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Old 07-27-2011, 08:19 PM   #41
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Originally Posted by jdw_fire View Post
raising the tax cap would fix more then 35% of the problem, per 12 Ways to Fix Social Security - Planning to Retire (usnews.com)

quite some time ago i suggested removing the cap and putting a new knee in the benefit formula at the $106,800 point and above (if i remember correctly it was 5%). i am thinking that would still work.
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This suggests that the SS shortfall is only 17%, since 83% of all wages are captured by the tax. I am pretty skeptical of this claim since most analysis talks about 25-30% reduction in the benefits for today's 35 year old when the reach 70, or when the "trust fund" runs out. It might make a nice down payment on solving the problem, but probably not the whole thing. Obviously there is a political problems for raising taxes on the top 6% or so of people making over 100K and not raising their benefits.
If you want the numbers, the best place is the original source - Individual Changes Modifying Social Security

The SS actuaries have calculated the impact of many different changes. The advantage of going right to their data is that they show year-by-year impacts. Often, immediate changes just increase the trust fund (with all the attendant complications) and still don't balance the out years.

Change E 2.1 is the simple "make all earnings subject to tax" proposal. But they have 35 more with varying degrees of complexity.
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Old 07-28-2011, 06:55 AM   #42
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All this discussion of trust fund and IOUs etc. is the result of the 1983 act that increased taxes by more than benefits. I've heard that the players at that time were working with projections that were too conservative and didn't realize that SS would run a surplus for so many years. But those surplus years seem to have ended (sooner than more recent projections had estimated, due to the recession). So there is no surplus cash flow today to invest.
True, and that makes the SS problem larger than anticipated absent the recession but not huge. There are a number of modest changes that fix SS without major cuts beyond a COLA tweak, primary among them raising the earning caps. The bigger problem will be non-SS revenues needed to pay back the trust fund. That should not come from the SS payroll tax which would be a regressive double hit on workers.
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Old 07-28-2011, 10:34 AM   #43
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True, and that makes the SS problem larger than anticipated absent the recession but not huge. There are a number of modest changes that fix SS without major cuts beyond a COLA tweak, primary among them raising the earning caps. The bigger problem will be non-SS revenues needed to pay back the trust fund. That should not come from the SS payroll tax which would be a regressive double hit on workers.

Agree.... the problem now is that the funds have to be paid back from the general fund and there is nothing there to be able to pay it back...

From an accounting prospective, the general fund has been borrowing a lot more than people thought and the debt is a lot higher than what they keep telling us.... SS is not that bad, but the general fund is so bad that SS will take the hit along with everything else....
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Old 07-28-2011, 10:45 AM   #44
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Agree.... the problem now is that the funds have to be paid back from the general fund and there is nothing there to be able to pay it back...

From an accounting prospective, the general fund has been borrowing a lot more than people thought and the debt is a lot higher than what they keep telling us.... SS is not that bad, but the general fund is so bad that SS will take the hit along with everything else....
Yes, I expect that you are right.
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