930s. First Social Security was going to run out of money in 1980, then 1993, then 2010, then 2016. We'll get to the year 2525 and some will still be arguing that Social Security's difficult stretch is up ahead.
Congress has not disappeared
True, Congress has borrowed from Social Security's Trust Fund to pay for current programs -- something Congress should not have done -- but that does not mean the United States does not have the resources to cover all of Social Security's beneficiaries and claims.
Writing in The Huffington Post, Reich mentioned one measure to close Social Security's modest, long-term deficit: lift the cap on Social Security payroll taxes on workers earning more than $250,000 per year.
Here's what I'd add to to Reich's recommendation to ensure that Social Security -- a successful pension system that's lifts tens of millions of senior citizens out of poverty every year -- remains a functioning pension.
- raise the current Social Security tax rate to 7.5% from the current 6.2% or both employees and employers
- earmark a portion of the estate tax to Social Security
- raise the retirement age to 70 beginning in 2020 or 2025. Life expectancies should be such that age 70 will certainly look like age 60 by then, if not sooner. (I.E. "age 50 is the new 40, 40 is the new 30 etc.)
- develop a more-accurate consumer price index for Social Security: the current one overstates inflation, something that has led to higher-than-required cost of living increases for Social Security recipients.
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Reader Comments (Page 1 of 1)
6-10-2009 @ 8:24PM
Patrick Collins said...
The thing I love most about Robert Reich, the Huffington crowd and Democrats in general is their willingness to always solve the problems they have created by taking someone else money to do it. The FICA tax has been raised 41 times since its inception - primarily due to Congress tapping this huge account to finance their deficit spending. Maybe CONGRESS should try living within the TRILLIONS of dollars we send them - what a concept. The authors' proposal and Reich's produces a 15% tax between the business and the employee. If you love this so much, why not impose it on EVERYONE. Quit exploiting the $250K crowd. Start it at $150K, which covers all members of Congress and see how far it goes...Idiots
6-10-2009 @ 9:52PM
ij70 said...
I be dead by then. Who is with me!
6-10-2009 @ 10:21PM
Clay Brown said...
The thing I love about the Republicans/nut job conservatives is their hate monger, small-minded, ways. First, their idiotic reasons to ban gay marriage; however, it gets EVEN WORSE. Some Republicans are EVEN against gay couples adopting children. How do some people live with such small minded, bigot ideals. America, "the land of the free,"? No, not according to Republicans. They think only some people should have equal rights, and THAT VIOLATES THE FREAKING CONSTITUTION. How do these people live with themselves? I can't believe this party was once the leader for civil rights movements? I guess that all changed after LBJ.
6-10-2009 @ 10:42PM
JCH said...
It's funny to hear people talk about the trust fund.
First, there absolutely should be no trust fund. Social Security should be a pay-as-you-go program.
But we have idiots in congress, and the white house, and for some reason they got the foolish notion that SS could be made safer by taking in extra money. They wuz wrong.
They had no choice except to invest the trust fund in debt obligations of the United States of America. They are the safest investment on the planet. Was it wrong for the government to spend the money on current programs? What the heck else were they going to do with it, stuff it in the White House mattresses?
They scammed you. Every dollar of extra payroll tax was an income tax. Then they spent that income tax like it was an income tax. Gee, imagine that.
See what I mean - stupid to start a trust fund.
If it were up to me I would reduce the payroll tax to an amount that would cover granny's benefits for the year. It would provide a fantastic stimulus to the economy.
Then I would add 99.9% bracket for any American company that moved perfectly good jobs overseas so some executives could get a one-year bonus. I would rip those morons the biggest new one in the history of new ones.
6-10-2009 @ 11:25PM
jvgunner said...
clay brown, you are whats wrong with america, If things go your way, we will all be gay pansies or illegal immigrants that dont have to work to be able to survive, raising our selfs & adopted children on the system & teaching them your stupid ways, the world has worked fine since industrialism, stop trying to change that & I presume your anti gun, anti hunt, drive a pria & I can just go on for ever
6-10-2009 @ 11:54PM
jon_audino19 said...
Social security is the biggest ponzi scheme ever. Much larger than anything Madoff could ever concoct, yet we have all of these shills telling us everything is ok.
Hey Joe Lazzarro - explain to me how Social Security isn't a massive ponzi scheme and I will be your biggest supporter.
6-11-2009 @ 1:36AM
Dan said...
In order to 'save' social security, you have to introduce some form of competition and reality:
1) raise the retirement age, and index it to the avg. of life expectancy as they do to inflation
2) provide a set 'credit' to each recipient to use each year to pick their own doctor, followed by a decent deductible indexed to inflation, as well as the 20% copay that they have now.
3) Lower the taxes across the board to stimulate job growth
4) Eliminate all federal income taxes and replace them with a flat tax that everyone has to pay, with tax credits for those under the poverty level.
6-11-2009 @ 3:29AM
SaintStryfe said...
jon_audino19: My 85 year old grandmother has worked her entire life. She has a small pension, but without social security, she couldn't live the life she does. She couldn't afford to have a car, or visit her sister, or go to Florida every few years to visit her family down there.
"Ponzi scheme" or not, it's a good thing that lessens human suffering and doesn't hurt any one person too much. The amount my paychecks are deducted woudln't make a huge difference for me, but by god, I know it makes a big difference for my grandmother and the other older members of my family.
6-11-2009 @ 3:32AM
dreamscape86 said...
Sure... once again, just make "the rich" pay for everyone else's retirement. The reason it's capped at $250,000 is that THOSE PEOPLE DON'T NEED SOCIAL SECURITY. I.e. they're paying in and don't even need it. Give them a break, they already pay 80% of the taxes in this country.
6-11-2009 @ 12:05PM
JCH said...
It's current cap is around $100,000.00. I would say many people who make around between $100,000 and $250,000 end up needing SS.
If there was no cap, and they only collected what they expected to pay out, the payroll tax percentage would drop substantially.
The issue would be how to apportion the benefits progressively.
6-11-2009 @ 11:19PM
Clay Brown said...
Lol, what! So it's fine to be against human rights? You should march against interracial marriage too because that isn't "traditional." This is the LAND OF THE FREE. Gay people should have the same rights as heterosexual. I just cant believe there are people that are as small minded as you. And don't get me started on people not being able to serve openly gay for the military. Anyway, when did I say illegal immigration is fine? America should tighten its borders, but people shouldn't be so HATEFUL towards illegal immigrants because ALL OF US ARE DEPENDENTS OF IMMIGRANTS. And just because I support equality for ALL Americans doesn't mean I support other liberal ideals. I'm just saying it's wrong, which it is.