It’s easy to fix Social Security. Here’s how…

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…

66 thoughts on “It’s easy to fix Social Security. Here’s how…

  1. Doug Ross

    Please stop using the misleading “it’s only X cents” argument. Its hundreds or thousands of dollars. Plus you left out the 6.5 cents paid by the employer or the self-employed. All those tiny little pennies add up.

    I want to opt out and only pay for widows and orphans and disabled. One tiny nickel should cover that.

  2. Herb Brasher

    Makes sense to me–always has. But unfortunately the people in a position to do something about the problem also want to protect their own purse. The ultimate conflict of interest.

  3. Brad Warthen

    I don’t think that’s it, Herb. I think they’re afraid to tick off others — voters — who would be affected.

    And Doug, there’s absolutely nothing “misleading” about using the percentage. Nothing could be more honest or precise. That’s exactly the way I think of it. In fact, I can’t imagine another way to speak of it that would have meaning…

  4. Lynn T

    Raising the retirement age is basically reasonable — if people can find and keep jobs into their late 60’s. If not, we are displacing the problem from Social Security to programs designed to help the indigent, which could turn out to be both less effective and more expensive.

  5. Ella Minnow Pea

    But all those pennies add up, right? Someone in the >110K bracket is already paying 28% in income tax, 5% state tax, Medicare for a couple percent, Social Security of 13% (you admit you missed by half, right?)… That’s nearly 50 percent of every dollar. Still not enough, right?

    Using the word “pennies” is a deliberate attempt to mislead. It is not pennies. It is pennies on EVERY dollar. Say a self-employed worker is making $140K. 13% of that extra $30000 is nearly $4000. And what do they get for it? The honor of paying for someone else’s retirement?

    Will you support a guarantee that the percentage won’t ever increase? It’s already gone from 2% to 13% since the inception of Social Security.

  6. J

    What’s a few hundred or a few thousand dollars when you’re successful. Not everyone is able to be as successful as we have been. Generosity should be a goal for those who’ve really been so fortunate. Seems there are a number of fine examples of those individuals whom we might emulate even though we don’t have as many nickels as they do.

    How thankful for SS we are who remember that the portal to old age was the threshold to poverty for many who had toiled for years. SS has done so much to help our country become a better place. It made little sense to many of us, during the first half of the year, to see our FICA deductions stop.

  7. Kathy Duffy Thomas

    I agree we should get rid of the cap on social security. There is no cap on medicare, so why is there one on FICA?

    On the other hand, I’d like to make the problem bigger by decreasing employer’s share of Social Security and Medicare tax. As an accountant for very small businesses, I see those taxes tearing up businesses that are often barely surviving.

  8. Steve Gordy

    Your proposed solutions are straightforward and rational, which is why they stand no chance of being adopted.

  9. bud

    Not sure there really is such a big problem but if so this is a pretty good way to go. What we don’t need is an approach that moves to a private account system.

  10. David

    Why is raising the retirement age preferable to means testing or reducing benefits for high income earners?

    If social security is really about making sure “that people are not COMPLETELY destitute in old age”, then why is it better for us to provide it for a well-off 68 year old instead of a poor 67 year old?

  11. bud

    The age limit will adversely affect poorer and non-white folks disproportionetly since they tend to have shorter life expectancies. Not sure the system is particularly in trouble for a couple of decades. Let’s start with the earnings limit then maybe take a look at the age requirement in a couple of years.

    Means testing sounds good but then it becomes a “welfare” system and makes it a juicy target for conservatives to demogogue later on.

  12. Brad

    LMNOP writes, “Using the word ‘pennies’ is a deliberate attempt to mislead.”

    Who used the word, “pennies?” And whom are you accusing of trying to mislead?

  13. Doug Ross

    “it would still only be 6.2 cents of every dollar.”

    cent = penny in my thesaurus.


    ” Generosity should be a goal for those who’ve really been so fortunate.”

    This statement is stunning. To equate generosity with taxes is what separates many of us. Taking my money to give to someone else is not generosity.

    I can do generosity perfectly fine myself, thank you.

