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Deficit Reduction and Social Security

Seal of the United States Social Security Admi...

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In reviewing the proposal by the president’s bipartisan deficit reduction committee, there is one portion that I cannot disagree with more.

To be sure, this is a serious proposal, with pain all around, but the delay in benefits for Social Security recipients until the age of 68 is wrong, wrong, wrong.

I have always been a huge advocate of the much-derided lock box for Social Security.  The current system is solvent until 2037, but will rack up huge losses going out to 75 years from now.

Treating Social Security as just another part of the overall budget is one of the accounting tricks that have gotten us into this mess to begin with.

This is the first year since the 1980s that the Social Security will start paying out more than it has taken in.

This is due to the large number of Americans expected to retire. The 75 year shortfall is calculated at $5.3 trillion. Insurmountable, right?

Wrong.

Senate report says tweaks can sustain Social Security

Social Security faces a $5.3 trillion shortfall over the next 75 years, but a new congressional report says the massive gap could be erased with only modest changes to payroll taxes and benefits.

There are a few options to fix Social Security:

1. Increase the age where retirees qualify (as proposed by the committee)
2. Curb cost of living adjustments
3. Raise payroll taxes on EVERYONE

Social Security isn’t an “entitlement”. Everyone pays into it. It is an insurance policy that provides a modest safety net for retirees.

I agree with this letter writer to the Baltimore Sun on this point:

Cutting Social Security benefits is as bad as raising taxes

Social Security is said to be an “entitlement,” but the difference between an “obligation” and an “entitlement” is just a matter of point of view. Those of us who have been paying into the Social Security system for years are entitled to our promised benefits. The U.S. government is obligated to keep its promises.

Social Security and it’s problems should be addressed separately from the concerns of the burgeoning Federal deficit.

For too long, legislators have counted on being able to dip into the Social Security revenues to work their accounting magic and prop up a wasteful budget.

It’s long past time to end that practice.

-Chris

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November 11, 2010 - Posted by | Debt, Deficit, Democrats, Economics, Republicans, Tax Debate | , , , , , , ,

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