Social Security
Social Security is the predominant federal social insurance program in the United States. It was part of Franklin D. Roosevelt's New Deal initiative during the Great Depression and was signed into law in 1935. The program gives old-age benefits from the federal government to workers and their families. The elderly are its biggest fans.
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“”Because they want the federal government controlling the Social Security like it's some kind of federal program. |
| —George W. Bush[1] |
Content
Social Security is made up of two different parts: Old-Age and Survivors Insurance and Disability Insurance (the latter being added in 1956). Supplemental Security Income (SSI) is also handled by Social Security but isn't funded by the same taxes. In order for workers to qualify for the old-age benefits, they need to work for at least ten years and earn a minimum of $4,480 a year. For people born after 1959, workers can receive full benefits once they turn 67 but can receive reduced benefits at 62. Overall, it is less generous than the amount allotted to seniors by most Western nations.[2][3]
The vast majority of Social Security's funding comes from payroll taxes (specifically, Federal Insurance Contributions Act taxes). This is considered to be a category separate from "income taxes," although payroll taxes are also based on income. Those on the left often speak of programs funded by "income taxes," thus eliminating Social Security and similar programs from consideration and leaving defense as the largest federal program. However, Social Security's budget is larger than the defense budget, and together with Medicare and Medicaid, makes up about 40% of the federal budget. Unfortunately with the baby-boomer generation starting to receive their benefits, Social Security is now spending more than it takes in. The program is expected to begin running deficits every year starting in 2037. It's not a crisis per se, but take note. Luckily, Congress has a happy record of tackling problems early, before they become crises.
Fixes
Modifications to Social Security have been proposed for decades and the sustainability of the much beloved program is increasingly becoming a concern to politicians and citizens alike. In general, Democrats favor either keeping program the way it is or slightly modifying it while Republicans favor more radical cuts and modifications, such as privatization.[4]
Ignoring the privatization solution, ultimately, well, you either need to increase taxes or reduce benefits. Or both. The easiest, and simplest way to fix social security is to remove the cap without increasing the payout; social security taxes are only levied on the first $110,000 of wages each year, and there is quite a bit of taxable income above this, so surely the government will do the right thing and slightly raise taxes on the wealthiest Americans. Now that we've all had a good laugh, the options for reducing benefits would be to simply cut the payments, or to restrict eligibility by raising the retirement age or eliminating disability, or worse.