  14. Brad

    And Bud… exactly. The anti-government people want to make this a program for the poor and the poor alone so that they can erode public support for it. They’ve succeeded in marginalizing, and turning their base against, anything that can be portrayed as being for “those people.” What a victory, in the quest to drown it all in a bathtub, it would be to put Social Security into that category!

  15. Doug Ross

    And it’s 13 cents of every dollar over $110,000 right?

    Means testing is another way to say “wealth redistribution”. If I pay in money, I should get money back no matter what my income or assets are.

    I’d like to see an option to take a lump sum payment at retirement. This would be a great benefit to the lower class to allow them to have an actual asset to pass on to heirs. A monthly subsistence check just make you a slave to the government.

  16. Brad

    And I am completely unmoved by any argument against eliminating the cap, including the one about the additional burden on businesses.

    If you have an employee who is, to you, worth paying $150,100 rather than $110,100, you are seriously going to try to tell me that you can’t hack the additional $2,480? Really? Tell that to someone who looks a lot dumber than I do.

    And if you really, REALLY operate your business on such a slim margin that you can’t pay another $2,480 to get an employee worth $150k to you, then reduce his pay to $147,620. An employee at that level should know your business well enough to understand, if it’s truly necessary. And if he’s going to refuse to work for you over that, then you’re better off getting someone who’s a little more interested in the job.

  17. Brad

    And I will never, ever accept the argument that you get from some anti-tax folks that someone is going to refuse to go after an additional thousand dollars in pay because he’ll have to pay $62 in taxes on it.

    (Notice how I used $1,000 rather than a dollar, which would be simpler? I did that because our anti-tax friends get all upset and accuse you of “misleading” if you use small amounts. Why, I have NO idea on Earth. 6.2 cents is to a dollar EXACTLY what $62,000 is to a million. Both are piddling amounts compared to the whole. No one would any more balk at $62k to make a million than he would at 6.2 cents to make a dollar. It is precisely the same.)

  18. susanincola

    Could you clarify something — does removing the cap also cause benefits to be increased for those affected (it looks like the answer is yes)? Does the math on fixing Social Security in this way include the increased payouts for those that would be paying in more?

    If so, this sounds perfectly reasonable to me. The wealthy would pay more, but they would potentially get more as well. The cap as it exists currently is arbitrary anyway.

    I do have a concern about raising the retirement age, as I think it would just end up with a lot of older folks getting reclassified as “disabled” since they won’t be able to work. Does the model include a certain percentage of people moving from the “retired” to the “disabled” category, and still getting benefits at 65?

    And finally, would this change include changing the age at which people become eligible for Medicare?

  19. Brad

    I don’t know. I’ll think about that when I attend the Medicare discussion next week.

    But yes, of course the benefits would rise along with the contributions. Everyone should receive from the program proportionally to what they paid in.

  20. J

    Doug, the govt is generous with their tax treatment for those that are wealthy. I’m sure you’re taking advantage of many of those tax advantages.

  21. David

    “But yes, of course the benefits would rise along with the contributions.”

    That is just silly. Let’s create bigger burdens on future taxpayers (Surely later generations won’t be dealing with budget problems of their own in the future!) by promising to give more benefits to people who won’t need them. I’m all for raising the contributions cap to solve current problems, but you’re solving this one while potentially creating another one down the road. If you absolutely believe Social Security must dole out benefits proportionally to what people pay in, then we should just raise the tax rates. More is collected without creating future liabilities.

    And what other area of government do you believe that people should get more out of than others because they paid more in taxes? Maybe people who pay more in car taxes should get to go to the front of the line when they go to the DMV. It’s ridiculous.

    The fact is Social Security is not about what YOU pay and what YOU get out of it; it’s about making some provision for old age.

  22. `Kathryn Braun Fenner

    “penny” is a colloquial term for “cent” drawn from the British monetary system–the official term is “cent.”

  23. Bart

    Libertarians, Republicans, Democrats, liberals, conservatives, and all others who embrace another political ideology, understand one simple fact of life.

    Social Security is here to stay. It is truly the third rail of politics and if anyone tries to make any radical changes to the program will be voted out of office faster than the Roadrunner getting away from Wiley Coyote.

