Time to Go on the Offensive to Improve, Not Just Save Social Security and Medicare
The wind has suddenly been knocked out of sails of those critics of Social Security and Medicare in Washington -- Republican and Democrat -- who have for years been warning direly that the two programs were going bust. Suddenly their favored “rescue” plans for these crucial programs -- turning to a stingier way of calculating the annual inflation adjustment, raising the retirement age, and even reducing benefits for Social Security, and cutting benefits for Medicare -- don’t make sense to anyone.
Thanks to an improved jobs picture, a marked slowdown in health care cost inflation and other factors, the latest annual Trustees Report from the Social Security Administration paints a picture of a much improved situation. As things stand now, this report says the Trust Fund that was built up, starting back in the early 1980s, to cover the anticipated increase in benefit payments to the wave of Baby Boomer retirees, will not be exhausted until 2033, which happens to be about the time that the last Baby Boomers born in 1964 will be retiring, and when the wave of 78 million Boomer retirees will be starting to shrink as early boomers born in the late 1940s and 1950s begin to die off (the oldest Boomers, born in 1946, will be 87 in 2033).
The Medicare Trust Fund, too, is looking much better. As recently as last year, it was being projected to run out in 2026, but now it looks like it will still have a positive balance in 2030.
What this means is that actually shoring up these two programs so that they will be fully funded and able to pay full retirement benefits to retirees and health benefits to all those on Medicare, should be much easier than and less painful to all concerned than the voices of doom in Washington have been threatening.
For example, just eliminating the cap on income subject to the Social Security payroll tax, currently set at 6.2% for employers and 6.2% for employees, but only on the first $113,400 of income, so that all income becomes subject to the tax, including the income of millionaires and billionaires, would fully fund the program way out past 2075, when the last Baby Boomer have long moved on to that great Woodstock in the sky.
That’s not such a bad idea really. The cap on income subject to the 1.45% Medicare tax on employers and employees was eliminated some time ago and the American economy as we know it didn’t come crashing down as critics warned.