Another Viewpoint on the Primary Cause of Social Security’s Solvency Problem - planadvisor.com; SSA OIG
Speaking virtually at the 2023 Harkin Retirement Security Symposium earlier this week, Social Security Administration chief actuary Stephen Goss presented a counterargument to the premise that declining birth rates are the primary driver of the program’s looming insolvency. Noting that the drop off in birth rates seen over the past few decades was actually factored into reform measures enacted in the early 1980s, he offered the opinion that “80% of the shortfall comes from unanticipated economic setbacks.”
Goss goes on to provide an analysis of the “dispersion of earnings” that has taken place since the 1980s (and was magnified following the 2007-2009 “Great Recession”), suggesting that real wage growth for the top 6% of workers has significantly outpaced that of the lower 94%. The result of this dispersion, he noted, is that even though average wages increased more than expected, a larger portion of overall wages tend to escape FICA taxation.
Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, speaking later at the event, acknowledged this point, and both he and Goss subsequently suggested that lifting the cap on earnings subject to FICA tax might be a viable consideration in addressing the solvency issue. Richtman also suggested that “taxing investment income at the same level as wages” might be another worthwhile avenue for legislators to explore.
Planadvisor.com’s Paul Mulholland offers a recap of the Goss presentation in a post on their website, which you can access here. For a complete review of the presentation, the actual symposium proceedings can be viewed here, and the slides used by Mr. Goss can be accessed here.
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