Social Security

As has been pointed out elsewhere, Social Security is not in a crisis. There are many more serious problems to worry about than the possibility that the Social Security trust fund will be depleted in 40 years — and at that point, income will cover only 80% of the expected benefits for a while.

The graphic from the Congressional Budget Office tells that story. This Current Law graph shows that under the current plan, revenues will equal outlays (benefits) in 2019.

Between then and about 2053 outlays will be partially financed by the surplus built up in the Social Security Trust Fund. After 2053, outlays would be reduced to equal revenues.

[The CSSS Plan 2 graph projects what would happen under the anticipated Bush proposal. It excludes the funds invested in personal accounts. So that graphic is not the whole story of the Bush plan. See the report for details.]

If one really wanted to worry about the so-called crisis, here are two suggestions.

1. Invest at least some of the current trust fund in index funds in the stock market. If, as Bush suggests, the stock market provides greater returns than US government bonds, then why do we have the Social Security Trust Fund invested entirely in US Government bonds? Put some of it in stock market index funds.
   
   
2. As you probably know, social security is funded by the most regressive of all means to raise public funds. It is a fixed-rate tax on the first $90,000 of income earned as salary and wages. How about raising the limit, or even eliminating it entirely, as we do for Medicare. That would probably solve the problem right there. And if it didn't, how about taxing income from other sources than salary and wages?

I'm sure that between these two suggestions, the so-called crisis in Social Security would be eliminated.