Social Security Merits Support, Not Disdain

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There is an option besides raising the retirement age or lifting the income cap. When Bush came out for Social Security 'reform' he immediately removed any consideration of payroll tax increases. That was non-negotiable. But he is gone now and we are not bound by his positions.
The current gap between income and cost over the 75 year actuarial window is 1.7% (2008 Trustees' Report). That is probably too low and we should be conservative and use the typical average projected gap from the 1999 to 2007 Reports which would put us somewhere around 1.95%. Per the Social Security Trustees a family earning the median would have to accept a annual tax increase of $975 to totally save Social Security for everyone ($50,000 X 1.95%). If as now half of that was covered by the employer you would have that family out $487.50/yr or $1.33/day.
Lets say that instead you had an entry level job at $10/hr that also miraculously had two weeks of paid vacation. That translates to $29,120/yr. Accepting your half of a 1.95% point boost in payroll tax equals $283.92/year or 78 cents per day. Do you really want to work an extra couple of years past the current ceiling of 67 simply to save yourself the price of a can of Coke?
And of course you could mix and match. The influential Liebman-MacGuineas-Samwick Plan proposes a cap increase that scored out at 1% of payroll. Meaning that we could cut the increase for the median household in half. Meaning the cost of a total Social Security fix for the $50,000 household would be $237.50 per year or 65 cents per day. For that $10/hr worker 37 cents per day.
Yet you never, ever hear of a straight out payroll fix, not even as part of the solution. Because most reformers do not want to mend Social Security, they want to end it. If given the tradeoff between working for two extra years or paying 37 cents a day which choice would most lower income workers choose? Which is why this particular choice is never offered.

Bruce Webb of WA 12:21PM March 19, 2009

I cant get hired at 70, but would like to work; ss is a life-safer for me. I appreciate ss to the max!

William Clark of AZ 11:47PM March 18, 2009

I paid into Social Security for years. I am a recipiant....I think it is a life saver for me and for many others. Also, the Medicare benefits ---I have no gripes. I just appreciate it.

Mary Newlon of NC 10:53PM March 18, 2009

I need to differ with the poster above who states that food and gasoline are not included in the cost of living adjustment. He/she can see the calculation here: http://www.ssa.gov/OACT/COLA/latestCOLA.html
Then go to the Bureau of Labor Statistics to compare numbers with and without these two items. http://data.bls.gov/cgi-bin/surveymost?cw
Simply noting that benefits increased 5.8% this year should convince most people that food and gasoline were included.
That said, be aware that before-retirement indexing uses wages instead of prices.

Paul of IA 9:08PM March 18, 2009

Out of experience, I can tell you that Social Security is the safest and surest thing going for us. I lost my pension when the company I worked for, for 22 years went down the drain. I have lost so much money during this financial crisis on my 401(k) I was in tears along with my sister who has lost much on her IRA and my cousin who said she called irate at the financial person who recommened she put part of her money into an annuity account--where she has lost much of her hard-earned money. I worked HARD for 48 years of my life saved money, opened a 401(K) contributed to Social Security and Medicare and here we are, my sisters, my friends, and others who worked hard and saved and now find ourselves with little money left after losing almost half in our retirement accounts. Social Security and Medicare are not the problem---the problem is the administrations, like Bush, who toke money out of Social Security, who allowed lobbyist to take money from Medicare to enrich the Pharma and insurance industry. If the 30 and 40 year olds allow the greedy insurance industry to privatize either of these programs what do they think they are going to do with their elderly parents or grandparents---allow them to starve to death, throw them out in the streets? What we need to do is DEMAND Washington protect and secure both SS and Medicare or we will all suffer.

someones's mother of IL 4:18PM March 18, 2009

"The third "easy fix" target is the annual inflation adjustment for Social Security payments, which could be unsweetened a bit."
Well I beg to differ with you Mr. Moeller! As a recipient of SS I have to point out that the last Administration managed to redefine the calculations that comprise the calculation for the Cost-of-Living formulations.
Surprise, surprise, these oh so "compassionate conservatives" removed the cost of gasoline and FOOD from the calculations, resulting in drastically lower COLA adjustments!! And adding insult to injury, at least in MY case, when my checks were adjusted three or four dollars a month upward, my FOOD STAMP allocation plunged 25 to 50 DOLLARS a month. So when I do my basic arithmetic, I come out with LESS than I had on two counts!! This is hardly a "sweet deal".
In fact, I call it a royal pain in an excretory orifice! I feel I am already contributing to a reduced Federal government expenditure situation twice over!!!
In all fairness, we DID very recently receive the first increase in basic food stamp allocations across the board for the first time in I believe it was 18 years. Presumably, the policies of reducing Food Stamp allocations by 3 to 4 times the amount of SS COLA payments will just resume from a higher starting point.
I'm holding on, and I honestly consider myself better off than a lot of other people -- that said, please don't call THIS a "Sweet Deal" until you've spent a year on the program and see for yourself.

Gerry of NY 3:36PM March 18, 2009

Here are two fixes. Stop paying Social Security to anyone that did not pay into it. This would include legal immigrants, illegal aliens and anyone else. In the 1970's Social Security was opened up to people that never paid a dime. This was compounded by the government changing the laws to allow the government to "borrow" from it. All the money in social security is gone, all that is left now is a big IOU from the government.

Stopthepork of CA 12:56PM March 18, 2009

if they think Social Security is a bad deal.
I'll bet a cookie that many/most who think that have spent years listening to the Fox News Channel and Rush or Hannity on radio.
The fact is, with insurance companies in worsening shape and pension plans disappearing, the ONLY annuity product you CAN count on is Social Security. And you CAN count on it as long as you continue to elect liberal politicians. It's that simple.
As for "fixing" it, there is no current fix needed. We certainly should not be taxing the upper excluded wages for THIS program.
We should be taxing the upper excluded wages more heavily with income tax instead, for the benefit of the overall federal budget.

Muser of NM 11:16AM March 18, 2009