Monday, December 21, 2009

Another big story on the dire straits for Social Security, coming soon

In September, this blog linked to some analysis by Sloan and others suggesting that Social Security could run a deficit even by 2010 or 2011. Today MSN greets us with a U.S. News & World Report story, “How long can social security last, link here.
The average benefit in 2009 was $1155. According to Social Security’s own reports, it will start running a deficit in 2016.

But the latest story has the trust fund exhausted by 2037, after which social security would be able to pay only 75% of promised benefits until 2083.

One proposal is to raise the Social Security earnings cap (from $106,800) by 2% a year until 90% of all earnings are subject to FICA. But an increase in FICA taxes by 2% would also eliminate the deficit.

The real “kicked can” would be means testing, which (if it looked at family structure and “filial responsibility”) could make social security a morally and politically divisive issue indeed.

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