Reply to Charles Balhous on Social Security finances

by Dale Coberly

(Dan here…Dale Coberly replies to this article (Is it Becoming Too Late to Fix Social Security’s Finances?) by Charles Blahous).


You do not seem to grasp how small “4% of the tax base” is,  or how very reasonable it would be to pay that 4% for a longer, richer retirement, out of an income that will be more than twice what it is today.

That might be a politically difficult concept where neither side is being honest.  The “right” want to cripple Social Security for essentially ideological reasons.  And the “left” wants “the rich” to pay for Social Security… for essentially ideological reasons.  But as you note, the essense of Social Security is that the workers pay for it themselves.

Moreover, that 4% can be reached over a period of nearly eighty years.  To do it without ever reaching short term actuarial insolvency would require about a one tenth of one percent increase in the tax (combined) each year starting very soon,  or a one tenth of one percent increase in the tax (for each the worker and his boss) starting in about 2018 and running through abut 2033…  or some combination.

Further increases of one tenth of one percent (each) would be needed at a decreasing frequency, such that by the end of the 75 year actuarial window, the rate increases would be about one tenth of one percent every ten years…  again, while wage are projected to be increasing over one full percent per year.

And again, this would be neither a burden nor unfair to the workers.  They would get the money back over a longer retirement, and at a higher standard of living in retirement than current workers.  Moreover they would have at least twice as much money in pocket AFTER paying the tax as they have today.

The problem may indeed be “political,”  because neither side is honest enough to recognize this simple solution.