Advocacy / Finance / Politics

Rethinking Social Security – Without Higher Taxes

social security

Social Security is among the least favorite topics for politicians – in either party.  Democrats often raise it to justify new taxes and accuse Republicans of planning cuts, while Republicans stress solvency. 

Here is some truth.  Younger Americans tend not to think about it, most older Americans depend on it.  As the number of eligible Americans swells, pressure on Congress to keep it solvent rises.  Congress hates hard decisions.  Accordingly, members agree on the problem, put their head in the sand on solutions.

That cannot continue.  By varying estimates, Social Security will either continue to be mismanaged and collapse by 2034, or responsible, long-term thinkers will take the helm, avoiding the iceberg.

While few want to think about it, assuring sustained solvency for Social Security is complex, politically difficult, and yet also essential.  No one wants to wake up one morning to headlines saying no check, federal commitment has lapsed.

Notably, just as hard cases make bad law, so do crises. A balanced, fiscally responsible solution to Social Security insolvency is possible, but that takes forethought – not massive cuts or new taxes. 

Another untenable idea was lofted last week by Democratic Congressman John Larson.  His solution is new taxes. His plan – without being moderated – would effectively raise taxes on those who work hardest, especially small businesses, gradually spreading them outward to more employees and employers. 

The goal appears to be a slight-of-hand, higher taxes obscured by higher benefits.  Just boost federal revenues, buying off Republican members with higher benefits to some constituents.  Missing are ways to raise labor participation of older Americans, reward saving and working, prompt younger workers to open private saving plans. 

Haven’t we heard this before?  Yes, this has been the chant for 80 years. Give me your money, give me more, grow the federal government and we promise to give you a piece of the action. 

Buying votes with empty promises, centralizing power at the federal level, and seeding a progressively Socialist state is not new.  The idea of raising taxes, year over year, on those who work – to finance Congress – is also not new.

In August 1935, Franklin Delano Roosevelt bemoaned the government could not assure “100 percent of the population against 100 percent of the hazards and vicissitudes of life,” a goal that would obviously be unattainable but lodge enormous power in the Government, usurping personal responsibility.

Instead, FDR pressed Social Security, having the Federal Government do what people might not for themselves – save.  He argued people would “reap direct benefits,” drawing from a bottomless well.

Today, while Congress bickers over discretionary spending, three-quarters of every tax dollar goes to entitlements.  Sadly, while we paid into the system, the return is anemic.  The federal government long ago spent our money.  

That is where the Larson promise picks up – He offers another chance for the big payout through higher taxes.  It puts one in mind of Lucy offering Charlie Brown another swat at the football, which she will again pull away.

So, what is the answer?  Groups like AMAC offer – in detail, with balance and respect for those who have paid in, but no false promises – a way forward.

Keeping Social Security solvent did not worry FDR.  It should us.  A way forward was mapped by AMAC in March of 2019.  It does not involve raising taxes.

In short, the goal should not be pie-in-the-sky promises, but a “path to long term … trust fund solvency without raising taxes.”  The 2018 Report of the Social Security Trustees said, absent reform, the “trust fund reserves become depleted by 2034.”   That should be spur enough.  

The answer must be tied to economic growth, gradual adjustments and realism, not to slap-dash taxes, eroding private sector growth, higher levels of dependency, and fairytale windfalls.

Specifically, AMAC offered balance with integrity, their top five recommendations:  Prioritize solvency, not revenue hikes for elevated benefits.  If Congress wants to increase benefits for low earners, find offsets in the bill. Recognize how much Americans have paid into the system; work to treat earners more equally.  Offer incentives that permit earners higher retirement income, with less federal dependency. Assure long-term Social Security solvency by enabling states to improve fiscal management.

In short, guarantee solvency but do not do so by raising taxes.  COLAs could be tagged to Adjusted Gross Income (AGI).  Social Security benefits should be excluded from an individual’s gross income, eliminating “double taxation.” 

