Why a Bigger Social Security Program Would Make Us Worse Off
Rachel Geszler’s thoughtful piece in The Daily Signal explains the problems with The Social Security 2100 Act, likely to pass the House soon. It would make Social Security solvent and head off 20% plus in benefit cuts for all due to occur in the absence of reform. However, the bill relies on hefty tax increases to accompany benefit increases for all, including the wealthy, not just those in poverty.
Tax rates would rise from the current 12.4% to 14.8% such that someone making $50,000/yr would pay $1,200 more per year for a total Social Security tax bill of $7,400. This is equal to what a household spends on food per year. On the benefit side, a worker earning $30,000/yr would receive $333 more in Social Security benefits, but millionaires would receive $12,333/yr more according to Geszler. “The irony is that while everyone would receive more benefits than they currently do under the Social Security 2100 Act, those benefit increases would be less than if they had just kept their money and saved it on their own,” Gesler notes. She explains Social Security is, despite popular belief, not a personal savings program but a wealth transfer program that moves wealth from young to old. Worker payroll taxes are immediately transferred to current retirees, making it difficult for workers to save money for themselves over time.
Geszler cites research from the University of Pennsylvania’s Wharton School of Business that states the economy would be 7.3% larger with a smaller Social Security program that focused reform on benefit cuts for the wealthy, raising the retirement age, and smaller cost of living adjustments. Thus Gezsler summarizes by suggesting Congress curb Social Security’s growth and focus on its original purpose: protecting seniors from living in poverty. Read full article here.
Note, AMAC has been at the forefront trying to strengthen Social Security without a tax increase by developing and proposing its Social Security Guarantee. AMAC has been discussing and continues to discuss this common-sense solution with Congressional Representatives in its efforts to protect America’s senior citizens who rely on Social Security. To review AMAC‘s Social Security Guarantee, click here.
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