Worried about the fate of Social Security given that its reserves are forecast to be wiped out by 2035, necessitating a cut in benefits? Congress is on the move. More than 200 Democrats in the House of Representatives have sponsored the Social Security 2100 Act, which promises to keep full checks going to beneficiaries into the next century.
While that prospect sounds great, I simply can’t buy into the enthusiasm for this legislation emanating from all corners of politics. The gist of the proposal is the stability of Social Security should depend upon the assumption that our kids will pay the taxes that we won’t. It is an irresponsible idea, one that puts the entire system at risk.
If politicians are serious about the stability of this vital program, they need to stop wasting precious time on partisan politics, and start looking for a balanced approach that combines a mix of reductions in benefits and more revenue. For example, Social Security benefits could be indexed for changes in life expectancy. But at this point, the prospect of saving Social Security depends upon all-or-nothing policy measures. These proposals aren’t serious, and fail year after year.
In this latest proposal, the legislation would gradually phase out the cap on taxable wages and increase the payroll tax, split between worker and employer, to 14.8% over roughly 25 years (an increase of nearly 20% from the current 12.4%).