If FDR promised a Depression-era safety net, lets enhance survivor benefits – perhaps make adjustments with an age setback for new retirees, even as percentages surrounding early retirement remain unchanged.  

In short, while no one likes to talk about Social Security, “AMAC believes that the implementation of key structural reforms enacted by Congress provides the opportunity to evaluate their efficacy and sufficiency for long term solvency” of the Social Security Trust funds. 

To get to there, we should take taxes off the table, think in terms of perpetuating our high growth economy, remember Social Security was born in the Great Depression, when unemployment levels were off the charts. Today’s economy is not that one.  Not needed are higher taxes on young families – acting responsibly and trying to save for retirement. 

Moreover, we should generally want higher levels of labor participation, not more incentives to leave the labor market. That is neither a fruitful national objective – or good reason to raise taxes.

Balance and long-term thinking are the missing pieces.  Until we get real about what we want and why, we will continue to snarl at each other and blame each other for snarling.  One thing we all know:  Like open-ended tax hikes, that is no solution.

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Glenn Scott
2 years ago

No one should be receiving SS benefits if they didn’t contribute into it.

Howard LAST
2 years ago

Social Security does not need to be fixed; it needs to be repealed outright. The problem is how to make whole all our citizens that had their funds stolen over all these many years. Yes stolen, what else would you call it when something is taken under duress? Don’t pay your FICA and see what happens. There is a simple way to get their money back, just abolish all items in the budget not authorized by the Constitution. This would give better than 90% of the budget available to give their money back with interest. It would have an added benefit of getting Big Brother out of our lives.

How many people are aware that Social Security was the idea of Otto Bismarck and that Adolph Hitler refined it? Joe Stalin’s best friend FDR fits right in with these two great humanitarians. Bismarck made the retirement age 65 because most people did not live to 65. My father died at 62 and did not receive a dime that was stolen from him. I was self employed and put away in my own retirement fund approx. the same amount as FICA. I now receive a return about an order of magnitude (ten times) greater than Social Security. I retired at 57 and am now 74.

If Social Security is such a great deal how come it is not voluntary? Did Bernie Madoff put a gun to anyone’s head and say give me your money? So how come he is in jail and our politicians are free? No one was ever forced to join a Ponzi Scheme, but Social Security is a different matter.

Call Social Security by its proper names, “Stealing from your Children and Grandchildren” or “Bribing you with your own money”.

Anyone know which Section of the Constitution authorizes Social Security.

So anything other than abolishing Social Security outright is just a slight difference from what AARP and the crooks and/or mental midgets in Washington are doing or want to do. Modifying Social Security will not make it Constitutional or give you a better return than investing on your own.

Kathleen & James Miller
2 years ago

Keep social security relevant! Pay back the
money that Obama took out for Obama stole!!

Paul Brixner
2 years ago

I agree with Bob Evans; don’t put Social Security Money in the General Account where our politicians can use it for something other SS payments to those Americans who earned it. Invest SS money to get decent returns with responsible investors.

Nasty Nat
2 years ago

Politicians have been robbing SS and Medicare for years without even leaving an IOU. They have neglected SS and Medicare for nearly 50 yearsshould have acted 50 years and have little or no interest in making SS or Medicare solvent, since they do not collect SS benefits or are covered by Medicare. They only enjoy stealing funds from both when they’re desperate for money. Put SS and Medicare back in a trust, not the general account and stop taxing SS payments that were paid already.

Meri Coury
2 years ago

I liked the idea some years ago whereas we STOP putting our retirement into social security and PRIVATIZE it so the federal government can’t get their sweaty palms on it! I do not understand why Democrats don’t like that idea. I guess they like being broke.

Terry G.
2 years ago

Since the SSA has become a very low paying investment PONZI scheme run by the government the following needs to be implemented: First, the government cannot be allowed to touch SSA $….EVER. It should be overseen by an independent management team. Second, the $ needs to be invested and credited to each individual. Third, deductions should be on all income not to a limited upper amount as now. Fourth, do away with the present retirement program of all government employees and officials and require them to participate in the SSA. No separate retirement system as now. They are servants of the people not princes and princesses.

