Samuelson: Alternatives for fixing Social Security

[question everything]

ROBERT J. SAMUELSON NEWSWEEK

Alternatives for fixing Social Security

May 18, 2005

(snip)

We can no longer afford this system: its costs will overburden future generations and could weaken the economy. As Congress considers Social Security legislation, it ought to design a broad makeover of retirement. Americans should work longer. We're healthier and – as the number of new workers shrinks – society will need older workers. Social Security and Medicare were originally intended to protect the neediest among the elderly; they should not subsidize ever-longer retirements. Unfortunately, the odds of this sort of makeover are slim.

(snip)

By 2030, spending on Social Security, Medicare and Medicaid (which provides nursing home care) is projected almost to double as a share of national income (gross domestic product). To hold federal spending constant – again as a share of GDP – would mean eliminating almost 50 percent of the remaining spending on non-retirement programs. If we paid for higher retirement spending with taxes, we'd have to raise taxes at least 30 percent.

(snip)

My aim is to trim the increases in federal retirement spending by half in 2030. Because the projected increases are between 6 percent and 7 percent of GDP, the required savings is about 3.5 percent of GDP. Here's what I suggest:

- Raise Social Security's normal retirement age to 70 by 2030
- Cut Social Security benefits by 20 percent. Spare retirees whose wages were average or less than average.
- Raise Medicare's eligibility age slowly to age 70 by 2030. People from 65 to 70 could get the choice of buying Medicare protection.
- Require Medicare recipients to pay 20 percent of the program's costs through premiums. Beneficiaries now pay about 12 percent.
- Tax Social Security as ordinary income.

(snip)

These proposals will be seen as harsh. They aren't. People who reach 62 or 65 or 70 have no automatic claim on their juniors. Why is it that a couple in their thirties with two children, car payments and a mortgage should subsidize the retirement of a couple in their mid-sixties with no mortgage, whose children are long gone and who could still work?

(snip)

Doubtlessly many Americans prefer having someone else support their leisure. But that was not the original purpose of Social Security or Medicare. We need to move these programs back toward their origins.


Find this article at:
http://www.signonsandiego.com/uniontrib/20050518/news_lz1e18samuel.html

[Ganja Ninja]

1. Doubtlessly Newsweek is trying to regain favor with ...

the Bush administration.

[David Dunham]

2. What an as-hole. Social Security should be left alone.

[TheFarseer]

3. I don't understand how we get accused of not having any ideas

I've seen alot of ideas coming from EVERYONE. Rasing the limit at which income is subject to the FICA tax, raising the retirment age to 66 makes the most sense to me.

[rocktivity]

4. Remove the salary cap altogether, and the rate can be lowered

Oh, and roll back those tax cuts, too.

:headbang:
rocknation

[ibid]

5. The retirement age is 67 now (fully phased in by 2027) - age 66 for 1943

births now, for example.

[TheFarseer]

6. huh, well why the heck is Chuck Hagel touting

raising the retirement age to 66? I though he was anyway. Anyway, raise the retirement age is the point, although I'm not sure I would be for raising it much higher than that.

[ibid]

7. The raising the retirement age idea is to do so in the 2027 to 2039

time period and to make it 68 at that time (by the year 2038).

And Actually based on likely life span increases and health increases it is a good idea - except they must - and under all proposals will - retain the ability to retire at 62.

Based on the current projections no change is really needed IMO

But if a change to age 68 will bring along an end to the wage cap, the net net will be very progressive - what will happen is that there will be excess funds in future years which will allow a cut in the basic payroll tax rate.