How to Keep Social Security Secure

[turbinetree]

Here’s a plan that eliminates the long-term shortfall in its finances and updates the system for the 21st century.

Henry Aaron

May 1, 2018

This article appears in the Spring 2018 issue of The American Prospect magazine. Subscribe here.

For the last 35 years, official government projections have reported that Social Security will be unable to pay some scheduled benefits sometime in the middle third of this century. For almost as long, the Congressional Budget Office has annually warned that the overall federal budget is on an unsustainable trajectory. Conservatives, some of whom still yearn to roll back the New Deal and Great Society, point to these projections as support for their claim that we can no longer afford Social Security, Medicare, and other so-called “entitlements.” Their declared strategy involves sowing doubts about the sustainability of these programs and creating a coalition to scale back or replace them.

So far, this campaign has enjoyed little legislative success, but the talk of crisis has made many people very nervous. Roughly two-thirds of the American public tell pollsters that Social Security is already in crisis or faces major problems. Smaller majorities say that they don’t expect to receive some or all of the benefits they’re due.

Nervousness has not eroded Social Security’s popularity. Solid majorities of liberals, conservatives, and independents alike say that Social Security is important and that they are willing to pay more in taxes to sustain it. The last major assault on the program, George W. Bush’s 2005 proposal to replace Social Security by diverting revenues into private accounts, turned into a political train wreck when members of the president’s own party shunned his plan.

The chief, indeed the only, argument for scaling back Social Security is that current Social Security taxes plus accumulated reserves are insufficient to pay all scheduled benefits beyond 2034, if current projections turn out to be exactly correct—or a few years earlier or later, if they are a bit off. In 2018, Social Security will channel more than $1 trillion in pension benefits to more than 62 million beneficiaries; by 2035, 88.4 million beneficiaries are projected to have earned entitlement to $1.672 trillion in benefits (in 2017 dollars). Revenues in 2034 are now expected to cover just three-quarters of scheduled benefits. If Congress makes no changes in the program, benefits will fall automatically by approximately one-fourth. To avoid benefit cuts altogether at that point, Congress would have to raise taxes earmarked for Social Security by approximately one-third.

http://prospect.org/article/how-keep-social-security-secure

[SWBTATTReg]

1. Very good article, now if only our ...

political leaders have the courage and guts to do something jointly to enhance the future viability of this very important program for millions of us...

[pansypoo53219]

2. kill the CAP + lower the rate. greenspan fucked it up.

[ProfessorGAC]

3. Lower The Rate?

Not sure where you're going with that. I would make the tax progressive like our income tax, but with very high values before the higher percentage kicks in.

Let's say it's roughly 6.8% today, up to 120k. I'd say raise that to 150k, then from there to 300k, the rate goes up to 7.2%. From 300 to 600k, the rate would go up to 7.6%. From 600k to 1.2 million, it would be 8%. Then 8.25% on anything over a million. That would create a huge difference in revenue by taking a little more money for those who can afford it the most, and they will still be eligible for benefits, with nothing silly like means testing.