It’s well established that the Social Security trust fund will be unable to maintain the existing level of benefits after roughly 2035. Politicians of both parties lie all the time about this saying “we’re not touching Social Security”. Sure you are. Either we touch it (fix it) now or it will get ever more challenging as we close in on the magic date. The answer as is usually the case, is relatively simple but requires actual courage hence the desire to put it off as long as possible. Benefits need to be adjusted based on income, with the focus on what social security is supposed to do; ie, prevent seniors from being penniless or starving in retirement. Revenues need to be increased, starting with addressing the ridiculously inequitable sources of income now (people making under $150K per year).
We need to eliminate eligibility for social security benefits at a certain income level. Once joint income gets to $250K/yr I think the max benefit should be 50% and at $400K/yr it should be zero. Social security is not here for rich people to pad their lifestyle. It’s possible the $250K cutoff needs to be zero but I’ll start more conservative than that. It doesn’t matter what you’ve put into it, that doesn’t mean you’re owed anything out. It’s a way for us to offer some marginal assistance to seniors to prevent them from relying 100% on other government handouts or starving due to lack of income. Given that generation X suffered through the transition of fixed benefit pensions to maybe 401K plans putting a substantial hurt on their retirement savings, along with a large veteran, handicapped and survivors population there is plenty of demand for a base retirement income in America.
There should be no cutoff on social security (FICA) deductions based on income levels vs. the absurdly low (middle class) limit now. All income should be subject to the social security tax period. If you make $400,000,000 in income we should tax that at the same rate as $100,000 in income. In addition, I believe we should handle carried interest on hedge funds as income as well, subjecting it to at least social security and medicare taxes if not actual federal income tax. Name all the Americans who feel sympathy for the poor hedge fund kings having to contribute to society. Once you have all income contributing to the system you can make a more realistic assessment as to whether the payroll tax rate is adequate for the macro population and their projected age demographics for the next 10 and 20 years.
Stop taxing social security benefits except at the $250K income and above level. Taxing benefits has to be the least efficient government exercise possible. Yes I know it’s a major source of program funding but that is because we have the incredibly regressive income limit on who contributes. Taxing the poor is not a way to help the poor. Taxing the rich is.
Social security benefits should be indexed to wage growth (that’s what they are substituting for) not price growth which simply exacerbates inflation.
DOGE should get the @#$% out of the social security system. No one would debate that the systems need to be upgraded but there is no reason to crash the existing system, which isn’t broke, for no reason other than you can. Develop a modern system in parallel and make a switch when it is ready, not patch it on the fly. These are people’s lives you’re messing with not a stupid startup company. No we don’t have millions of dead people collecting benefits either. Just too many high income ones. Pushing all interaction over to online (completely asinine for the elderly) or office visits while simultaneously shutting down offices is idiotic. Phone contact remains the easiest way for most senior Americans to contact the agency, given that many have serious limitations on transportation or internet access, especially in rural America. Do not even think about switching phone contact over to AI, most customer service bots today are annoyingly bad, and asking elderly people with questionable hearing to try and understand the stupidity and frustration of AI responses is almost inhuman. If you want to use AI in social security, have someone develop an algorithm to effectively flag fraud, duplicate or excessive payments. Then turn investigation and enforcement of those finding over to inspector generals or IRS agents or treasury agents or whomever. Where is the Treasury department internal audit function anyways?
Cutting staff at social security is idiotic when it takes six months now to process a new disability claim. The person could die before that happens which is completely inexcusable.
The age at which one is eligible for 100% social security needs to be indexed to actual life expectancies. When they go up, the eligibility age should go up and when they go down it should at worst case stay frozen in place. Life expectancy hasn’t necessarily just soared upwards in America in the last decade and we trail many developed countries in that regard due to our poor public health environment (smoking, sugar drinks, salt, environmental pollutants, allergens including worsening pollen, vaccination denial and obesity to mention the obvious ones).
Start with these assumptions and see what the long term model says about program sustainability. If these changes aren’t enough to make it stable then you have to either increase the payroll tax or trim benefits. Making political statements does nothing to ensure Social security, only actions will do that. Privatizing social security as has occasionally been broached by the inevitable free market crowd is the stupidest idea ever. Sure long term investing in stocks has proven to produce high returns, but people close to retirement can’t afford to risk their retirement on a market downturn that may take years to recover from.