Written testimony from today's hearing before the House Social Security Subcommittee on the recent report of the Social Security Trustees:
Charles P. Blahous, Research Fellow, Hoover Institution and Public Trustee for Social Security
The financial challenges facing Social Security should be addressed soon. If action is taken sooner rather than later, more options and more time will be available to phase in changes so that those affected have adequate time to prepare. Earlier action will also afford elected officials with a greater opportunity to minimize adverse impacts on vulnerable populations, including lower-income workers and those who are already substantially dependent on program benefits.
The fact that Social Security's financial viability is significantly affected by the strength of the overall economy in no way diminishes the undeniable fact that changes will have to made in currently scheduled benefits and payroll taxes if the program is to provide our children and grandchildren an adequate level of retirement security. The sooner we address this challenge, the less disruptive the changes will be. Those most adversely affected can be given the time they need to prepare, the burden can be more equitably shared across the generations, and the political animosity and public anxiety associated with the unavoidable changes can be moderated.
The Republican does not make any recommendation on what to do while the Democrat says that the "undeniable fact" is that benefits will have to be cut as well as taxes raised, a statement which is undeniably false. The problem could easily be solved simply by lifting the cap on income covered by the FICA tax.
Right - there are many ways to "fix" Social Security, including raising the cap or modest, gradual increases in the payroll tax. And the Democrat wants to cut benefits "to provide our children and grandchildren an adequate level of retirement security." How does cutting benefits do this?
ReplyDeleteRaising the cap on income to "infinity" will be very unpopular and unfair, even to the masses.
ReplyDeleteDue to SS's bend points, only 15 cents of every dollar paid in over the cap is returned as benefits - an effective tax rate of 85%!
Until the trust fund represents a store of wealth, rather than simply numbers which represent a draw on the Treasury, the problem will never be fixed. It will only be hidden behind accounting tricks.
Don Levit
And as you know (or should know), Don, that day is never going to come. It's a pay-as-you-go system.
ReplyDeleteNo, wait, maybe Michelle and the kids will be digging in the White House garden and strike oil. That might do it...