by Dale Coberly
SOCIAL SECURITY AT
Last Sunday I gave a very short talk about Social Security at a political rally and outdoor party called Berniestock in Lebanon, Oregon.
It was not a venue conducive to detailed explanations or suggesting ways people could try to tell what was true from what was pretending to be true, so I suggested that those interested in learning more should come to Angry Bear where we could explore the issue more carefully.
The purpose of this post is to give anyone who follows up on my invitation at least a place to start if they login to Angry Bear within the next few days.
What I said at Berniestock was limited to telling them that Social Security is paid for by the workers themselves and has nothing to do with the Federal government debt. Nor can Social Security borrow money…or acquire debt… on its own. So all the claims that Social Security was somehow responsible for a huge “looming deficit” were not true.
But, I told them, Social Security does have a problem of its own, which fortunately is easy to fix.
Social Security’s problem is that the present generation of young people is going to live longer than past generations. This means they will need to save more for their retirement. Making matters worse, this new generation of workers is not expected to have its wages grow as fast as in previous generations. This means they will have to save a higher percentage of their income for their retirement.
But this problem can be fixed by simply raising their own Social Security payroll tax by about one tenth of one percent per year…while wages are expected to grow one full percent per year, or ten times as fast. One tenth of one percent of a 50 thousand dollar a year income amounts to one dollar per week. Or they could just do what is suggested by the Trustees Report and raise their share of the payroll tax about 1.4%. all at once immediately, and not have to see another raise for at least seventy five years. This would be fourteen dollars per week for someone earning 50,000 dollars per year.
I said that if that looked like a lot of money to them, they should remember that they will get it back with interest when they retire and will need it much more than they do today. This is a much, much better solution than letting Congress cut benefits or raise the retirement age.
And then I said come to Angry Bear and we can talk about this.