I’ve got all these blog posts I’ve been meaning to write for weeks, and I need to catch up. Here’s one…
Way, way back on July 17, I attended an event over at the local AARP headquarters. It was a policy discussion of Social Security. The format was that we watched a couple of experts debate what to do about SS on a video feed, and then discussed it amongst ourselves. It’s been so long I forget who all was there, but some of them were Kester Freeman, former head of Palmetto Health; Peggy Hewlett, dean of the nursing school at USC; Mac Bennett, head of the local United Way; John Ruoff of The Ruoff Group; and Mary Kessler, director of the Capital Senior Center. There were about six others.
Our discussion was moderated by Jonathan Peterson, author of Social Security for Dummies. Really. I liked that.
The “experts” on the video feed were David John of The Heritage Foundation and Virginia Reno of the National Academy of Social Insurance. They spoke from predictably left and right perspectives. Guess which was which.
We were given a lot of data for coming up with our own solutions. I sort of knew what I thought we should do, but the data were helpful in confirming me in my opinion.
You can review some of the data at this website — although in a quick scan of what’s available there, I didn’t find it quite as helpful as the workbook we had at our session, which spelled out what each policy proposal would do. You might have fun, though, programming your own Social Security solution.
What’s my solution? It’s so easy, it’s pathetic that Washington seems so helpless on this issue:
- Eliminate the cap on the payroll tax. That would fill 86 percent of the funding gap in the program. As Peterson said when I said this, it’s the closest thing to a “silver bullet,” if you can overcome the objections to doing it.
- Raise the full retirement age to whatever you have to raise it to to get the other 14 percent. Raising it incrementally to 68 by 2028, and you fill 18 percent. So you’d have money left over. Ta-dahhh!
These two steps are no-brainers. It’s ridiculous that there’s a cap to start with, and the full retirement age should reflect the realities of modern longevity.
I’ve heard objections to eliminating the cap. All of them are ridiculous. This “tax increase,” as opponents call it, is nothing more than simply seeing to it that everyone pays the same tax all year — which is what 94 percent of the working population does already.
The cap right now is $110,100. Only 6 percent of the country earns more than that. Everyone below the line pays the 6.2 percent tax all year. People who make more get to a point in the year when they get a nice tax break — in fact, they no longer pay at all the tax everyone else keeps paying. And it is nice. I can tell you, as someone who used to get that break (starting at a time when the cap was much lower than it is now). It was nice to get a few hundred extra bucks just before Christmas. But if you’d taken it away from me, I wouldn’t have complained, because I thought it absurd that I got it. I certainly didn’t need it. I hadn’t in any way earned a special break that people who made less money didn’t get. It was regressive as hell, and I knew it.
What’s the worst thing that someone losing the cap would suffer? He’d have to pay the same tax he paid the rest of the year, only all of the year. He’d be fine. And no, it wouldn’t be a disincentive to earn more — it would still only be 6.2 cents of every dollar.
Another stupid objection: Lifting the cap would mean millionaires could retire on $150,000 a year. So? Big deal. It would fix the system, and we ought to do it now.
I could present objections to raising the retirement age and knock them down, too, but I’d rather move on to your comments.
FYI, next week AARP has invited me to another one of these discussions. This one is about Medicare…