What's the real problem with social security? Commonwealth CIO Brad McMillan says to look beyond the headlines for answers.
If you’ve read the recent headlines on social security, you know that many commentators are predicting its “demise.” Why? Next year—and much sooner than expected—the social security system will begin paying out more than it takes in. But is this switch from a surplus to a deficit the real problem with social security? I don’t think so.First of all, this transition is both long expected and necessary.
By putting it this way, however, we have defined the problem. Now, we can start to worry about it intelligently. The problem is not the deficit, nor is it that benefits may be cut in 30 years. The problem is that the revenue raised for the social security program is, as of now, insufficient to allow that balance to be kept.
It’s hard to say for certain, but the most popular proposed fix, per the polls, is to eliminate the earnings limitation. If workers paid the social security tax on their earnings, this would at least postpone systemic problems for decades and likely eliminate them altogether. Simple, right?
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