Update: Pelosi says she can live with it
There are many options to address issues for the program, which are not offered as part of Pres. Obama’s insistence on keeping Social Security on the table and front and center. Perhaps the ‘chained cpi’ is abstract enough to look harmless, and trying to ‘fix’ a possible problem decades in advance doesn’t appear to be simply weird?? From comments comes this note from Dale Coberly. There are several other plans carefully thought out that fix things if needed…
A reader suggested I check the results of the “one tenth of one percent tax increase” against the recent bad news from the Trustees.
I looked at the result of increasing the tax one tenth of one percent for each the employee and the employer whenever the Trustees project short term actuarial insolvency. The results were the same as before the recession: an average increase of one half of one tenth of one percent increase on the combined employer-employee tax over the seventy five year actuarial window results in no insolvency whatsoever.
The effect of the Recession has been to move forward about six years the date of the first one tenth of one percent increase to about 2018.
By 2033 the tax would have been increased about one and a half percent for each, while wages will have gone up about 25%. Workers will have MORE money in their pockets AND will have paid for a longer retirement at a higher standard of living.
There is no crisis. Social Security is not going broke. Social Security adds NOTHING to the deficit. Social Security is not welfare.
Over the whole century and into the next, the SS tax would need to be raised another one percent, while wages will have gone up over one hundred percent.
What the bad guys have done is looked at the possible need for the tax raise, assumed that we will not be smart enough to raise the tax and called the difference “a huge debt.”
There will be no debt. But if people are not smart enough to realize that if they are going to live longer they are going to have to put aside a little more to pay for groceries after they can’t work any more, then they are going to have to learn to live on a little less .
They could even do that. It wouldn’t be wise, but at least it wouldn’t be as stupid as letting them “fix” Social Security in a way that destroys its value as insurance. And that’s all it is: a way to insure your own savings against inflation, market losses, and personal bad luck. Even against recessions.
But unless the people tell the president and the congress… that’s exactly what they will do” “Fix” it.. the way a two year old fixes his daddy’s watch.
David Duyan offers some ideas on the current issues:
- What Chained CPI Means, and Why a Cut in a Time of Inadequate Social Security Benefits Makes No Sense