Everybody knows Social Security is in crisis and it will collapse if we do not reform it quickly.
Everybody may be wrong.
The US Treasury just reported that Social Security and Medicare are $44 trillion in the red. But Paul Krugman, the economist who writes for the NY Times, notes that only 16% of that sum comes from Social Security. Also, most of the combined shortfall, 62% of it, comes after 2077!
Crisis?
There is a fundamental problem. The number of retirees will soon be a flood – the first boomers turned 58 this year – while the number of workers whose Social Security taxes will support them has fallen with the birth rate. "As a result," writes Krugman, "benefit costs will rise by a bout 2% over the next 30 years, and creep up slowly thereafter."
Panic time? Well, if we make the Bush tax cuts permanent now, we will reduce what the federal government takes in by at least 2.5%, he says.
Erase those tax cuts and you have more than taken care of Social Security for a long while.
Krugman doesn’t really go into this, but we should tinker with Social Security, too. Right now, there is no tax on earnings over $87, 900. Getting rid of that cap will bring in more money. Also, we should investigate improving the return on Social Security dollars.
Incidentally, Social Security runs a surplus today, will continue to do so for several years and is fully funded through 2042.
So why the screaming and yelling and tearing out of hair about the imminent demise of Social Security?
First, the agenda of the Right – in particular, the free market fanatic element - is the repeal of the New Deal. Secondly, the "privatization" of Social Security means "investing" billions of tax dollars in the stock and bond markets. Reverse Robin Hood, it’s taking from the poor (and middle class) to give to the rich.
It is just a coincidence, of course, that CATO and other think tanks championing "privatization," are heavily funded by Wall Street individuals and corporations.
PS The Associated Press reports today on still another Wall Street scandal. Seems as many as two dozen individuals at the New York Stock Exchange were involved in illegal trading in stocks. No matter; the Administration cannot wait to risk Social Security money in the casino, often fixed, that we call Wall Street.