Real deal on fixing Social Security

Everyone knows that every private corporation in America would love to be able to predict that over the next 40 years they will remain financially solvent. Imagine those thousands of Lehman Bros. clients and customers who rue the fact that they couldn't predict the solvency of that company just weeks into the future back in 2008!

Turns out, however, only one entity in the U.S. can actually say that – and it isn't a private corporation. It's the Social Security Administration.

As any honest commentator on the subject will have to admit, that without changing a single thing about that program, the Social Security program will continue to produce surpluses in its trust fund as far as the eye can see and pay benefits without changes until your children's children have children. Indeed our planet will likely succumb to the ravages of global warming before Social Security sees a deficit.

But then what? Sure, we should be concerned that that Social Security program in 75 years may start to see problems – if indeed in 75 years we fail to change our economic system in a more democratic, sustainable direction.

So these great forward thinkers like Erskine Bowles and Alan Simpson are on the ball with their proposals to cut Social Security benefits now to save the system later. Unfortunately they seem only mildly interested in the single tweak to the system that will eliminate any foreseeable financial problem with Social Security. Here it is according to the Economic Policy Institute (warning the simplicity of it may cook your noodle):

Earnings in 2010 above $106,800 (the amount rises each year with average wages) are currently not subject to Social Security payroll taxes. Roughly 16% of earnings fell above the cap in 2008, up from 10% in 1983, and the plan would gradually raise the taxable earnings cap to cover 90% of earnings over 35 years. In any given year, approximately 6% of workers have earnings above the cap (21% would be affected at some point in their lives). These high-income workers would pay higher taxes but would also receive higher benefits. A study by the Congressional Research Service found that eliminating the cap altogether and immediately (rather than raising it gradually, as Bowles and Simpson propose) would nearly eliminate Social Security’s projected shortfall, with the typical affected worker paying 3% higher taxes and receiving 2% higher benefits (Mulvey 2010). In contrast, gradually lifting the cap as proposed by the Fiscal Commission co-chairs would reduce the projected 75-year shortfall by around 35% (0.67% of taxable payroll).

Simply put, make the rich pay their fair share.

Notably, the deficit commission chairs changed their report once already to accommodate concerns and opposition to their original plan; significantly the tax side of the report's proposals have also earned opposition from Republicans. It needs 14 out of 17 votes to be moved into the legislative arena. So, instead of going on about the President, which seems to be the thing the professional (here I use the term loosely) left (again loosely) loves to do these days, why not organize our rhetoric and real action toward pressuring members of Congress to oppose the deficit commission chairs' report and offer the most direct and simple solution to Social Security's potential financial issue. Too easy?

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