The president’s proposal to privatize Social Security has been pronounced dead – as it should be. Mr. Bush first announced the plan in his January 2005 State of the Union address and no amount of administration road show, in which the president and other officials tried to rally hand-picked, sycophant crowds behind the plan, could convince the country to agree.
Now, Senator Charles Grassley [Rep. Iowa], who chairs the Senate Finance Committee, has said there is not a chance of action on Social Security before the congressional elections in 2006. Others have said it won’t be addressed before 2009, after the next presidential election.
This is a terrible mistake and Crabby Old Lady is ashamed of Congress – Republicans and Democrats - for dropping this issue.
Social Security is not anywhere near as sick as the president and Republicans made it out to be during their campaign to shove private accounts down the country’s throat. But with the demographic increase in people older than 65 in coming years, some tweaks do need to be made and the earlier that is done, the less painful it will be for everyone.
The problem, as Crabby has explained in this series, is that the federal government – not just this Bush administration – has for decades raided the Social Security Trust Fund, spending the money held there willy-nilly, leaving behind Treasury IOUs. This must be repaid and guess who will be stuck with the bill? But there is a three-point solution:
- Stop the government raid on the Trust Fund now.
- Gradually raise the eligibility age for full benefits to 68 or 69. This has already been done once and Crabby, for example, is not eligible for full benefits until she is 65 and eight months. We are living longer, healthier lives and this change should not be a hardship as long as corporate America gets over its aversion to old people and keeps them employed.
- Eliminate the salary cap. The average Joe pays $2,480 of his annual $40,000 salary into the Social Security fund. That’s a big chunk of change at that level of income, but it secures his old age.
At the other end of the scale, a worker with an income of, for example, $250,000 is taxed the same dollar amount as the person who earns the $90,000 Social Security cap: $5580. [The cap will be raised in January 2006 to $94,200.] Is that fair? Crabby asks.
If the cap were eliminated, the worker with a quarter of a million income would pay $15,500 into Social Security and, Crabby believes that anyone taking home $234,500 (minus whatever income tax he pays) who can’t live comfortably is, as Oscar Wilde put it, “someone who knows the price of everything and the value of nothing.”
However much the Bush administration has reduced taxes for the top one percent of earners [removing those tax cuts would help too], we do still have a graduated income tax. It is based on a social theory that those with more should contribute more to the common good. There is no reason this same philosophy should not apply to the Social Security tax.
Crabby believes these three changes will be the least painful to the largest number of people and will guarantee Social Security – the most successful social program in the history of the world – for future generations. It is unconscionable for our representatives in Congress to postpone changes for more than three years. To do so, will make the eventual fixes harder on everyone.
…to be continued…