A Simple Solution to Permanent Social Security Solvency

[louis c]

The cap is currently at $110,00. That means that once somebody reaches that level of income, they stop making contributions to the system.

Raise the cap to whatever it will take to make Social Security's projected solvency guaranteed for 25 years into the future. Have automatic increases in the cap any time the projection goes below 25 years.

This would always guarantee the Social Security system will be solvent from generation to generation.

[Tumbulu]

1. Yes, many of us have been saying this for years...

this is one of those no brainers....so I cannot figure out who is against it- except the obvious obstructionists!

[global1]

2. I've Posted This Thread Each Time A Discussion Comes Up Here On DU About "Raising The Cap"....

Check out this link: http://www.democraticunderground.com/?com=view_post&forum=1002&pid=2117173

I think the American People could get behind a campaign to "Raise The Cap".

Check out the following link: http://election.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1818709

I still think a tv commercial - or a 'you tube' clip that can go viral - with pics of all sorts of people 'raising or lifting' their caps - would be a very poignant way of the American People voicing their support for 'raising or lifting the cap' to solidify "Social Security".

I think such a campaign is worth a try versus having the other side attacking SS and weakening it in any way. The idea is to have both typical American People photographed lifting, tipping or raising their caps:

[My Good Babushka]

3. Absolutely!

I've often been told that $250,000 - $400,000 is middle class, so I think they should kick in, too.

[Auntie Bush]

4. Thanks for posting that perfectly sensible solution

which I too have been wondering why we don't just do this simple solution. I bet though that the righties in the congress wouldn't vote for that. We have GOT to get RID of those FOOLS if we want any progress or want to help the middle and lower class.

[madrchsod]

5. put more people to work

[LiberalFighter]

14. Require all companies that have employees outside the USA to pay

their portion of the Social Security and Medicare taxes. Base it on the average of employees hourly rate x 2080 hours x number of employees working outside the USA not paying payroll taxes.

So maybe $1600 to $2400 per employee not working in the USA that provides labor for a product or service intended for USA use.

[reteachinwi]

30. At a living wage

[leftstreet]

31. +1

[BainsBane]

6. and require people who live off investment income to pay into SS

like the self employed have to.

[Vincardog]

7. Eliminate the cap all together, and make capital gains pay SS too. Tax all income as regular $

[louis c]

8. Do Both

[LiberalFighter]

17. I would suggest the SS & Medicare tax on capital gains and dividends

be when it is over 50% of the poverty level. When they reach 65 they would be exempt from Medicare taxes. When they start receiving SS benefits then they would be exempt from that tax.

[AtheistCrusader]

9. For 25 years, you don't have to do anything at all.

But more to the point, why have a cap at all?

[Indydem]

10. Sure, but only if you raise the benefit cap.

You can't raise the contribution cap and keep a benefit cap.

If you do, you have turned the most successful Democratic program in history into welfare.

But, if you raise the benefit cap, the solvency is jeopardized.

THAT is why politicians who actually know what is going on don't want to raise the cap.

[pangaia]

16. Right. I think I may have seen you post this

in another thread.
But, there must be a 'middle way..raise the cap, raise benefit cap BUT only so much.. so SS becomes progressive similar to the way taxes USED to be. Some formula would certainly work if the fascists can be outvoted and stopped..

[louis c]

24. No, I don't want to raise the benefit cap

If it is raised, it should be at a rate far below the contribution cap in order to provide solvency.

[Indydem]

25. That is a terrible idea

You have converted an insurance program where people pay in relative to what they receive, into a wealth transference program (welfare). That idea will lead to a loss of respect and faith in the program, and its eventual disassembly.

It may be great in your head and on paper, but in reality it's stupid and shortsighted.

[exboyfil]

28. Hate to break it to you but higher earners (those between about $55K-$110K ) already

subsidize social security by the reduced formula for their benefit calculations. That is why I propose no increase in benefits, but a lower withholding amount for income above the current $110K or so cap. In general I would make this lower withholding amount reflect the actual subsidized amount that those earning over $55K pay. I agree strongly that you can't opt out of your obligations to support lower earners when you reach a magic $110K threshhold. Any media campaign to remove the cap should explain how the benefits are actually calculated.


http://www.ssa.gov/pubs/10070.html#a0=0

Three levels of benefit calculation

90% - $ 0 to $9,204/yr.
32% - $9,204/yr. to $55,512/yr.
15% - $55,512/yr. to $110,100/yr.

Formula approximately adjusts for inflation. Another subsidization comes in with the tax on Social Security benefits for those earning income in retirement. In general that tax will fall disproportiately on those making over $55K during their working career.

[louis c]

39. If it is a redistribution of wealth, then it is a good idea

Maybe the "haves" should contribute a little more to the "have nots", especially when they're all working their whole lives.