    Now, as a fiscal conservative on most matters, this is one program where I agree there should be no cap on earnings. Whether you agree or not, I really don’t care one way or the other. If you pay into the program, you are entitled to draw from it and if you have a 401k or retirement plan that pays you $1 million a year, if you paid into SS, you have the right to draw from it.

    My complaint is that SS is no longer the program it was intended to be because both major political parties fed at the SS fund trough without hesitation and both have misused and abused the program for political purposes since its inception.

    There are too many who actually need their SS payments each month, no matter how small they may be. I cannot disagree with those who think everyone should put savings aside for retirement but for so many, just earning enough to live on is difficult enough, much less trying to save enough to retire on.

    This is a double-edge sword issue and neither side can have a win-win scenario. It does need reform and a tighter control on abuses but without the willingness of all parties to sit down with a cross section of business owners, employees, investors, and sensible politicians (I know, its an oxymoron) to come up with an acceptable solution, scaring the hell out of senior citizens and now the younger generation will remain political fodder for both sides to feed on.

  24. Doug Ross


    “Doug, the govt is generous with their tax treatment for those that are wealthy. I’m sure you’re taking advantage of many of those tax advantages.”

    And once again you make assumptions about me that are completely false. In fact, I am punished for making a decent salary by losing all sorts of deductions like tuition tax credit. Other than a mortgage deduction, all I have left to deduct is my charitable contributions and one child.

    If you want me to show you my tax returns, I will…

  25. Brad

    OK, I just stepped in there as moderator, and edited Doug’s comment.

    J, suffice it to say that Doug found what you said to him highly insulting. So back off on the personal…

  26. J

    Thanks Brad. I take advantage of many of the tax breaks as do many others, but I never advocated for them and think our country would be better if the income equality were more even. Things go in cycles and it looks like were in the cycle of the early 1900s.

    Talk about SS! What a laugh with Mittens picking P Ryan. There is going to be a major barrage of video political advertising – full employment for advertisers. Willard has never had nor does he have a consciousness of the world that the vast majority of people experience. He can say goodbye to seniors, students and veterans.

    David Frum, a Repub with some creds, puts the next ad into perspective for the RR team.

  27. Joe The Economist

    “•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.”

    You ought to look at sources for your information. It is likely that this means that you have to eliminate the cap AND cap the associated benefits.

    You also ought to clearly explain the difference between being fixed and solvent. According to the Trustees of the system the difference is about 12 trillion dollars.

  28. Joe The Economist


    “Social Security is here to stay. It is truly the third rail of politics and if anyone tries to make any radical changes to the program will be voted out of office faster than the Roadrunner getting away from Wiley Coyote.”

    I think you have missed the memo. The demographics of the system are in full retreat.

    By combining data from the US Census and Trustees report, you find that 2010 was the first year in which a majority of voting aged Americans expect to get substantially less than was promised. 2011 was the first payroll taxcut in history. 2011 is the year multiple candidates call it a ponzi-scheme. 2012 is the first year in which a majority of voting aged Americans will retire after the Trust Fund is empty. 78% of the country expects to live long enough to be affected by that event.

    If you think that politicans will ignore 78% of the country, you maybe right. The problem is that number will increase every year until it is 100%. At some point politicans will emerge to serve that audience.

  29. Joe The Economist

    Brad, the flaw in your argument is two fold.

    First, the figure is 10.6% not 6.2%. And payroll taxes aren’t all of the taxes. And at the margin, they are looking at not $62, but $153 (all payroll taxes) and another $350 (income taxes) and maybe another $100 in state and local taxes. So it isn’t $62. It is closer to $600 on marginal money.

    Second, the audience affected will retire sooner. You are looking at a trade-off of time versus money.

    The bigger problem here is that high-wage workers are net contributors to the system. These people tend to get less back than they contribute. As the leave, the govt losses money.

  30. Joe The Economist

    @Brad you commentary on wages is flawed. The incremental payroll tax may be $2,500, though I am not confident in your math there.

    The problem is that 99% of the businesses will pass along the cost to the consumer, but the 1% will offshore the job, and the 1200 positions that report to him.

    Your view is that the problem is the $2,500. It is simply part of many costs. It isn’t a drop in the bucket. It is a bucket in an ocean.

