The federal deficit wasn’t caused by Social Security, exactly the opposite. Once upon a time, every thing was rosy; Social Security took in more than it paid out and the government borrowed the surpluses. These days Social Security pays out more than it takes in. By collecting what the government owes it, Social will be wholly solvent for the next 26 years. Yea!
There shouldn’t be a problem in 2038 since Alan Greenspan’s 1983 Social Security commission fixed the problem forever! The plan was to slowly increase payroll taxes along with an older retirement age. Since the Social Security payroll tax applies to a certain ceiling, currently $106,800, the ceiling should rise since it’s tied to inflation and goes up yearly using a formula developed by Greenspan’s commission. In the beginning, the commission’s fix’s taxed 90 percent of payroll wages covered by Social Security. Sounds great and it was…until the ogre of inequality reared its ugly head. These days the Social Security payroll tax rate only nabs 84 percent of total income.
That 16 percent fall is due to the bigger portion of total income that has gone to the top 1 percent. The top 1 percent of American income has gone from 11.6 percent to 20 percent since 1983. The ceiling needs to be raised to $180,000 to get back to the 90-percentile rate of 1983. Viola! Problem solved until your great-great-great grand kids come along.
So stop trying to mess with my Social Security! There’s no reason to consider reducing Social Security benefits or raising the eligibility age. The only logical thing to do is raise the drawbridge don’t lower the water! Just raise the ceiling don’t lower Social Security.
(Data Liberally borrowed from Robert Reich at http://robertreich.org/ )