[FogerRox]

43. There is no benefit cap

[Vincardog]

33. Ok as long as the benefit is the same for everyone. Same $ amount for every recipient

[Sirveri]

35. The benefit payout structure is already tiered.

Above a certain point you only get 10% back on your payments. Under about 9k you get 90% of the money you pay into the system. There is a third tier, but I think it's at 35% and I don't remember the end points.

[Gman]

11. Take it up to $400K

solve the problem for decades.

[Sirveri]

36. Then tie tax rate and tier growth to top quintile income growth.

Then it is solved basically forever.

[Gman]

38. Perfect

[golfguru]

12. Would you then increase monthly SS checks commensurately?

The way I understand it, social security is neither welfare nor tax. Workers contribute and then receive commensurate benefits.

So if a person is contributing 4 times than current threshold, how much higher her monthly retirement checks should be compared to some other person who contributed the current maximum?

[SalviaBlue]

13. So, my mother in law who never worked

should not get SS?

[HiPointDem]

15. if your mil gets SS, it's because her husband *did* work.

[SalviaBlue]

19. I know.

If you use the logic of the post I responded to, then it would follow that my MIL would get 0.



"The way I understand it, social security is neither welfare nor tax. Workers contribute and then receive commensurate benefits.

So if a person is contributing 4 times than current threshold, how much higher her monthly retirement checks should be compared to some other person who contributed the current maximum?"

[madrchsod]

18. both my grandmothers never worked and they received ss and medicare

[golfguru]

20. Your mother-in-law is probably in the same boat as my mother

My mother never had a job in US either, and she received Supplemental Social Security. However
if your father contributed then your mother deserves benefits as a widow.

But that was not my point. I was asking what should be done with those who contribute 4 times the current maximum. Should they earn their benefit check commensurate with their contribution or should we just confiscate their excess contributions?

Again to emphasize, my point is not about MINIMUM benefits, my question pertains to maximum benefits for those who would contribute above current maximum.

[magellan]

21. Why shouldn't it be calculated the same way it is for everyone else?

The more you put in, the more you get out. It's always been this way afaik, and I'm sure the same discussions occurred in the past when the cap was raised a lot in one go.

[Selatius]

23. Because FDR didn't want SS cutting $10,000 checks every month to millionaires in retirement.

The spectacle of Social Security coddling the wealthy in retirement likely would've provoked a negative reaction to the program altogether, especially in the years of the Great Depression. Thus, a benefits cap and a contributions cap were born. The program was built as a level of security against the ravages of old age and disability. Anything beyond that would be unnecessary.

[Sirveri]

37. The program payouts are progressively tiered, you only get 10% back above a certain point.

If we didn't touch the tiers, but just upped the cap by 300k you'd see folks getting checks for 30k a year from SS. This is why if we raise the cap we need to do it slowly and look into making more than three tiers, possibly even a 5% or a 1% tier above 250k.

[golfguru]

40. SS benefit checks are already progressive, but not quite flat

I contributed twice per year compared to my mother-in-law, but my benefit checks are only 40% larger than hers.

I think if someone contributed 4 times the current maximum, their benefit checks should be in the same proportion as mine compared to my mother-in-law. So may be two times the current maximum if they contribute 4 times the current maximum. Otherwise the SS program becomes a welfare program paid by the rich for the not-so-rich. SS should not become a welfare program.

[Oilwellian]

41. I doubt it seriously

Are you really trying to convince us that a large majority of Americans would pity the rich paying a slightly larger percentage of their income toward SS? The large majority pay SS on 100% of their income. Goldman Sachs CEO, Lloyd Blankfein, paid off his obligation to SS last year after receiving his first paycheck. So let's say he has to pay SS taxes out of his first 3 paychecks each year. Do you really think the large majority of American people would start viewing SS as a welfare program if we do that? What do you think we are? Idiots?

[golfguru]

42. Pity is your word, not mine

As opposed to you, I am not jealous of the rich. Fairness is my word. As I said, SS benefit checks are already progressive. No need to go the welfare route and confiscate money from those who contributed their fair share. If Blankfein dude contributed then he deserves return on his contributions.

[exboyfil]

29. Not exactly

See my other post. The contributions for higher earners use a multiple that is 6 times less than lower earners to calculate benefits. Also many of those higher earners will see further reductions in S.S. benefits because of the tax on benefits.

[Vincardog]

34. the benefit is the same for everyone. Same $ amount for every recipient. The rich don't need

more. That is what got us into the problem.

[PoliticalPizza]

22. Yes, but...

Great idea, but they'd rather always take from the real middle class!

[liberal N proud]

26. If I made $200K, I would not mind paying SS on all $200

I also doubt that I would worry at that point if I ever drew SS.

[MrYikes]

27. If I remember correctly

ss monthly benefit maximum is either $2300 or $2600.

We need to eliminate the cap. Further, in every regard, we need to attack the income disparity. We must always keep that in our focus.

[duffyduff]

32. It's not "insolvent" and can never be "insolvent"

It's a federal program, and therefore it can never go "broke."