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Guest Column: How to save Social Security 101

July 3, 2012

By David Soll

We have all heard the rumors that Social Security is on the verge of bankruptcy within the next decade or so. This is currently true if we do nothing.

It frustrates me when politicians and certain ideologues at the local and national levels use the present problems of Social Security as reasons to simply privatize or eliminate it altogether. They call it an “entitlement” when the truth is that Social Security is a pre-paid insurance program.

Not long ago, a politician who dared speak about getting rid of Social Security would no longer have a political career to look forward to. Today, U.S. Rep. Paul Ryan, R-Wis., comes up with a budget that practically erases Social Security as a pre-paid, publicly-funded social safety net and opens it up to eventual privatization (a prospect over which Wall Street salivates), and he is awarded with rumors of a potential vice presidential nomination. I, for one, am tired of this Republican pattern of “tackling” problems by eliminating them instead of working to solve them through legitimate fixes.

Preserving Social Security forever would be an easy fix. Republicans want to raise the retirement eligibility age to 70. I say lower it to 60. By doing this, you accomplish two immediate benefits. First, you likely take several million aging workers out of the workforce, thus opening up millions of jobs for the younger generation. Second, you lower the unemployment rate by several points.

Economics 101 states that as the labor market tightens, wages go up, and thus tax revenue goes up. If the eligibility age is raised to 70, you are keeping millions working — millions who would rather simply retire and spend every penny they receive in Social Security benefits (an economic boon) — while you keep millions of younger people and college graduates desperately looking for a job continually desperate.

An additional benefit to lowering the eligibility age to 60 is the drop in people suddenly no longer in need of welfare and food stamps. (Talk about shrinking the size of government!)

Further, we should remove the cap currently set at about $109,000 to affect all earned and unearned income; it is beyond the pale that someone who earns a billion pays no more toward Social Security than one who makes $109,000.

Cutting the Social Security tax in half from 5.65 percent to 2.83 percent — an automatic tax cut for every single person making $109,000 or less, not to mention your employer. Then, double the current amounts given to each retiree up and down the entire scale, another economic boon.

These are common-sense fixes to help save one of the greatest systems ever devised.

David Soll is a Democratic candidate for Winnebago County Board in District 20.

From the July 4-10, 2012, issue

One Comment

  1. Joe The Economist

    July 3, 2012 at 1:43 pm

    “call it an “entitlement” when the truth is that Social Security is a pre-paid insurance program.”

    This is factually incorrect. Social Security is a pay-go system where very little if anything is pre-paid. Source SSA

    In 1983, Social Security was insolvent so it had not a single penny of pre-payment and more than 40 years of promises to fulfill. Today the system has a 20.5 trillion dollar shortfall. Source SSA

    There is no study which supports the idea of removing workers from the work force as helping Social Security. It would put more strain on the system, and there is no guarantee that these jobs will be replaced or need to be replaced. As workers retire, they will spend less. This is lower demand for goods and services.

    For the records, payroll taxes are 15.3%, 13.3% with the holiday. Of that 2.9% is HI, 1.8% is DI, so I am asking where did you get 5.65?

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