the social security cap.

[mopinko]

ok people. this is a pet peeve of mine. lifting the cap is NOT the answer. of course, it's a made up crisis anyway, but still....

let me see if i can get people to look at this in a different light-
SS is not welfare, fica payments are not tax. it is a baseline disability, survivors, and retirement INSURANCE program.
let's try a hypothetical scenario-
lets say that there is a general consensus that low income people are not able to buy appropriate insurance on their homes. since this is often the only investment that these people have, losing it will leave them destitute, and a burden on the social safety net. progressive legislators decide to address the problem with a low cost, basic, no frills, government administered insurance program.
the program will be funded in part from premiums of home owners, as well as contributions from mortgage lenders.
now. if you only enroll low income people in this program, first, you will have a small pool of money, probably not enough to float the program. also, there is no way to know who will end up poor at a later date, and need the program. so, all homeowners must buy into the program.
now, this is meant to be a baseline. not to replace all other insurance, not cover every dime of losses. and it is insurance, not welfare. the payout reflects the pay in. nobody gets rich, nobody gets screwed.
so, if you base the premiums on the value of the house, the millionaire pays a huge chunk to insure his mansion. then what? then this basic pool is on the hook for a payout on giant mansions, and rich people end up sucking up disproportionate amounts of the pool.
so what do you do to prevent this? you limit participation to a modest payout. there is only one way to do this fairly, and that is to limit premiums to a modest amount. and that is what the purpose of the cap is. if you want high income wage earners to pay on every dime, what are you going to say when they retire, and your mamma gets $1000/mo. and old man rockefellar gets a check for $25,000?

if you want to turn it into a welfare program, that is a different issue all together. then you can have a progressive tax to fund it, and a means test to pay it out. but that is not what it is, not what is was meant to be, and imho, not what is should be allowed to become. it is insurance, something i earned and own. not a gift.
fwiw, they raise the cap every year any way. that is why it is still in business. 10 years ago, the cap was $55,000. now it is $90,000. i am not an actuary, i do not know what this has done to the liabilities of the system. but if 2+2 still = 4, in the end, i don't think much is gained.

IT AIN'T BROKE, SO BE CAREFUL HOW YOU FIX IT!!!