  31. Joe The Economist

    “It was regressive as hell, and I knew it.”

    Social Security is highly progressive. Social Security is a system which pays benefits based on your contributions. On a per dollar contributed basis, high wage earners might get as little as 1/10th what a low-wage worker receives. How anyone can describe that as regressive is beyond me.

    These figures which come from the SSA are PRE-TAX which makes the return lower for high-wage workers and higher for lowwage workers.

  32. Joe The Economist

    “and the full retirement age should reflect the realities of modern longevity.”

    That might be a stronger argument if the contributions were 2% of the first $3000. If you want modern longevity we need to keep the costs constant.

    The other problem here is that disability depends to some extent on people leaving to get retirement. So you may fix OAS only to find that you have broken DI.

  33. J

    I’m reminded of the comments of a friend from CT.

    “ff only the American voter would realize that the god of the “religious” right is the god of greed and selfishness, we could get on with the job of creating and maintaining a social safety net for the poor whose ranks are growing daily because of the worship of money.”

  34. Mark Stewart

    Since I am here on the CT shore this week, I would observe I am pretty confident that people around here also value monetary wealth, its creation and its expenditure.

    Would also disagree that greed and selfishness mean the same thing – or that they go hand in hand..

  35. Michael Rodgers

    You said before somewhere that you don’t want those videos on your screen while you’re reading The State online. Here’s one way to stop them. In Internet Explorer go to Tools … Internet Options … Security … Restricted Sites. Click Sites and then type in
    and choose Add.
    I have several things in there to block ads. For example,

  36. Doug Ross


    So Joe The Economist has provided a lot of factual information. Does any of it cause you to revise your solution? Or do the numbers make your head hurt?

  37. Brad

    By the way, in reply to this: “It is likely that this means that you have to eliminate the cap AND cap the associated benefits”…

    The way I read it that’s not the case. The discussion in the AARP materials seemed to assume that benefits would NOT be capped, and that discussion was the basis of my remarks…

  38. Doug Ross

    Other than the fact that they are correct, right? Better for your argument doesn’t make them true. At least admit you missed by half on the true rate.

    Anyway AARP (a lobbying group funded by selling health insurance to seniors) may not exactly be an unbiased source.

  39. Doug Ross

    6.2 cents is not the tax. It is 10.6 cents now and will revert to 12.4 cents in January.

    Self-employed people like me pay the full amount out of our own pockets.

  40. Brad

    So in other words, I wasn’t wrong.

    For Doug’s sake, I will try to remember next time (if I ever again address the subject) to mention that self-employed people pay the employer’s part as well.

    But it seems superfluous to me. I would think everyone would understand that without being told.

  41. Doug Ross

    You know the difference between 6.2 and 10.6 and 12.4, right?

    “Everyone below the line pays the 6.2 percent tax all year.”

    Everyone doesn’t. Not just the self-employed. Each employed person contributes 10.6 percent (soon 12.4) to Social Security.

    Seriously, I know you’re not a numbers guy but this is beyond obtuse… just plain old stubborn.

    And your “logic” that makes every tax increase “just” X cents per dollar or XX dollars per 1000 is so myopic. Try doing the math sometime so that the real impact can be seen.

    A guy like Vince Sheheen who makes $400K per year would be on the hook for 290*12.4%= $35,960 dollars extra. Not pennies, not dollars, tens of thousands of dollars.

    Steve Spurrier, who makes 1.75 millions per year, would pay an extra $200K.

    I know, I know… they should be grateful for the opportunity to pay more.

  42. Brad

    No, Doug, those are words you make up and put in my mouth.

    What I would say, and did say, is that people who make more than $110,100 would merely pay the proportion of their pay over that amount that they paid on the income under that amount (which, for the overwhelming majority who are NOT self-employed, IS 6.2 percent, and I have my own opinion about who is being obtuse here — I dealt separately above with the employers’ portion).

    And what I believe is that most people would not have a problem with that. (And if they did, they’d be hard-pressed to convince me that they’re suffering a hardship.) I CERTAINLY don’t believe the “chilling effect” argument that people won’t try to make more money because they’d have to pay a small portion of the increase in tax.

