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How to fix Social Security

February 17, 2011

One simple fix for Social Security that won’t even affect 98% of American workers: raise the Social Security payroll tax ceiling back to where it was under Ronald Reagan.

See Mark Thoma qu0ting Robert Reich* on “Why Social Security Isn’t a Problem”, Feb 17, 2011. Mark is an economics professor at the University of Oregon. Yes, he and Reich are boths liberals. But this is just simple common sense. Beyond that, Ronald Reagan OK’d it 28 years ago, so it can’t be all that horrible to your average conservative.

Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation. Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. …

…Today, though, the Social Security payroll tax hits only about 84 percent of total income. It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. …

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000. Presto. Social Security’s long-term … problem would be solved.

A logical person would wonder why this solution isn’t being talked about these days. Robert Reich succintly gives the answer:

… it’s probably no accident that the solutions being considered fall on the politically less powerful while raising the cap hits the politically well-connected.

Nice. The wealthy, who probably don’t really need their Social Security checks after retirement, are keeping us from even having a discussion about the one, simple & easy fix for Social Security. Instead they’ll let all us peasants argue about raising retirement ages and cutting benefits. Super. What’s that old saying, “kill the rich”? I say we eat the rich.

*Robert Reich was Labor Secretary under President Bill Clinton. He was also a  trustee of the Social Security trust fund.

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