I was on a call recently, listening to somebody talk about a federal revenue committee that has been discussing ways to rearrange tax burdens and increase revenues. This person mentioned that one proposal under consideration was doubling Social Security. Two people in the room laughed.
I don’t have the details. This isn’t the sort of proposal that gets reported in the news. I assume the idea would be to raise withholding and employer-paid rates immediately, with increases in benefits to be phased in over time. People who are currently retired and not paying into Social Security would receive no increase. People who have been paying in at the new rates for a certain number of years would receive fully twice the benefit when they retire that they would now. Everyone in between would be affected based on years at the new rates.
I can see that this would be an appealing place to look for revenue. Because Social Security benefits paid now are funded by Social Security taxes paid now, the lag in increased benefits would substantially increase the current Social Security surplus. That would make those funds available for other uses. Instant additional funding.
This isn’t accounting funny business exactly. Social Security funding has always worked that way. We run funding surpluses. Eventually, the benefits paid out would catch up somewhat, making the situation then closer to today’s situation. In the meantime, there would be no worry about the boomers being a drain on general funds.
Sounds good, right? Well, then why did people laugh? Why is this idea outside the Overton Window?
A lot of the reflexive ridicule comes out of the last few decades of messaging from politicians and conservative think tank “scholars” who were tasked with taking Social Security private. Two market busts and a long stretch of recession have effectively killed that idea for now, but the messages are still out there. Nor have the counter-messages made much headway in these days of big corporate media.
This week, I want to do something about that. I’ve identified several things that people don’t know or don’t fully understand about Social Security after decades of miseducation. Each day this week, I’ll be taking a closer look at one aspect of Social Security or retirement funding. Here is a list of posts I have scheduled.
- It Isn’t Broke
- We Suck at Money
- We Aren’t Investing
- Corporate Retirement Funding
- The Perqs of Retirement Security
Have questions about Social Security? Have technical reasons why you don’t think doubling Social Security would be beneficial? Feel free to add them in the comments here, and I’ll try to make sure they’re addressed.
If, instead, you object to Social Security being increased based on philosophical grounds only, that’s nice. You can do that. Anyone trying to turn my comments section into yet another paean to economic libertarianism will like find themselves booted, however.
Disclosure: I work for a company that has official positions on these issues. The positions I present here should not be taken to reflect the views of my employer. Additionally, I have no influence on the positions of the company that employs me. These views are mine as a private individual.