Warshawsky on the Social Security Expansion Act - thehill.com

American Enterprise Institute Searle Fellow Mark J. Warshawsky, in an OpEd piece published on thehill.com, dissects the Social Security Expansion Act bill (S. 393) proposed by Sen. Bernie Sanders’s (I-Vt.) and endorsed by nine fellow Democrats, calling it a flawed proposal that “… no sensible American should love.” Warshawsky, formerly a deputy commissioner for Retirement and Disability Policy at the Social Security Administration and assistant secretary for Economic Policy at the U.S. Department of the Treasury, analyzes the projections advertised for the bill, calling on Congressional Budget Office (CBO) estimates that cast doubt on the benefit expansion forecasted in the bill’s provisions.

In describing the tax increases proposed in S. 393, Warshawsky cites the negative effect of the higher levies on labor and capital…effects that, among other things, would likely result in depressed wages in the economy, increase the cost of capital, and reduce national income. As Warshawsky points out, S. 393 calls for extending the 12.4% payroll tax on earnings above $250,000, with all earnings subject to the 12.4% rate after the annual taxable maximum reaches the $250,000 level. For benefit calculation purposes, Warshawsky notes, S. 393 would exclude earnings above the $250,000 mark from the benefit calculation.

The remainder of Warshawsky’s post delves into more of the details associated with S. 393, supporting his conclusion that the bill’s these tax increases … would just be just sufficient to bring the program into balance with no room for benefit increases. He closes his post with the suggestion that “… more realistic, responsible and modernizing reform plans on both the benefit and revenue sides showing bipartisan policy leadership are needed to solve Social Security and the larger and growing budget crisis in a fair, reasonable and economically productive manner.”

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