The system works much better when current benefits are essentially paid for just from current SS taxes.
And that would work if there weren't such a demographic bulge in the population. But there is. So we have to deal with it in unorthodox ways. Another legacy of the Depression, the War, and the Greatest Generation. And the way to deal with it was set out in the early '80s whith, and it worked beautifully. Unhappily, a Republican came into office, determined to pretend that the surplus that was built specifically for the purpose of meeting the obligations to the children of the Greatest Generation should be "given back to people," and then 4 short years later, this same Republican pretended that the kitty was bare and [shock!] there was not sufficient money to pay off those obligations.
This was all self-inflicted, a combination of stupidity, willful forgetfulness and venality.
Here is an excerpt from an article on the SS Commission of 1983:
Fourth, both sides agreed to mutual sacrifice, a concept that has yet to surface in the current conversation. Democrats accepted a six-month delay in the annual cost-of-living adjustment and the increase in the retirement age, while Republicans accepted a faster-than-planned rise in payroll taxes and a substantial tax increase on the self-employed. The two sides closed the deal by subjecting up to half of Social Security benefits to income taxes for higher-income beneficiaries, a provision that allowed Democrats to say Republicans had passed a tax increase and Republicans to say Democrats had agreed to a benefit cut.
This agreement was rooted in a common willingness to solve the problem regardless of the political consequences. Republicans gave up their effort to reduce the public's dependency on Social Security, while Democrats gave up the one campaign issue that might have slowed Mr. Reagan's easy run to re-election in 1984.
It is hard to imagine how a similar package could emerge from today's highly polarized process. Yet, as the 1983 rescue showed, Congress and presidents can take action when they are forced into up-or-down votes on urgent problems. The key is deciding just how urgent a problem is.
brookings.edu |