Anita Johnston
2 years ago
Reply to  Terry G.

Terry G, YOU ROCK!!!!!!!!!! Best idea yet. Anita J.

2 years ago
Reply to  Terry G.

Actually that was the case many years ago, Government employees did not pay SS as they do now but they were eligible for SS as everyone is now. Their retirement and SS we blended (referred to as off set) and capped. Then one day someone was young enough to retire from the government and was able to obtain enough SS quarters to qualify for SS benefits separate from their government job. After years of court battles it was determined government retirement, firemen, police, and air traffic controllers retirement is separate from SS. So you can collect from both if you are eligible for both. That also applies to the military. This was not a popular ruling and bills are introduce frequently to reverse the decision.
And by the way, government employees are not servants. They serve the public as employees, not as slaves or indentured servant as you implied.

2 years ago

First, put my retirement age back to 65! Replace the $2trillion, swiped by politicians, by taking a cut of oil profits that someone is getting. I don’t mean the company producing the oil, I mean the country of America…if we are indeed the world’s biggest or second biggest energy producer…then sell some…put it in a Social Security fund/safe investment…that cannot be stolen by politicians! (Use the rest to pay down the deficit!)
Stop punishing ME…by taxing me more, moving the goal post by age, or yakking about cutting benefits!
We should not be in this position!
DANG A BUNCH OF POLITICAL HACKS! This can be fixed if brave an honest elected officials get after it!

Tom Willenbring
2 years ago

1, SSA payments into the system top out at a certain level. While I enjoyed that cap on FICA taxes when it happened around late October each year, it was not required for me to pay my bills and save some for my retirement years. To help regain solvency of this system so vital to some retirees, I think high wage earners could continue to pay into the system even after reaching the magic maximum earnings threshold, and beyond.
2, Double taxation is not fair! One bite of our earnings apple is enough. Exclude SSA benefits from the taxation puzzle.
3, Give wage earners the option of investing in private plans. SSA has been proven to fail in its main mission of providing retirement funds. Instead, it has proven to provide less than what is needed for the beneficiaries to exist above the poverty level.
4, Now that the USA is self-sufficient in our oil reserves perhaps we should adopt the Saudi Arabian plan of paying our citizens (not the illegal aliens/criminals). Of course, we should pay off our NATIONAL DEBT first and then start the PAY THE CITIZENS PLAN!
5, Adopt the FLAT TAX! 5% tax on gross income from all sources. 10% consumption tax (sales tax). Eliminate all other taxes and fees for GOVERNMENT SERVICES! Fees for private services would remain as they would be part of the gross income.

Vicky Kramer
2 years ago

You are adding another tax: Sales tax to which Congress will always raise income and sales tax rates.

Pat R
2 years ago

The first thing that MUST BE DONE before any real fix should be instituted is to legally lock up the Soc Sec Trust Fund from Congress. It will still be under a government agency but without any Congressional ability to tamper with it’s usage whatsoever.

2 years ago
Reply to  Pat R

That’s the best idea I’ve EVER heard!!

2 years ago

When SS was passed; the law said it could not be taxed. That went down the tubes but the taxed money doesn’t go back into the SS fund like it should it is spent by Congress in the budget. Both parties have been stealing it for other purposes since 1965 including setting up and funding the Peace Corp. There are IOUs in the pot. it’s time those IOUs are repaid and if they have to take the Congressional pension plan and convert it to SS so be it.
They also need to take off the yearly limit and pay the tax all year like most of us do but CEOs are done by 2/1. Now that entire fund is OUR money only. We paid the FICA taxes in good faith as insurance for our retirement and it was matched dollar for dollar by our employers in our name. We ARE ENTITLED TO THAT MONEY. It is not welfare, it was insurance. It was never set up to balance anyone’s budget, but in 1965 LBJ moved it to his general funds to MAKE his budget LOOK balanced after he escalated the Nam war. Congress saw a pot of gold, both parties. They thought it was THEIR money to spend. So its time to take off the taxes on the taxed money we paid into SS all our working lives. Wasn’t there a tea party a few centuries ago for taxation w/o representation and double taxation???? And We the People won. In 2016 a bipartisan committee in the House STOPPED the taking of more funds. What happened in 2017-2018-2019 I’d like to know. The House controls the budget and the spending.

