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Home Publications Blogs Beat the Press Great Piece by Thomas Edsall on Social Security

Great Piece by Thomas Edsall on Social Security

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Thursday, 07 March 2013 05:33

This one should be mandatory reading for reporters as well as anyone else who comments on the topic.

Comments (7)Add Comment
...
written by skeptonomist, March 07, 2013 8:45
Strangely, Edsall seems to go along with the idea that SS will be "bankrupt" if the large surplus in the Trust Fund is exhausted about 30 years from now. Of course this is exactly what has been planned all along, and the level of benefits in 2040 or later is something that can be decided by people then - there is no need at all to decide this now or to set aside any money for SS benefits after that. Does Edsall not understand that SS is not basically a funded retirement plan? Certainly that seems to be the general misconception. It would help if supposed authorities would explain it once in a while.
SS is progressive
written by Arne, March 07, 2013 10:05
I found it unbalanced. Edsall spends most of the article talking about the regressivity of the taxes without explaining the progressive nature of the benefits.

The term "saddled" in "the elderly will be saddled with increased expenditures for medical care and other necessary services as they age" deserves the same derision you heap on "soaring debt" in other posts. Increased medical expenses simply go hand-in-hand with living longer.

I am biased in detecting bias since I prefer a different solution, that suggested by the NASI poll. SS should be funded by its beneficiaries. Since it costs more to live longer in retirement, we should be contributing more. Someone making $300K does not benefit more than someone making $150K, so why should they pay more?

Social Security has enough to contend with without trying to use it to solve the income inequality problem. Tax capital gains the same as wages first. (BTW, capital gains is extremely volatile and should be directed to paying down debt rather than used to support ongoing programs.)
Increase everyone's payroll taxes, if and when necessary.
written by Mike B., March 07, 2013 10:56
I have no problem with advocating the elimination of the cap, but I think the wealthy can prevent it. Raising benefits would also be good, but I don't think it's politically feasible now. Therefore, I'll settle for maintaining currently scheduled benefits, with small, gradual increases in payroll taxes, if and when necessary. Do nothing in years in which the projected trust fund ratio is over 100% for following 10 years; if not, raise the payroll tax a little.
Error in 5th Paragraph
written by trast, March 07, 2013 12:25
Hard to go on after this blatant error.
Medicare, in turn, is financed by a flat 1.45 percent tax on the first $200,000 of earnings for a single person and $250,000 for a married couple, matched by the employer, after which it rises by a modest 0.9 percent on all income above the $200,000 and $250,000 levels.
.....1.45% tax (plus employer 1.45% tax is not capped.
Medicare tax
written by Mike B., March 07, 2013 1:00
There are some errors in the article, but the Medicare tax is correct: 1.45% (each for employee and employer) on all income, plus *another* 0.9% for income over the $200,000/$250,000 threshold. The latter is a new tax this year.
Medicare Tax
written by trast, March 07, 2013 1:45
Mike B. - the article (5th Para) seems to state he thinks the 1.45% is capped at $200K/$250K. The SS cap should be eliminated or increased as you suggest, but the political will to do it not apparent(still surprised the 2% payroll tax holiday was allowed to expire).
...
written by urban legend, March 07, 2013 2:05
Arne is correct. The piece has some severe weaknesses. The Social Security retirement portion of FICA is not regressive because the benefits are capped, too. It is run like a defined-benefit plan, with contributions increasing future benefits, and, as a matter of law, is completely separate from the rest of the Federal budget. Some progressivity is built into the benefit formulas, but it still provides a reasonable benefit based on contributions even at the capped level.

The idea of lifting the cap depends substantially on viewing Social Security as part of a "unified budget," which as a matter of law does not (and should not) exist. The right answer, also advocated by Coberly, after a few more years after a period of economic growth so we can have a better idea whether any changes really will be necessary, is gradual, minor increases in the tax without messing with the benefits.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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