There are many, many ways to tackle the deficit without messing with Social Security and Medicare. These programs should be invested in and improved; cuts are pointless.
“Instead of dealing with reality, it’s far easier to set up a generational battle between us and our children over who might be more entitled to a future without a ballooning deficit by suggesting Boomers take the hit now in order to make it nicer for everyone else.
“There is no need to make significant cuts in Social Security or Medicare. The trouble is that hardly anyone admits that accomplishing these goals must include reasonable tax increases to retire the deficit in a reasonable amount of time. Because, and listen closely…
“Social Security isn’t ballooning the deficit. Medicare doesn’t have to balloon the deficit.
“Repeat that. Over and over.
“The tax cut deal just made cut employees’ Social Security contributions by 2% and those contributions will be made up via the general fund. This is why there’s such an outcry on the right about the deficit (even though they also argue that tax cuts don’t have to be paid for…) and on the left about the danger this poses to Social Security. On this one, the left is correct, but it’s a problem which could be remedied with one small change to existing law.
“Equalize the taxable wage base. It hasn’t been done for 20 years. The cap is too low. Leave employees’ contributions at 4% and raise the limit to cover the difference. That’s all. In 2010 and 2011, the taxable wage base was $106,800. Any earnings over that level do not count for purposes of Social Security contributions (though they do count toward Medicare contributions).
“Raising or eliminating the cap on wages that are subject to taxes could reduce the long-range deficit in the Social Security Trust Funds. For example, if the maximum taxable earnings amount had been raised in 2005 from $90,000 to $150,000—roughly the level needed to cover 90% of all earnings—it would have eliminated roughly 40% of the long-range shortfall in Social Security. If all earnings were subject to the payroll tax, but the base was retained for benefit calculations, the Social Security Trust Funds would remain solvent for the next 75 years. However, having different bases for contributions and benefits would weaken the traditional link between the taxes workers pay into the system and the benefits they receive.”
“This report doesn’t address the possibility of keeping workers’ contributions at 4% AND expanding the wage base, but I’m betting some combination of the two would serve the purpose of maintaining solvency while spreading out the contributions in a way that is more progressive.
“We don’t need to be unfair to anyone. We need to be creative. We need to quit lying about how desperate the situation is. We need to admit that conservatives loathe New Deal policies and programs like Social Security and desperately want to kill them. They’ve got the mainstream media, Fox News, and the Tea Party on their side. What they don’t have is truth.”