2 years ago

How about paying back the money that the federal government has taken from our social security fund and used for other government activities? Now they are talking about providing medicare for illegals. I personally have worked for many years throughout my life and so I have invested in the social security program. Now that it is time for me to take some of the money that I invested, they are talking about how they are going to deal with the shortfall. If I had invested that same amount of money in the market, I would have much more than I have now. My social security check is not an entitlement, it is money that I put into the system that I am now accessing. It was earned.

2 years ago

Why is SS listed as an entitlement? We paid into a fund that promised a return on our investment. Does the payment by a company as a dividend considered an entitlement?

2 years ago
Reply to  Dave

If you are entitled to it , it’s an entitlement. You can call it what you want, if you earned it it’s yours. You’re entitled to collect it. If I have a combat injury that is acceptable to the VA, I am entitled to VA care. If I invest money at 3% I am entitled to that dividend.

Judy ball
2 years ago

SS. Is just not enough to live on. What we had saved went during the Obama years. Because our business went downhill. By the time we pay our monthly bills we have less than $300 for gas and groceries for the month. My husband has to take extra work to pay for car insurance and repairs.
Thank God he is still able to work.

Vicky Kramer
2 years ago
Reply to  Judy ball

SS wasn’t meant to live on. It was meant as a supplement.

Penny Webster
2 years ago

Please AMAC get er done!!!!!!

Bob Evans
2 years ago

Why don’t we just invest social security for good returns, just as the Canadian’s do. Do not put the money into the general fund where it is a political target.

Dwight Baker
2 years ago
Reply to  Bob Evans

We can’t, because the vast majority of Congress critters are corrupt, power hungry sociopaths. Taking money away from their control is a non-starter. As long as we allow people to vote who make up their mind how to vote based on lies they see on TV, that is going to continue to be the kind of politician that gets elected. After the hyper-inflationary currency collapse that now seems inevitable, we will have a window of opportunity to make needed constitutional changes.

J wolf
2 years ago

I just wander if a portion of SS had been invested in stock market the last 3 years what it would look like, I know of Penion’s that started doing that some 40 something years ago and are in the top 10% of funds in the country today.

I Am M.O.TheR.
2 years ago

No one asks the important question: Where is the missing $2 Trillion? Of course SS is going broke and Medicare costs are continually being shifted onto the patient just like Obamacare did! If you want to better your retirement funds and get free healthcare, go to Mexico, throw away your ID card and come back across the border claiming asylum! Then the criminal elitist Congress will bend over backwards to take care of you.

Meri Coury
2 years ago
Reply to  I Am M.O.TheR.

Everyone knows where it is. the Democrats SPENT it! (It says that “The federal government long ago spent our money.” It’s in paragraph 12)

I Am M.O.TheR.
2 years ago
Reply to  Meri Coury

If one thinks paragraph 12 is an acceptable answer to the question then they are surely happy accepting less then half of what was promised. And no doubt will be completely giddy when the amount is reduced further, or the rules are changed, by Congressional mandate to save SS. The question isn’t about who spent the money, but where did it go and why!

Mary Lou Hults
2 years ago

I worked for SSA for 21 years as a technical expert. Several times congressman hosted town hall meetings. I talked to them about several ways to save money, but none if them were really wanting to listen. They said my ideas wouldn’t save enough. Even saving several million seems a goid start.
Anyway, I’m sure anyone who did my job could suggest several ways to help keep SSA solvent longer. Those measured coupled with the “experts” who do this for a living should be able to help.

