This is from a NYTs article October 13, 2022
Demographic shifts have led to that imbalance. More baby boomers are collecting payments. Retirees are living longer. At the same time, a declining birthrate has produced fewer workers contributing to payroll taxes — the primary source of Social Security funds. The payroll tax is split between employers and employees, who each paid 6.2 percent of wages, up to a taxable maximum of $147,000, in 2022. Next year, up to $160,200 of earnings will be subject to these taxes.
There are two ways to close the funding gap: raising payroll taxes or trimming benefits, both of which require congressional approval. But so far, legislators have done little to address the problem.
The thing is there are many ways and combination of ways to close the funding gap for Social Security. By stating the above – as is often the case, the political debate focuses on rich and poor which is exactly how some politicians want it to be.
Of course, when “trimming benefits” is used, it means prospective changes to benefits not yet earned or received, but the language serves its purpose of being inflammatory and scares older voters. The Social Security law is so complicated, few people fully understand it in any case.
The problem is social programs are put in place, they are anticipated to be permanent, huge liabilities are created, sometimes they are expanded using unrealistic cost assumptions and then – –
There is a solution perfectly acceptable to all – as everyone would be responsible for filling the funding gap.
The best part is that there is NO political liability for Congress – so it is as bipartisan and responsibility-shirking as a solution can be!
“Demographic shifts have led to that imbalance. More baby boomers are collecting payments. Retirees are living longer. At the same time, a declining birthrate has produced fewer workers contributing to payroll taxes. ”
Although this statement may be partially true, it is also misleading. In 1950 there were 43.5 million workers. In September 2022, there were 158.9 million workers. There are more workers now paying into the system than ever before. It still might not be enough.
Maybe the real problem is expanded benefits and unfunded COLAs during this time?
There really are only 2 ways to deal with Social Security, trim the outgo or increase the income. I get that some politicians don’t want to deal with social programs since the funding mess has been handed down and handed down by previous reps who didn’t want to face it. When you start charging more or giving less, the voters take note and the current officeholder gets the blame. Nobody remembers the official from 10 years ago who didn’t touch the problem when he/she should have.
Herb Stein, I believe it was, once said something to the effect “what can’t go on, won’t go on” and that applies to the current Social Security set up. The border has been opened to bring in a horde of workers but those folks don’t seem to be the high income types. They may earn at the lower levels and pay into Social Security but not enough to solve the problem. When I stop in at the doughnut shop for a coffee and donut, I often think about how many $15 per hour workers there it takes to pay my benefits each month and it is a lot.