Saturday, October 17, 2015

Getting the relevant points right on Social Security sustainability: big NYTimes story Saturday

The New York Times continued the debate on Social Security Saturday with a long article in the “Your Money” section here.

The upshot is that Democratic proposals to increase the FICA tax rate and/or limits to tax higher earners probably would shore up the solvency of the system.

Looked at more closely, some GOP proposals, like that of Chris Christie, seem to focus on lowering the expected benefits for younger workers.  I’m OK with this if there are some alternative savings vehicles (partial privatization, essentially the purchase of very long term annuities from life companies) to make up the difference.

One of the points in the article is that longer lifespans is not the big deal it is usually said to be;  longer lives would account for 20% of the shortfall.  More of the difficulty comes from lower birthrates. Ironically, admitting more refugees, if employable, could help with the problem long term.

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