Social Security and North West plan
Lifted from comments by Dale Coberly…
This year’s Social Security Trustees Report seems to be late as usual.
But this is the LAST year that a gradual increase in the payroll tax can begin and still solve some of the less understood problems of the projected shortfall in SS funding: This is mostly that a gradual increase starting now preserves the Trust Fund at it’s current level… meaning the Congress doesn’t have to find the money to pay back it’s debt TO Social Security. The interest from that Trust Fund will keep the needed tax increase about 1% smaller than it otherwise will need to be. And the needed increase of one tenth of one percent per year will eliminate the projected “actuarial” shortfall entirely.. and that should eliminate the “sky is falling” argument of those who want to destroy Social Security.
Trouble is that neither the Left nor the Right are interested in actually solving the SS shortfall. The Right wants to kill Social Security by calling it welfare. The Left wants to kill Social Security by turning it into welfare.
After this year, SS can still be “saved” by the one tenth percent per year increase in the payroll tax, but will not have the advantages alluded to here. Because the Trust Fund is being drawn down, the needed tax rate to prevent an actual shortfall in about 2030 will rise fairly rapidly. If nothing is done, the tax rate would need to rise about 2% all at once in about 2030 or so. This would not be a real burden to people even at that, but they will see it as such… be told to see it as such… and the bad guys will seize the opportunity to cut benefits, raise the retirement age, and even “tax the rich” as the first step to turning it into welfare as we knew it and guaranteeing that event he honest rich — who currently are NOT burdened by SS – wiil be burdened by it and join the campaign against it.
Even raising the tax rate about 1 and a half percent now would solve the projected shortfall for the rest of the century. This solution is objected to by those who want to confuse you because it would leave a need for another “significant” tax raise in 2093. That raise would be about one half of one percent.. at a time when wages will be more than 100% higher than they are today. I think we can leave that problem to those who will face it. It’s not my favorite solution, but those who tell you we must “solve the SS problem once and for all” are hoping you are stupid enough to think they are saying something sensible.
Given the House’s action yesterday to give a trillion dollar tax cut to folks making the highest 2% in income and paying for it by cutting Medicaid by a like amount for the poorest Americans, I have no hope that the government will do anything sensible on social security as long as the GOP exists.
Raise taxes on wage/salary earners; sounds like a standard republican party agenda.
And as Terry’s comments above point out, this political faction also trues to hand out of tax-grants to the already wealthy; a standard abeiance.
Upside down, intentional strategies are very clear, are they not?
I oppose them both (tax grants to those of means and increased tax rates on domestic labor) and so should everyone else.
And please remember, as long as net wealth and GDP continue to grow, there is no shortfall in economic wherewithal. That is such a misleading, narrow accountant’s storytelling to fearmonger about Social Security, that is ugly. It is clear that the repetition of the storytelling is part of the continuing campaign that also uses political strategies intentionally shifting burdens on to the incidence of domestic labor as those of high net worth concentrate more and more of the income stream and marketable gains in their favor.
Modest common sense could make things right-side-up, remediate for the decades of misleading storytelling and happily pay retirement earnings (they have been earned, remember) in line with the nation’s economic successes — but this does not start with raising tax rates on basic wages/salaries. That is an upside down, non-starter, part of the thinking problem foisted as a strategic communications campaign goal to impress this misdirected view upon us, while it is also poor employment policy too.
Thanks for the opportunity to point this out, one more time.
New Rule for experienced writers who see the references that Federal taxes pay for stuff and services: Until Modern Money Theory(MMT) is understood just repeat the mantra: ‘Taxes do not pay for anything’. Then start reading works by Pavlina R Tcherneva, Randall Wray, Bill Mitchell and Stephanie Kelton just mention a few until understanding is gained of the empirical basis of MMT.
Well, I hadn’t realized my comment had been promoted into a post, but it doesn’t look like it did much good.
Those who think raising the Social Security “tax” a dollar a week… or even eventually about twenty dollars per week when wages are 200 dollars per week higher… is a burden on the worker simply don’t understand the whole point of Social Security: it is retirement (and death and disability) insurance for workers paid for by workers “so no damn politician can take it away from them” [said FDR].
The idea that workers can’t afford to pay for their own basic retirement is nonsense. Moreover it is pernicious nonsense. Welfare for All sounds so fair, so just, but it won’t happen in America. And, as a working person I think it would be bad for the workers if it did.
Self pity is not attractive. Fortunately most workers don’t suffer from it. Just a few people who think they are saving the poor but are too lazy to understand that there are better ways than welfare to protect the poor from the hazards of free enterprise.. just those people think they are Saving the Poor. there are better ways.
And, Ray, ” taxes do not pay for anything.” But they do solve the apportionment problem that you are going to have to solve anyway when you get your magical money theory thing going… and in essentially the same way : political process. But by a method that is a good deal easier to keep track of and won’t have the problems that (i think) finally sank the soviet union (planned economy… which is almost as bad as unregulated free market capitalism.