  43. Brad

    By the way, this discussion is an excellent example of the thin line between opinion and fact in our hyperpolarized political discussions these days.

    Doug insists that his preferred way of thinking of it (the way that makes it sound more onerous, because to him it IS onerous) is the ONLY factual way, and that any other way of looking at it, however factual and however clearly explained (and fully understood, I think, by most people), is WRONG because it doesn’t make it sound as bad as he thinks it is.

    This sort of disconnect has become typical in our time, and is why it is so hard to have productive, effective conversations about these issues.

  44. Doug Ross

    Because your idea of “factual” disregards all the facts. My facts are complete.

    You say that paying 6.2% more on every dollar over $110K shouldn’t be a hardship for anyone because it’s not your money. And, again, your “facts” are incomplete because your 6.2% is in addition to all the other taxes that are taken out of those dollars.

    If you start with a dollar and take away 28 cents for federal taxes, another 3 cents for Medicare, another nickel for state taxes, you are left with 64 cents. Now you want to take another 6.2 cents (or 12.4 cents for the millions of self-employed people).

    The disconnect is based on your belief that someone else paying more money for something should not a problem. You apparently have the divine knowledge of how much is enough for one person to earn.

    Here’s a real life example for you. The top 25 highest paid employees at the University of South Carolina make $7,361,282 per year. Under your plan, those 25 people would contribute an additional $285,899 total and that would be matched by the university as well… for a total of $571,798.

    There are approximately 640 employees total who make more than $110K at USC alone. It’s not a stretch to assume that USC would be on the hook for several million dollars. Where will that money come from? Can you say “tuition increase”?

  45. Doug Ross

    Find some people who make more than $110K (including self-employed). Ask them if they’d be okay with paying additional Social Security taxes. Then see if you can convince them that they shouldn’t feel badly about paying more. Let’s see how that works out.

  46. Brad

    Doug, I was speaking from personal experience, as someone who’s been on both sides of that line, and expects to be on both sides of the line in the future, given the up-and-down nature of my new economic world.

    In any case, it is not a “fact” that I said what you say I said, starting with your assertion that I said it “shouldn’t be a hardship for anyone because it’s not your money.”

    I’m done with this discussion. I’m completely satisfied with what I’ve said about it, and am not interested at all in running around and around these points, with utter and complete futility, any further.

  47. Doug Ross

    Brad: “And what I believe is that most people would not have a problem with that. (And if they did, they’d be hard-pressed to convince me that they’re suffering a hardship.) ”

    Does that not imply that you personally believe that someone would have a hard time convincing you that the extra taxes would be a hardship? Does it also make a huge leap in terms of your belief that people over the maximum wouldn’t care? Assertions should have a little more foundation than “I believe…”

  48. Joe The Economist


    “Nope. I’m not aware of any reason why I should suppose those numbers are better than the ones I got from AARP…”

    My numbers come from SSA or the IRS. Given the choice between SSA and AARP, I lean to SSA. The government’s reports have their own problems, but at least no one is paid to put them in. Besides that, I am very confident that AARP has never said that payroll taxes were 6.2%.

    You have a number of factual errors here, and I am happy to provide links to SSA information.

  49. Joe The Economist


    I have yet to find any research that supports your claim that lifting the cap will make the system solvent much less fixed.

    The latest material that I have seen from SSA says that Eliminating the cap and Capping the Benefits, almost make the system solvent. That is 12 trillion dollars away from being fixed.

    According to SSA, the system needs 8.6 trillion to make the system solvent for 75 years. The infinite shortfall is 20.5 Trillion. 20.5-8.6 is roughly 12 trillion.

    What is the difference between fixed and solvent? Fixed means that you have no problem. Solvent means that you have your problem your grandchild’s problem.

  50. Joe The Economist

    One of the on-going problems here is that we are linking SS retirement and SS disability together. Together they are 12.4%, but one serves your retirement and survivors and the other serves your inability to work. These are different systems, and have completely different problems. Lumping them together invites bad conclusions.

  51. Joe The Economist

    Another on-going discussion problem is that the 6.2% is what the employee pays. The employer matches that amount.

