John Rother, AARP’s director of policy, "Redeeming the trust funds is a sacred commitment, since they represent prior contributions from workers to fund their own benefits. Failing to do so would break the intergenerational compact that’s the foundation of Social Security."
http://www.aarp.org/bulletin/socialsec/Articles/a2004-12-28-success.html Don’t Mess With Success
There’s nothing wrong with Social Security that a few changes can’t fix
By Merrill Goozner January 2005
<snip>The simplest adjustment would be a slight increase in the payroll, or FICA, tax. According to the Social Security trustees, if the tax on wages today were raised by less than 1 percent each for employee and employer (from the current rate of 6.2 percent each), Social Security would be solvent through 2077.
Another proposal is to "pop the cap"—to raise the point at which wages are no longer subject to Social Security taxes. Congress set the level in 1983 to cover 90 percent of all wages. The wage cap today is $90,000. But top earners today have a larger share of the income pie, and the portion subject to tax for Social Security has fallen to 84 percent. Using the projections of the Social Security trustees, raising the wage cap to about $140,000 would provide almost one-third of the requirement for solvency for 75 years.
It’s worth noting that a recent report by the Center on Budget and Policy Priorities, a Washington-based research group, concludes: "If the 2001 and 2003 tax cuts are made permanent, as the Administration has proposed, their cost over the next 75 years
will be more than five times the Social Security shortfall over this period."
Another source of payroll taxes could be newly hired public employees. Edith Fierst, a lawyer who was a member of President Clinton’s Social Security Advisory Council, says that currently nearly 7 million local and state employees are not covered by Social Security but rather by employer-operated retirement funds. Bringing new workers into Social Security would help fund the system.
BENEFIT CHANGES
Some adjustments have been made, and more are likely. The rise in the normal retirement age from 65 to 67 already constitutes a benefit cut. And more people are paying taxes on their Social Security benefits. Other changes to benefits could include modifying the cost-of-living adjustment, raising the normal retirement age even higher and calculating a person’s initial benefits using price increases rather than wage increases.<snip>
Barbara B. Kennelly, head of the National Committee to Preserve Social Security and Medicare, says private accounts change the intent of Social Security. "What the president’s plan does is take Americans out of the community pool, where we share the risk, and put each of us into our own pool of one to fend for ourselves," she says. "That’s fine if you’re rich.
"Of course, we have to make changes in years to come. What we don’t have to do is dismantle the current program to do it."
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