1. We need so much more basic education about social security - really our entire social welfare system. So few people understand it well - and even fewer can speak clearly and in context about it. I'm a pretty well read person and I learned things from this essay. Geez.
2. Any thoughts on another threat to employment: care needs? In addition to child care, many workers find it impossible to care for family (disabled, older, etc) and have to withdraw or reduce their participation in paid work. Can social security help with that?
TANF ended up being a slush fund for political insiders and retired pro football players. I played an unusually ignorant role in getting that 'block grant' enacted by providing a synopsis of existing research to former Governor Ned Ray McWhorter, who was advising Clinton. I regret not knowing more at the time. My synopsis wasn't nearly critical enough of how things could go wrong with block grants.
2 trillion dollars??? Time to present a bill to Congress. If they can't find the money, let them check into ICE funding or the "war" chest. I love the way your laid this out. It makes so much sense. Thank you!
The tax increases involved here would kill the Dems during midterms. And the hand waving away of the demographic problems doesn't work in the real world.
Anti-immigrant policy is the biggest demographic threat Social Security faces, but it's unclear how it will unfold in the future, since the net loss of immigrants over the past two years was met with revulsion on the human rights front and growing chorus of business leaders saying it hurts their bottom line. It's an unknown in how it will progress, but not an unknown in how Social Security would be affected.
Thank you. I've been talking to friends about how we need much more than a simple change in leadership. This is it. It's easy for me to imagine the relief this would bring to many, including people I know.
When you talk about changing the taxing for self employed how do you handle non 1099 contractors? I own a small sole prop, no employees and honestly no plans for any, and I hate having to account for both sides of the tax payment.
I think we should keep self-employed paying the worker tax, and drop the employer side. Then issuers of 1099s (the employers who use contractors) would pay something like a contractor use fee that scales with the number of contractors they use. So think of a progressive per contractor fee that rises so that companies that use millions of contractors would be paying in substantially to the program.
I saw your piece on how the U.S. has the lowest self-employment rate in the OECD. I went off to find the data, cuz that's what I'm like. What do they do to make that happen? Could we offer high school classes that train people to be their own bosses? I know that it seems like pie in the sky, but I'm always dreaming.
It's some version of "rich people don't need any more Social Security." Social Security is an insurance benefit and once your wage is high enough, the risk of economic insecurity in old age--the risk that Social Security insures--gets low. It's why the cap is there in the first place.
I guess. Still, it doesn’t sit right with me. Appears this country has no stomach at all for taxing the uber-rich. I do appreciate the way you broke down the program and its evolution. I’ve benefited twice in my life, first as the child of a father killed in war and now as a retiree. I want it to be there for my children and grandchildren. As the Soup Nazi might have said, “No pensions for you!”
It's coming. It is by far the most popular policy related to Social Security and it has been for decades. The program needs money and the typical American thinks its deeply unfair that the rich pay in a lower share to a program that we all benefit from, even them.
Economic Effects of Higher Taxes: Subjecting all wages to the 12.4% payroll tax would lead to a sharp rise in effective marginal tax rates for workers with incomes above $184,500 (the current taxable maximum). The ~6% of workers this applies to a large extent live in states that levy high taxes on higher incomes (like NY or CA), so eliminating the tax cap could lift combined tax rates to levels that noticeably slow economic and income growth, or even cause total revenues to fall if taxes are pushed above their revenue-maximizing rates. With regard to this last point, eliminating the tax max could be seen as a backdoor revenue transfer from state + local governments to Social Security if their tax revenues fall in response.
Economic Effects of Higher Benefits for High Earners: Benefits are based on the earnings subject to payroll tax, so increasing the taxable maximum would expand benefit amounts for the highest earners. Since Social Security retirement benefits are a substitute for private savings, higher benefits would disincentivize saving for retirement, which would put downward pressure on private investment and subsequently wage and income growth. You could change the law so that higher benefits aren't paid on new tax contributions, but that would mark a fundamental shift in how the program works, which some might argue would undermine the program's political support and the program's built-in work incentives.
Opportunity Costs: Policymakers can't raise taxes on the wealthy an infinite number of times and eliminating the tax max would soak up a lot of their ability to do so. If they eliminate the tax max without making any changes to the growth in Social Security benefits, it becomes a lot harder to finance other programs or goals we as a society might want with just taxes on the rich alone.
The Committee for a Responsible Federal Budget has put out a proposal for lifting the payroll tax cap on just the employer side and levying it on all compensation, including wages and other fringe benefits, which would raise just as much revenue as simply abolishing the tax max but at a smaller economic cost. https://www.crfb.org/papers/employer-compensation-tax-social-security-and-medicare
wow - this is so great. Two thoughts:
1. We need so much more basic education about social security - really our entire social welfare system. So few people understand it well - and even fewer can speak clearly and in context about it. I'm a pretty well read person and I learned things from this essay. Geez.
2. Any thoughts on another threat to employment: care needs? In addition to child care, many workers find it impossible to care for family (disabled, older, etc) and have to withdraw or reduce their participation in paid work. Can social security help with that?
Yeah, I think this is a good note, that we need to add elder care to these amendments.
You are my hero!
Wow, thank you!
Sounds like you are trying to make US into Finland. Hmmm, isn't that the happiest country on earth? Republicans will never stand for that.