    Virtually all economists – including those at the AARP, Brookings Institute, and the like, agree that this amount ultimate is paid by the employee in the form for reduced wage. The economic return studies from SSA embed this logic.

    Every worker pays 12.4% of wages for Social Security. The payroll tax-cut is really iffy here. The general taxpayer is making up for the shortfall, so while you may save from payroll taxes – if you have income you lose more in income taxes over time.

    The payroll tax holiday does nothing but make people think that they are paying less.

  52. Joe The Economist


    Numbers aren’t suppose to hurt, but the way politicans cut the data I understand that numbers confuse.

    For what it is worth, I only use government sources. If you want a source, let me know.

  53. Brad

    OK, as I said earlier, I’m satisfied with what I’ve had to say on this, and have no interest in running in circles.

    I’ll only respond to this: “Besides that, I am very confident that AARP has never said that payroll taxes were 6.2%.”

    Let me know when you have time to drop by my office, and I’ll show you the AARP material. Given the course of this discussion, you may still disagree with me, but I’ll be optimistic.

    In the meantime, be assured of this: I’ll not approve another comment in which you call me a liar.

  54. Joe The Economist

    I haven’t called you a liar. I am questioning your source. I don’t need to come by, just point me to the link. I would also be interested in the link for where AARP says that lifting the cap will solve this problem.

    I work for Fix Social Security Now, and I am very interested in different viewpoints. Normally think-tanks and activists use the same reports, and I haven’t found one yet that says lifting the cap will fix the problem.

  55. Brad

    All right! I’ve got it…

    I thought I was going to have to scan and email you the relevant passages from the materials AARP gave me, but Patrick Cobb over at AARP helped me finally find the same material online.

    Here’s a link to the passage on the idea of eliminating the payroll tax cap. You say “I haven’t found one yet that says lifting the cap will fix the problem.”

    Well, you won’t find that in the AARP materials either — nor did I ever claim you would. That was the position I chose from the many options offered. (The format of this session was that we were presented with a dozen policy proposals, with pros and cons on each, and urged to choose our own course. The point of this post was to communicate the course that I choose, given the information presented.)

    I call your attention particularly to: “If all earnings were immediately subject to the Social Security tax, the new revenue is estimated to fill 86 percent of the funding gap.” That’s what caused Peterson to observe to me, when I said that’s what we must do, that that indeed came closest to a “silver bullet,” although it doesn’t get us all the way there — hence my proposal to raise the retirement age slightly.

    As for your assertion that “I am very confident that AARP has never said that payroll taxes were 6.2%,” I refer you to this: “If you make above that amount, you (as well as your employer) would pay the 6.2 percent payroll tax on your remaining wages.”

    As you see, they do not insist upon calculating it as though the employee were paying both parts. Nor should they.

    Finally, remember that I said that the AARP figure was based on an assumption that the benefit would not be capped? I base that on this part of the argument AGAINST lifting the cap, from the same document: “However, this “solution” would cause huge Social Security checks for very high-income people.”

    Which makes me say, “So what?” Why shouldn’t someone who paid a lot into it get a lot out, as long as you’ve made the system solvent.

  56. Joe The Economist

    I have seen this piece. It doesn’t list sources. So there isn’t much for me.

    The piece is consistent with other material that I have seen. At 90%, it probably does mean capping benefits. What you are seeing about large pay-outs comes from a completely different think-tank trying to argue against the idea.

    This is a comparable piece.

    This is why I stay away from 3rd party commentary. They word things such that the reader is virtually assured of reaching the wrong conclusion.

    We see their piece differently. “If you make above that amount, you (as well as your employer) would pay the 6.2 percent payroll tax on your remaining wages.” I don’t see that saying that payroll taxes are 6.2 and you do.

  57. Joe The Economist

    “And gentlemen, that just can’t be helped…”

    Disagreeing with me isn’t all that surprising or a cause for help.

    Disagreeing with the Social Security Administration introduces the question of whether you trust their compotence. I find any number of their assumptions as foolish, and I can tell you why. I don’t question their compotence though. When you disagree you need to come up with how you disagree with them or it is their compotence that you question.

    These people run a business on which millions of people depend. If Social Security isn’t compotent those people are screwed.


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