2008 Woodie Awards
Reform will be difficult and complex
Dane Schumann
Issue date: 3/31/05 Section: News
Adding personal accounts to the Social Security program is not the only proposed change that has made it onto the public forum. Raising the retirement age is an idea that would undeniably help with the problem of long-term solvency but not solve it. This would work in a fiscally positive way by keeping more people paying into the system for a longer time and would effectively refuse more people benefits in the future (as more people live to age 65 than say 67).
Another idea that is somewhat newer than raising the retirement bar is the suggestion of calculating benefits on an inflationary scale rather than a wage based one. This would conceivably help deal with the solvency situation as wages generally grow at a faster pace than inflation. Because this happens the fund is forced to calculate benefits in an arbitrary manner that may or may not be reflective of the fiscal situation within the United States. While President Bush has made it clear that he will not raise the pay roll tax that funds Social Security, his options for funding the system could still possibly be driven by tax revenues. Currently only the first $90,000 of a person's income is eligible to be tapped by the Social Security pay roll tax laws.
While Bush has not advocated a raise in the tax rate per se, he has indeed sounded mildly supportive of raising that ceiling to make more of a person's income susceptible to be taxed in the first place. This would obviously add a considerable amount of revenue to the system.
With all of this in mind, it is clear that the president, congressional members and the citizens of this nation have a lot to think about. It is still unclear whether or not any parts of Bush's plans will become law. Despite an increased majority in both chambers, he faces strong forces on Capitol Hill after a bitterly contested election and a strong AARP lobby that took a hit on his Medicare bill in November of 2003. That is why he has come to Kirkwood. He needs support and direction for his plan and hopes to sell the plan to the constituency that will most greatly affect the forces in Washington.
Another idea that is somewhat newer than raising the retirement bar is the suggestion of calculating benefits on an inflationary scale rather than a wage based one. This would conceivably help deal with the solvency situation as wages generally grow at a faster pace than inflation. Because this happens the fund is forced to calculate benefits in an arbitrary manner that may or may not be reflective of the fiscal situation within the United States. While President Bush has made it clear that he will not raise the pay roll tax that funds Social Security, his options for funding the system could still possibly be driven by tax revenues. Currently only the first $90,000 of a person's income is eligible to be tapped by the Social Security pay roll tax laws.
While Bush has not advocated a raise in the tax rate per se, he has indeed sounded mildly supportive of raising that ceiling to make more of a person's income susceptible to be taxed in the first place. This would obviously add a considerable amount of revenue to the system.
With all of this in mind, it is clear that the president, congressional members and the citizens of this nation have a lot to think about. It is still unclear whether or not any parts of Bush's plans will become law. Despite an increased majority in both chambers, he faces strong forces on Capitol Hill after a bitterly contested election and a strong AARP lobby that took a hit on his Medicare bill in November of 2003. That is why he has come to Kirkwood. He needs support and direction for his plan and hopes to sell the plan to the constituency that will most greatly affect the forces in Washington.