If you're really concerned about Social Security 40+ years out, then instead of the wacko privatization schemes the Bushies are pushing, how about something simple - remove the ceiling on the payroll tax. Why should income about $87,900 not be subject to the tax? The benefits go to everyone, why not the costs? That would insure solvency for even the 20 year olds.

I agree. Remove the cap.

The demographics seem to me to demand that there will be a stretch of so-called 'insolvency', that is, a while that outgo exceeds income, and that will likely be long enough to wipe out the surplus.
Then, the new boom (or whatever it will be called), which is bigger than the baby boom, will increase its earning power and we'll head back in the other direction, pay off whatever needed to be borrowed, and build up another surplus.
Unless, of course, we panic.

And, of course, we have no idea whether, in 40 years, people will regularly live to 120, or be able to work construction until 80, or what. Or, for that matter, whether in 40 years we'll be living in a post-capitalist paradise, or a post-nuclear wasteland, or under galactic overlords who will euthanise everybody at sixty.

Redintegro Iraq,
-V.

The logic behind the cap is that SS is not welfare or a redistribution scheme. The mechanics behind all the trusts were put there for that explicit purpose. Supposedly benefits rise with contributions in the system. If the contributions rise and the system stays true to its original mandate, then wouldn't benefits have to rise for those individuals. How does that increase the overall longevity of the system? Or will we say screw the most successful governmental program in the history of the United States and bastardize it.

The 40 year figure also does take into account the amount income taxes would have to rise to repay the trust fund debt.

Whether or not SSTF is currently insolvent - it is perfectly fine today and actually contributes to the General Fund expenditures - it would be better to change it from a pay as you go system to an investment oriented system. This is a change from a entitlement program to an asset accumulation program.

There is nothing wrong with the idea of letting people have accounts that have some choices about investment. The whacked out crazy idea of Bush and his former adviser Lindsey is that the cost of transition - setting up the new accounts while paying out the current and future entitlements - would be about a trillion dollars and would be borrowed.

Oneill's idea was to not cut taxes and instead use that money for the transition cost. It's still a good idea. It will ensure the long term viability of SS and actually increase the wealth of retiring Americans.

Also since the SSTF also helps out widows and orphans survivors and the disabled, there would always be some redistribution. Raising the cap on the payroll tax would be a good step in this direction and helping to fund the transition cost. Also since the rich would have a great deal contributed in, there would have to be a "cut" taken out or a cap put in on the contributions to their personal account and the money taken and either used for the diabled, orphans, etc. or put into the accounts of less well off people.

The CEO should not recieve a 1:1 payoff for the money he puts in. Some of that money should be rolled into the SS acct of the janitor.

In all it would act as a sort of enforced 401k or IRA retirement savings program. It would increase savings in this country, increase asset accumulation, and help ensure retirement stability, as well as increase the prosperity and independence of seniors. Frankly, I'd rather have thirty years of compounded interest on my payroll tax contribution than a fixed government entitlement payoff that Greenspan is finding ways to cut inflation increases to by using ever more spurious statistical justifications.

I was raised Republican and while I oppose Bush for being a moron, just because he's a ninny doesn't mean the idea is bad or we shouldn't do something about Social Security! Not all conservatives are insane.

By 2050, Social Security will support 80 million retirees. FICA tax collects enough for 55 million now: requiring but 44% more revenue by then. America's population should grow 1% a year for the next 45 years - is there a revenue problem here? ( CBO -- AGING POPULATION CHART )

Medicare takes 2.8% of earned income, today. Suppose that grows to 12% by 2050 (plausibly raising 10 times the revenue -- per taxpayer -- with no growth screening cap). Anticipating more than DOUBLED per capita income by that era, should there be ability-to-pay problem here?

For most taxpayers: very possibly!
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The real economic crisis in America is that - GOING BY THE LAST 30 YEARS -- incomes below the 90 percentile income mark may not increase much over the next 45 years now matter how fast the economy grows.

Between 1968 and 2001, family income by quintile grew:
a) to Census inflation: +17%, +23%, +40%, +57%, +87%;
b) to BLS inflation: -5%, -1%, +12%, +26%, +50%.

Over the same 33 years, according to Census or BLS inflation, AVERAGE (per capita) income grew 94% or 56%, respectively -- edging out TOP QUINTILE gains!

Something called "top coding" seemed to have hidden a quarter of all income from the already dismal distribution picture of the family survey (income above one million dollars not counted after 1994, nor above $300,000 before).

For whomever is in power, lower Census inflation (CPI-U-X1) yields both higher growth claims and lower cost of living pay outs.
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There is no free Medicare miracle. There is a free economic miracle to pay for the coming Medicare miracles (as in, new cures): per capita output quadruples as American population doubles - America's boomer bulge being a one-time, economic-miracle-diluted interval.

There may be a pain free income-equality miracle in store should America legally mandate universal unionization to re-normalize the power balance in the labor market (don't worry; more conservative American labor will not re-create Europe's wild welfare state here).

[LABOR IDEA OF THE WEEK!] Old time industrial unions were formed by the roughest toughest, heavy duty workers. Those most in of need unions today - older workers and single parents - tend to be the least likely to organize in the face of hell storm opposition and need mandatory unionization most of all.

Further: simply legislating unions may not equip less militant laborers with optimum bargaining power. Only full fledged, German style, sector-wide labor agreements may solidify the strongest market posture for all labor: weak and strong. Otherwise, business- under natural competitive pressures - will shift more investment toward the lowest militancy workers.

Denis Drew
Chicago
ddrew4u@aol.com

Trust Fund bonds are bought with regressive payroll taxes but will cashed with progressive income taxes: making for a partial transition to a progressive, pay as you go -- if not very coherent -- Social Security tax setup in the future.

I see a few easy solutions to the problem -- besides removing the cap we could increase minimum wage by $1.50/hr. This would have several effects. First, it would add a few $100 million to SSA trust fund. Secondly, it would have the net result of having less paid out to ederly employees due to work limits, thus, adding more solvency to SSA. Another solution to the SSA 'crisis' is to increase the SSA tax to 6.4% instead of the 6.2%. This would $150.00 average per employee to SSA, or about $1.6 billion per year.

I see a few easy solutions to the problem -- besides removing the cap we could increase minimum wage by $1.50/hr. This would have several effects. First, it would add a few $100 million to SSA trust fund. Secondly, it would have the net result of having less paid out to ederly employees due to work limits, thus, adding more solvency to SSA. Another solution to the SSA 'crisis' is to increase the SSA tax to 6.4% instead of the 6.2%. This would $150.00 average per employee to SSA, or about $1.6 billion per year.