Its time we faced up to the unfaceuptoable.
LB suggests that raising the cap on income subject to social security tax will solve the budget shortfall problem. Unfortunately there are three problems a tax increase can't solve.
First problem, the ratio of payees to recipients.
In 1940 it was 300 to 1. Ten years later, the ratio dropped to 16 to 1. At the start of the 21st century, it became 3 to 1. Soon it will fall to 2 to 1. I'm not trying to get out of a tax increase because the cap will have to be raised substantially no matter what is done but under the current setup it would be another Band-Aid. What makes you think that any increase in tax revenue would not be spent on other programs? History certainly suggests that.
Second problem, structural.
Social Security revenue goes to a "trust fund". When the Social Security trust fund has a surplus, it is invested in Treasury bonds. That is equivalent to "loaning" it to the rest of the government. The Treasury bonds held by the trust funds represent a legal commitment for the rest of government to pay back the bonds with interest when they come due. In 1968 the trust fund was put into the general fund by the Johnson Administration so a surplus could be claimed during the Vietnam War and Great Society. Surplus Social Security revenues were collected by the Treasury and spent on other government programs. The SS Trust Fund should have remained separate from the General fund in an account of it's own where the American people could monitor it.
Third problem, the system is unfair to poor people.
Promised retirement benefits are meager compared with the level of payroll taxes that workers put into the system now. What about the unfairness of the current program, poor people (especially minorities) die 5-10 years younger than the more affluent. Are people who die younger allowed to pass the money accumulated in the fund to their relatives? A coal miner who works 40 years and dies at 65 has his money go to some rich guy who lives to 85. I can't believe liberals, who claim to care for the poor, would support a program where rich people collect the most benefits.
Yes, a tax increase and removing the SS fund from the general fund, two points I believe we can agree on.
I'll let you fix the fairness problem if some kind of partial privatization is unacceptable to you.
First problem, the ratio of payees to recipients.
In 1940 it was 300 to 1. Ten years later, the ratio dropped to 16 to 1. At the start of the 21st century, it became 3 to 1. Soon it will fall to 2 to 1. I'm not trying to get out of a tax increase because the cap will have to be raised substantially no matter what is done but under the current setup it would be another Band-Aid. What makes you think that any increase in tax revenue would not be spent on other programs? History certainly suggests that.
Second problem, structural.
Social Security revenue goes to a "trust fund". When the Social Security trust fund has a surplus, it is invested in Treasury bonds. That is equivalent to "loaning" it to the rest of the government. The Treasury bonds held by the trust funds represent a legal commitment for the rest of government to pay back the bonds with interest when they come due. In 1968 the trust fund was put into the general fund by the Johnson Administration so a surplus could be claimed during the Vietnam War and Great Society. Surplus Social Security revenues were collected by the Treasury and spent on other government programs. The SS Trust Fund should have remained separate from the General fund in an account of it's own where the American people could monitor it.
Third problem, the system is unfair to poor people.
Promised retirement benefits are meager compared with the level of payroll taxes that workers put into the system now. What about the unfairness of the current program, poor people (especially minorities) die 5-10 years younger than the more affluent. Are people who die younger allowed to pass the money accumulated in the fund to their relatives? A coal miner who works 40 years and dies at 65 has his money go to some rich guy who lives to 85. I can't believe liberals, who claim to care for the poor, would support a program where rich people collect the most benefits.
Yes, a tax increase and removing the SS fund from the general fund, two points I believe we can agree on.
I'll let you fix the fairness problem if some kind of partial privatization is unacceptable to you.
posted by Libertarian Hack at 9:02 AM
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