There has been a fair amount of speculation about the effects of the Covid-19 pandemic on the Social Security trust funds. This mostly comes from people who have always predicted doom for the trust funds even in better times and it's been little more than speculation.
The first fairly solid projection I've seen is from the Penn Wharton Business School's Budget Model. I don't know how solid their Social Security trust funds projections have been in the past but they're not some think tank cranking out projections designed to either scare or reassure people. The Penn Wharton model had the combined trust funds running dry in 2036, which was one year later than Social Security's actuaries had it. Now, the Penn Wharton Budget Model projects a trust fund exhaustion date between 2032 and 2034. That's not as good but doesn't sound to me like the sky is falling.
In any case, I'm not worrying about Social Security "running out of money." Even if the trust funds run dry, the agency would still be able to pay 76% of benefits just from FICA payments coming in. However, that scenario is no more than a right wing fantasy. Even members of Congress who are hostile to Social Security would not allow that to happen. There are far too many voters receiving Social Security. There will be tax increases or general fund transfers. The worst that might happen would be some very minor cuts and I'll be surprised if there are any cuts. Ultimately, the Social Security trust funds are an abstraction. What really supports Social Security is the support of the American people. Right wingers make the mistake of thinking that just because they don't like Social Security that it can't really be all that popular. That's wrong. Public support for Social Security is overwhelming and unwavering.
We've got far more immediate crises to worry about. Relax about the Social Security trust funds.
Just need to raise the maximum taxable amount. Currently in 2020, it is at $137,700 an increase of 3.6 percent from 2019. It raised 2.8 percent in 2019 and 7 percent in 2017. Every other year in the 2010s, it was only about 0-3 percent increase with 3 years of no increase (2016, 2011, 2010). The current trend of around 3-4 percent increase is good but needs to be more. I would say at least over $150K.
ReplyDeleteBelow is the table.
SOCIAL SECURITY ADMINISTRATION SOCIAL SECURITY CHANGES, 2010–2019
YEAR MAXIMUM TAXABLE AMOUNT % INCREASE
2020 $137,700 3.6%
2019 $132,900 2.8%
2018 $128,400 1%
2017 $127,200 7%
2016 $118,500 0%
2015 $118,500 1%
2014 $117,000 3%
2013 $113,700 3%
2012 $110,100 3%
2011 $106,800 0%
2010 $106,800 0%
@10:59
ReplyDeleteNot against raising the taxable amount in theory, but I doubt even that is required, and arguing for that supports the argument that the trust funds are in trouble. They are not.