10:50 AM Eastern - Wednesday, December 12, 2012

Who Wants to "Fix" Your Social Security? #default

The 71 publicly held firms in the coalition behind the "Fix the Debt" campaign have a combined deficit of more than $100 billion in their employee pension funds, but it hasn't stopped them from telling Congress how to fix Social Security.

If you're a wealthy CEO earning enough to make Scrooge McDuck jealous, then you're qualified.

Or at least that's what the "Fix the Debt" campaign would like lawmakers to think as its plan to rein in federal spending includes making cuts to Social Security and raising the retirement age.

The first part of their plan is a very hard sale as not many Americans like to talk about cutting Social Security benefits. So those who want to cut the program have instead settled on a less threatening argument about life expectancy.

In a recent column, Washington Post columnist Ezra Klein calls raising Social Security's age requirement a "cruel and regressive way to cut the program" and advocates for raising the age requirement for Social Security usually need the program the least.

"They don't want to retire at age 65, and they don't have short life expectancies, and they're not mainly relying on Social Security for their retirement income. They are bravely advocating a cut they'll never feel."

The best solution to addressing Social Security's shortfalls is one that would actually be felt by the 1% because it requires everyone to pay their fair share.

Americans only pay Social Security taxes on their first $110,000 of wages each year. Workers who earn more than that don't pay taxes on their additional income, nor do investors who earn money from dividends and capital gains. In other words, the top 1% of Americans finish paying into Social Security by mid-March (if they pay at all) while the overwhelming majority of us continue to pay a percentage of our paychecks into the fund all year long, year in and year out.

If lawmakers take a bold step and raise the cap on the Social Security payroll tax to make all income subject to payroll taxes, the Congressional Budget Office estimates, it would do three times as much to solve Social Security's shortfall as raising the retirement age to 70. It would raise enough revenue to close Social Security's solvency gap for 75 years and improve benefits for retirees.

It's also unlikely that "Fix the Debt" campaign members would ask lawmakers to raise the cap on Social Security as they stand to reap billions in windfalls if Congress approves one of their main proposals. But why should lawmakers take advice from CEOs who can't manage their own companies' retirement plans?

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