If only it was a matter of rational thinking, we could fix Social Security easily. We all want Social Security to continue. Well, most of us do.
Political party dogma gets in the way. Even Republican primary voters oppose cuts to Social Security and Medicare as a way to control the budget (http://www.aarp.org/politics-society/advocacy/2012-elections-voter-education-guide/). Eric Cantor, the House Republican leader, can’t explain why the candidates and leaders of the party are so out of tune with the majority of Republican voters (http://thinkprogress.org/politics/2012/02/19/428655/cantor-gop-agenda-fox/?mobile=nc).
Ron Paul, putting on his Herbert Hoover hat, thinks the program should never have been put in place and should be eliminated. Rick Santorum wants immediate cuts. Even President Obama is on a dangerous path by temporarily foregoing Social Security payroll contributions to stimulate individual spending.
Once the Republican nominee is established we’ll see some attention to Social Security in the election of 2012. My bet is that both parties will call for reform and neither will provide details.
So let’s at least set the record straight. There are a series of steps that, taken together, would go a long way to solve the long-term solvency issues for Social Security. These would be easy to accomplish and pretty painless.
1. Raise the amount of the Social Security contribution from 12.4% to 13.4%. A 1% increase for the typical worker would mean $4 more per week from worker and employer.
2. Gradually raise the full retirement age to 70. This would be phased in with workers born after 1964. Early retirement at 62 would still be allowed, with benefits reduced more severely than at present.
3. Increase the wage limit subject to Social Security from its current level, plus adjust this upwards annually based on the general rise in wages.
4. Expand the range of years considered when computing Social Security benefits. The effect would be to slightly reduce benefits.
5. The Disability component of Social Security has the most dire solvency problems. A number of reforms have been proposed, but the program should more fully focus on the goal of getting disability claimants and recipients back to work.
Do you want to address the Social Security issues? Here’s a fun website from the American Association of Actuaries to help you play the game: http://www.actuary.org/socialsecurity/game.html
We can solve the Social Security solvency issue with very modest changes. I doubt whether any variation of this path will be taken. The rhetoric will be more about values; we will debate how much government should assist older persons in their retirement. In 1935, our society said yes. What will be the answer in the coming years?