I heard a quick comment on CSPAN this weekend from a panelist. She said that if the wealthy contributed on all of their earnings rather than just the first $106,800 the fund would be solvent for many more years…even if the wealthy received higher benefits as a result.
Anybody have more facts related to that comment?
I was on a conference call last month with the lead economist for JP Morgan Chase, David Kelly. He told us that eliminating the deduction cap and raising the tax by two-tenths of a point would settle the issue for the foreseeable future. He also said it was unlikely that the government could do this in the current climate.
Does that include raising the benefits that rich people would get? Of course, even if we did raise the benefits for the wealthy it would still solve the problems in the medium term since we’d get the revenue right away and would not have to pay out for on average a decade and a half or so.
ETA: and of course the benefits might not be linear so even if the wealthy did get more back, they might still be net donors if their benefits don’t go up as substantially for the extra post-$100K contributions.
social security still takes in more money than it pays out, it is just that congress takes the surplus to use on their pork barrel earmarks. If they weren’t whores selling out to special interests, SS would have no problems.
Pretty much none of this is true.
Even under generous assumptions, the Social Security fund will take in less than it pays out at some point in the future. Under pessimistic assumptions, that happens sometime in the next 30 years (at which point we can only pay some fraction of full benefits) and under generous assumptions sometime in the next 60.
The SS “surplus” is still counted as surplus as a balance sheet thing. Pork barrel earmarks don’t affect that at all.
That surplus begins to disappear when an increasingly aging population (that also happens to live longer than previous generations) begins to retire at a rate greater than we can replace pay their benefits from taxes taken from current workers. The surplus did decrease last year (or maybe it was in 2010) but of course that was also in the aftermath of a major economic crisis.
Due to politics, the public debate has gotten muddied about what the social security fund surplus actually is and (apparently) whether or not it even exists. It’s true that there are fixes available that can keep the fund solvent for the foreseeable future (say the next century) but the means to accomplish such a thing involve a massive political debate, which I’m uninterested in starting.
I don’t know how those details would work, but I am told that SS is not a long-term problem. Once the baby-boomers die off, the system will come back into balance. So government procrastination will solve the problem. There will be a couple of decades where either benefits will have to be reduced or the deficit will increase. It is left as an exercise to the history student to guess which one is more likely. Either way, SS isn’t a long-term problem. Medicare on the other hand-it doesn’t look like there is a solution there…
This goes through a couple related scenarios. The claim from CSPAN is accurate, lifting the cap while extending benefits basically eliminates the shortfall (lifting the cap without extending benefits creates a sizable surplus).
[Moderator Warning]
rsat3acr, since I gave you a moderator note just yesterday to keep this kind of political commentary out of General Questions, I’m going to make this one an official warning. Don’t do this again. If you keep it up, you may find your posting privileges in jeopardy.
Colibri
General Questions Moderator