More on Social Security
Social Security is supposed to be retire program, where you “paid in” during your life time and then get your benefits when you retire. Of course the problem is that this is a farce. Social Security is at best simply a welfare program for seniors. At least the calls for taxing the rich to pay for it, reveal it for what it is. People are not getting back what they paid in, they are demanding that others support them.
It is actually little more than a ponzi scheme as it depends on increasing numbers of people entering the system to keep it solvent. As in a ponzi scheme those at the beginning of the program did quite well, but as more and more people enter the system, the strain will increase until the system collapses.
There are basically three ways to address this, cut benefits, increase taxes, or reform the system into a true retirement program. Cutting benefits probably is not an option, at least not unless it is part of some larger grand compromise. The political might of current retirees is just too great. You might be able to cut benefits on future retirees, but even that would be difficult.
Increasing taxes is more likely but still difficult as it suffers from two problems. Liberals often see taxes as an infinite pool of money. However that is not the case. Taxes are a burden on the economy. At some point that burden become so large that further increases actually bring in less money. The recession of the late 60s, mid 70, early 80s, all occurred at peaks when the total tax burden went over 30%. The economic downturn that began in early 2000, coincided with record high total government tax burden on the economy of over 33%. Just how much more taxes the economy will bear is unknown, but taxes are not an infinite pot of money that can be tapped without consequences, and many governments in Europe are finding out.
The other problem is that the shortfall is so great that that taxes required to close it will be massive, it cannot be gotten simply from “the rich” unless the rich are defined as everyone. Ultimately tax increases only delay the problem. After all we have already tried this approach in the 1980s. Faced with the choice of fixing the problem or delaying it by increasing taxes, Congress at the time choose to simply delay it. That is why we are facing the problem we are now. Simply increasing taxes does not fix the underlying structural problem of asking 2 workers to pay enough in taxes to support one retiree.
The best solution is to reform the system into a true retirement system. There is no doubt that such a system can not only work, but work much better than the current system. Democrats like to focus on the cost of the reforming the system, but they ignore the much greater cost of the current system.
