Social Security is a government program that forces people into poverty. If folks had been able to use the money for private investment, they would still get as much or more per month. But, under Social Security, your estate and family get nothing. In a private system, you get your money while living—and your family gets the investment money not distributed. Your family is better off.
But why worry about that—in about ten years both Social Security and Medicare will be broke and benefits will be cut and FICA taxes will go up—everybody loses.
SAVING SOCIAL SECURITY
By Richard Colman, Exclusive to the California Political News and Views, 6/14/24 www.capoliticalnewsandviews.com
Social Security, a pension plan for older Americans, is going broke.
By 2033, Social Security is expected to run out of money.
Currently, Social Security takes money out of wages. The employee pays 6.2% of his salary. The boss adds another 6.2%, making the total contribution equal to 12.4%.
Once 2024 wages reach $168,600, neither the employee nor the boss has to contribute more funds to Social Security.
Income from such sources as interest, dividends, rent, and capital gains (the selling of an asset) is not part of Social Security.
Social Security is a flat-rate tax. Such a tax is regressive, meaning that lower-income people pay a larger portion of their wage income than higher-income people.
In 1983, when Ronald Reagan, a Republican, was president, Social Security began to run out of money.
To solve the deficit, Reagan appointed a commission headed by Alan Greenspan, a person involved in Wall Street finances. Later, Greenspan became chairman of the Federal Reserve.
Greenspan’s commission recommended raising the Social Security tax to where it is now: 6.2% from the employee and 6.2% from the boss. Reagan signed legislation that raised the Social Security wage tax.
Now, over 40 years later, Social Security is again facing bankruptcy.
Some individuals suggest that Social Security should be abolished or privatized. Others have different ideas.
Social Security is popular with many Americans. Any congressperson suggesting abolishing Social Security might find himself or herself voted out of Congress.
One solution for keeping Social Security solvent comes from Alicia Munnell, a Boston College economics professor. She suggests raising the 12.4% Social Security tax to 15.9%. Munnell’s ideas were published in a May 31, 2024, New York Times financial column written by Jeff Sommer.
During the Bill Clinton administration, Munnell worked for the Treasury Department.
Munnell’s ideas may make Social Security solvent until 2050.
Sommer’s column mentioned raising the Social Security ceiling on wages from $168,600 to $300,000. According to Sommer, a Social Security tax increase would cover 90% of wage earners.
Social Security was passed by Congress in 1935. President Franklin Roosevelt signed the legislation into law in August 1935.
Raising taxes is not popular. But Congress, to preserve Social Security, might not want to dismantle a system that is hugely popular with many Americans, especially senior citizens.
Neither of the major 2024 presidential candidates, Joe Biden and Donald Trump, has talked about rescuing Social Security.
But a future president, whoever he or she is, will have to confront the possible bankruptcy of Social Security.
A president who wants to raise Social Security taxes, may want to cite Reagan’s 1983 decision to raise Social Security taxes.
Reagan, known for his dislike of taxes, may be the best person to mention if a future president suggests increasing taxes to save Social Security.
In theory, Social Security was/is a good program. Most people would not have any savings without the program. Unfortunately, like all good theory programs, once implemented, the greed of the government disregards the good intention.
Wages have increased so much that the cap is too low to sustain the program. Raising the cap to $300,000 would solve a lot of problems and the higher wage earners would finally pay a fair share. Social Security has been eroded by lots of programs for those who have not paid into it for such programs as disability that has further eroded the social security income base. This needs to be gradually phased out in fairness to those who can’t conjure up some phantom disability to get more money to which they are not entitled.