Vicky Kramer
2 years ago
Reply to  Mary Lou Hults

What are your idea’s? List some.

2 years ago

Unfortunately, this is a loose/loose situation. Social Security was never meant to be an entitlement program. It was meant to be a welfare program for the destitute, extremely poor and the disabled. So how do we get this back on track?

I think we can do this by removing the entitlement part from SS and make it a separate program. Similar to an encouraged or mandatory Thrift Savings Program. You have to pay into the program to get money out of the program. And you only get out what your account has in it.
This way we separate the Social Security Welfare program funding from the Entitlement Program funding completely.

The general tax fund will pay for the Social Security Welfare Program (totally separate from the Entitlement Program).
You will pay your mandatory entitlement tax separately based on your salary (you and/or your company can pay extra).
At age 70 you get Medicare A.B and D added to your entitlement tax. At age 72 you can apply for your entitlement. You do not have to take your entitlement until you want to and it will be calculated at the time you take it. But you can not take it prior to age 72.

At age 80 your entitlement will no longer be taxed and you will still receive your entitlement and Medicare A,B and D.

This may leave a lot of folks at the door of the Social Security Welfare Program looking for help. We can assist these people in various ways.

2 years ago
Reply to  LTC S

On other words and in simpler terms, just move towards a privatized SS over a 10 year period and allow people to control what their money is invested in over the course of their working lives. Get government out of the retirement business and just handle the extremely poor and disabled via extensions of various other federal welfare programs. SS was never designed to function as what it has been marketed to the general public over the last 60 years. It was originally intended to only deal with the destitute living long enough to reach the official retirement age and provide them with a subsistence living standard. Politicians quickly learned they could make all kinds of promises and extend benefits to everyone, while also re-directing money from SS for other pet projects and nobody would care enough to stop them. So now SS is little more than a financial grab bag for politicians to toss around money to buy votes. All while screaming the money is running out.

The reality is most of those over 50 are stuck with whatever the current SS system can provide, because they don’t have enough time to make up for all the time and financial returns they missed by contributing to the current system. Those younger than 50 should plan for their retirement as if SS doesn’t exist, because any of the proposed plans being discussed in Washington will have the SS program so means tested to death by the time they retire, that only a small sliver of people will qualify for getting anything.

The whole notion that people need the government to create a program to collect a tax (confiscate their money because they can’t trust that people can’t handle their own money) from them to then invest that money, in ridiculously under-performing T Bills and Notes, to then get back a pathetic return is and always has been totally absurd. Most people would be retiring with anywhere from $750,000 to $1,000,000 in retirement assets, if the same amount they paid into SS was instead invested at a modest 5 percent annual rate of return over the entire length of their working careers. The lack of financial literacy by most of the general public has been the greatest asset to politicians in keeping people tied to the notion of a need for a SS system. Anyway, this view isn’t very popular so I’ll just call it a day.

2 years ago
Reply to  LTC S

How about we return all the borrowed moneys for a starter

2 years ago
Reply to  LTC S

I disagree with this is for the extremely poor! I worked for 40 years and paid ss, so why shouldn’t I expect my payments back? People who are in politics shouldn’t spend any of the money put into the ss account, if they do. That is plain stealing! Everything could’ve been so simple if greedy politicians could’ve kept their hands out of the pot!

2 years ago
Reply to  Carol

If you read about SS, it started out as a welfare program and evolved into the program it is today – going broke. At the proper age, you should get your entitlement. A lot of people depend on SS as their primary means of support. After all, we paid SS taxes for 40 years we are entitled to it. Unfortunately, a lot of people never paid into SS and they too are getting support from SS. As the number of non payers grows the funds available to the payers is getting less and less. So we need to separate the funds used to pay those who paid SS taxes from those who did not. Other wise the pot is going to be empty……

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