General Discussion
In reply to the discussion: Sitting in a restaurant today I realized how much trouble we are in for [View all]HiPointDem
(20,729 posts)There is no reason to do ANYTHING "sooner rather than later" except rescind the stupid payroll tax "holiday" and start repaying the borrowed $2.5 trillion.
1. There is currently sufficient income to pay out benefits.
2. The US government owes $2.5 trillion dollars to the program. It mostly went to fund income tax cuts for rich people, and it should be repaid from income taxes (which are mostly paid by the rich and by capital, not labor) before any additional taxes or cuts are taken from labor.
The key facts, which are developed in detail on the following pages, are below:
The deterioration in the 75-year actuarial balance of Social Security that has occurred since 1983 has been caused overwhelmingly by economic developments, trends in disability incidence, and programmatic changes to Social Security.
Sixty percent of the current shortfall would be eliminated by a reversal of two adverse economic trends that have emerged since 1983: sluggish growth in average (real) wages and erosion of the tax base due to rapid growth in the inequality of earnings.
Reversing the demographic change most commonly identified with placing strain on the Social Security systemdeclining mortality rateswould eliminate less than 5% of the current shortfall.
The essential argument made by those who support radically overhauling Social Security through private accounts and the reduction of its guaranteed benefits is that demographic trends will result in fewer workers supporting each retiree, making the economic burden of caring for retirees too great for workers in the future. This falling worker-to-retiree ratio is identified as the primary cause of the long-run financing shortfall facing Social Security. However, this focus is misplaced; in fact, the lions share of the current actuarial deficit is the result of unfavorable economic trends, especially slow real wage growth and a rapid increase in wage inequality that resulted.
http://www.epi.org/publication/ib207/