Social security and crisis—lately, these words seem to be inseparable in the conservative bid to sow fear about the soundness of the social security system. Is it really about to go bust? The answer is an unqualified—no. There are sufficient funds to pay out benefits for the next 30 years or more, and there are simple and modest changes that would fix social security for the next 75 years. The gap that needs to be closed is equivalent to 2.2 percent of taxable income, and there are a number of measures that can be taken to achieve this goal.
This graph shows the goal of 2.2% of taxable income as a line across the top. Each bar shows how much different measures would move social security towards this goal. Note that the first bar shows that if people paid social security tax (payroll tax) on all of their income, as opposed to the current maximum of $106,800, the goal would be reached—and surpassed by this measure alone! Alternatively, Social Security could be fixed through some combination of these measures.
The “crisis” of social security is a figment of the conservative imagination, created to support the privatization of social security. This would be a disaster for the elderly, 80% of whom significantly depend on social security income and 40% of whom are wholly dependent on it.
Created by CPE Member Economist Emily Kawano
November 2011
Sources:
Wall Street Journal interactive tool.
http://online.wsj.com/article/SB10001424052702304186404576390271495365028.html
Economic Viewpoint: Social Security Crisis? What Crisis?, Laura D’Andrea Tyson, Business Week, 1/17/05.
http://www.businessweek.com/magazine/content/05_03/b3916024_mz007.htm
