Warning: Social Security faces a 23% cut

[CousinIT]

Here are some of those painful steps that can be taken to shore up Social Security:

Raise the retirement age. It’s already inching up. Americans born between 1943-1954 could get full benefits at age 66, but anyone born after 1960 has to make it to 67. But since life expectancy is increasing, there are proposals to keep raising it. One common proposal: lift it by a month per year. In either words, Americans born in year X might have to be age 67 and a month to get full benefits, and Americans born the year after that would have to be age 67 and two months, and so forth. After a dozen years, you’d have to be 68 to get full Social Security benefits.

Raise payroll taxes. That thing that says “FICA” on your paycheck? That’s what you’re paying into Social Security. It’s already pretty steep: 6.2% of all income up to $127,200 (if you’re employed by someone else, your company pays another 6.2%). The trustees say raising the payroll tax another 2.83% would help keep the program solvent. Another 2.83%? Ouch.

Raise — or eliminate — the cap on taxable wages. You’ll probably love this one because it doesn’t hurt you—unless you make more than the above-mentioned $127,200 a year. Right now, Americans pay into Social Security up to that amount, but beyond that threshold they’re home free. Big shots like Warren Buffett point out that subjecting all income to Social Security would be a huge boost to the program. The Center for Budget and Policy Priorities, a nonpartisan group, says “changes to the tax cap could close roughly a quarter to nearly nine-tenths of Social Security’s solvency gap, depending on how they were structured.”

There are other fixes too, but these are the three big ones. Again, the real question here is whether politicians can really inflict pain on voters. It’s coming one way or the other. Usually it’s best to change before you’re forced to; that’s what we’re dealing with here.

What makes this all the more interesting is that the report warning of big cuts is signed, first and foremost by the “Managing Trustee of the Trust Funds” Steven Mnuchin, who has a day job as Secretary of the Treasury. Right now, Mnuchin’s focused on pushing President Trump’s tax proposal through Congress, which aims to slash taxes, not raise them. In other words, the guy sounding the alarm on Social Security, warning something has to be done, proposes for now, to do nothing.

https://www.marketwatch.com/story/warning-social-security-faces-a-23-cut-2017-11-27

[dalton99a]

1. Gotta pay for those billionaires' tax cuts

[BeyondGeography]

2. The cap is the problem

Big fat solution staring us right in the face, ffs.

[Guilded Lilly]

5. It does seem too simple a solution doesnt it?

[brush]

13. It's a perfect example of Occam's razor (the simplest solution is most likely the best),

[brer cat]

10. It is such a simple solution

that I can't believe it hasn't been done. When I was working, I had many years when I passed the cap and I always thought it was ridiculous that some day my earnings above the cap would increase my ss payments, yet I paid nothing into ss for it. There is no justification for the cap being so low.

[Jim Lane]

16. Your earnings above the cap do NOT increase your benefits

This is one practical problem with raising or eliminating the cap. If the newly taxed portion of your wages increase your benefits, then much of the advantage to the system is lost. If your benefits don't increase, then the change undercuts the principle that each worker's benefits are based on what he or she paid in FICA taxes.

I personally favor allowing the benefits increase. If that means that some highly paid CEO can retire with a Social Security check of $50,000 per month, so be it. The solution is to recapture most of it through a much more progressive system of personal income tax.

[brer cat]

19. I don't recall the exact figures when I retired

but the amount of SS was based on a average of x years of earnings which would have included those higher earning years. I didn't notice if they only considered part of my earnings for years.

[Jim Lane]

20. I haven't retired yet...

but it's my understanding that the formula determines your initial benefit based only on the portion of your earnings in each year that was at or below the cap as it stood in that year (it gets adjusted for inflation).

The Social Security Administration has an online benefits calculator. You can figure your own initial benefit. Step 1 is:

Enter your earnings in Column B, but not more than the
amount shown in Column A. If you have no earnings, enter “0.”

Column A gives the cap amount for each year.

[Guilded Lilly]

3. Politicians are already inflicting pain on voters, without batting an eye.

[greeny2323]

4. Changing the tax cap is the easiest solution

We need to elect Dems to get it to happen.

[CousinIT]

9. Agree. This shortfall has been anticipated for decades.

No reason not to both raise the tax rate (I don't mind paying more for this) and change or remove the tax cap. It should be at least doubled if not tripled or quadrupled. Billionaires would whine but they ARE the minority and in a Democracy, what's best for the masses and what's most popular with the masses is what should be done. Besides, they can AFFORD to pay more tax much easier than most retirees can afford a 24% cut in social security checks.

[wiggs]

11. I don't think so. The boomers were anticipated and the formulas changed to

address the spike in retirees...but there's an un-anticipated factor that is causing a slight shortfall in the near future: no one could have foreseen that the wages of middle and lower income workers would be so flat since the 80s. Middle and lower income workers fuel social security revenues, but nearly all income growth since then has been at the top which does nothing for revenue increases.

[CousinIT]

12. Good point. I can't argue w/ it.

I think you're right. Yea wages have been flat since the 1980s. Raising the min wage would have been great for Social Security. Besides paying people a half-decent wage, that's what Republicans hate about raising wages. Dirtbags.

Raising wages, along with some of the other steps mentioned, would be the solution. I wonder if raising wages alone would fix the issue? I'm guessing not at this point?

[bullwinkle428]

6. That's why these fuckers are trying to push this tax heist through ASAP -

if they wait until 2018, then it's taking place in an actual election year.

[Chasstev365]

7. "Entitlement my Ass: We paid into it!

Robinhood in Reverse!

[Hoyt]

8. Similar Social Security Trustee Reports were written long before Trump ran or appointed Mnuchin.

This is not something new. The recommended means of solving the problem might be different than under Obama, but the problem is not new.

No one had the guts to address the issue under Obama, so here we are with GOPers in control. It won't be pretty.

[smirkymonkey]

14. K&R

[Kirk Lover]

15. How about we wait until a month before you die to pay out any benefits.

[Achilleaze]

17. K & R

[pnwmom]

18. They can lift the cap AND extend the tax to non-salary forms of income. Some combination

of these two avenues would fix Social Security.

As Hillary explained over and over during the campaign. . . .