Did you work on Elizabeth Warren’s new policy proposal or is it just coincidence you published this a day before she announced hers?
Not too strong of a coincidence; there's always a lot of talk around the release of the Trustees Report.
Great job.
TANF ended up being a slush fund for political insiders and retired pro football players. I played an unusually ignorant role in getting that 'block grant' enacted by providing a synopsis of existing research to former Governor Ned Ray McWhorter, who was advising Clinton. I regret not knowing more at the time. My synopsis wasn't nearly critical enough of how things could go wrong with block grants.
Live and learn, I think it taught a lasting lesson of how little states can be trusted to help families if they are given any kind of free reign.
2 trillion dollars??? Time to present a bill to Congress. If they can't find the money, let them check into ICE funding or the "war" chest. I love the way your laid this out. It makes so much sense. Thank you!
Francis Perkins, the woman who was the driving force behind both social security and unemployment benefits, is an inspiration.
The Stuff You Should Know episode covering her life is a must-listen. We need more people like her now, and she was doing this 90 years ago.
https://podcasts.apple.com/us/podcast/stuff-you-should-know/id278981407?i=1000681221677
Apropos of nothing, at 92 my mother is older than Social Security. 🤯
So! Much! Respect!
The tax increases involved here would kill the Dems during midterms. And the hand waving away of the demographic problems doesn't work in the real world.
Anti-immigrant policy is the biggest demographic threat Social Security faces, but it's unclear how it will unfold in the future, since the net loss of immigrants over the past two years was met with revulsion on the human rights front and growing chorus of business leaders saying it hurts their bottom line. It's an unknown in how it will progress, but not an unknown in how Social Security would be affected.
PS. The link at the bottom is to all my sources and explanations of the demographics, which includes this: https://www.kedits.com/p/social-security-is-my-roman-empire?open=false#%C2%A7are-demographics-really-not-a-problem-for-social-security
Thank you. I've been talking to friends about how we need much more than a simple change in leadership. This is it. It's easy for me to imagine the relief this would bring to many, including people I know.
The investments in workers and children would be massive.
When you talk about changing the taxing for self employed how do you handle non 1099 contractors? I own a small sole prop, no employees and honestly no plans for any, and I hate having to account for both sides of the tax payment.
I think we should keep self-employed paying the worker tax, and drop the employer side. Then issuers of 1099s (the employers who use contractors) would pay something like a contractor use fee that scales with the number of contractors they use. So think of a progressive per contractor fee that rises so that companies that use millions of contractors would be paying in substantially to the program.
I saw your piece on how the U.S. has the lowest self-employment rate in the OECD. I went off to find the data, cuz that's what I'm like. What do they do to make that happen? Could we offer high school classes that train people to be their own bosses? I know that it seems like pie in the sky, but I'm always dreaming.
Thank you! Could you summarize the arguments against raising the contribution ceiling?
It's some version of "rich people don't need any more Social Security." Social Security is an insurance benefit and once your wage is high enough, the risk of economic insecurity in old age--the risk that Social Security insures--gets low. It's why the cap is there in the first place.
I guess. Still, it doesn’t sit right with me. Appears this country has no stomach at all for taxing the uber-rich. I do appreciate the way you broke down the program and its evolution. I’ve benefited twice in my life, first as the child of a father killed in war and now as a retiree. I want it to be there for my children and grandchildren. As the Soup Nazi might have said, “No pensions for you!”
It's coming. It is by far the most popular policy related to Social Security and it has been for decades. The program needs money and the typical American thinks its deeply unfair that the rich pay in a lower share to a program that we all benefit from, even them.
These are the big ones in my mind:
Economic Effects of Higher Taxes: Subjecting all wages to the 12.4% payroll tax would lead to a sharp rise in effective marginal tax rates for workers with incomes above $184,500 (the current taxable maximum). The ~6% of workers this applies to a large extent live in states that levy high taxes on higher incomes (like NY or CA), so eliminating the tax cap could lift combined tax rates to levels that noticeably slow economic and income growth, or even cause total revenues to fall if taxes are pushed above their revenue-maximizing rates. With regard to this last point, eliminating the tax max could be seen as a backdoor revenue transfer from state + local governments to Social Security if their tax revenues fall in response.
Economic Effects of Higher Benefits for High Earners: Benefits are based on the earnings subject to payroll tax, so increasing the taxable maximum would expand benefit amounts for the highest earners. Since Social Security retirement benefits are a substitute for private savings, higher benefits would disincentivize saving for retirement, which would put downward pressure on private investment and subsequently wage and income growth. You could change the law so that higher benefits aren't paid on new tax contributions, but that would mark a fundamental shift in how the program works, which some might argue would undermine the program's political support and the program's built-in work incentives.
Opportunity Costs: Policymakers can't raise taxes on the wealthy an infinite number of times and eliminating the tax max would soak up a lot of their ability to do so. If they eliminate the tax max without making any changes to the growth in Social Security benefits, it becomes a lot harder to finance other programs or goals we as a society might want with just taxes on the rich alone.
The Committee for a Responsible Federal Budget has put out a proposal for lifting the payroll tax cap on just the employer side and levying it on all compensation, including wages and other fringe benefits, which would raise just as much revenue as simply abolishing the tax max but at a smaller economic cost. https://www.crfb.org/papers/employer-compensation-tax-social-security-and-medicare