Somehow I missed this when it hit the news in Feb.

A new bill which seems like it will keep social security solvent indefinitely.

It increases the benefit 2%, and changes the inflation index to be more generous to beneficiaries.

On the tax side, it lowers the payroll tax on the very bottom of the income distribution, otherwise raises it 2%ish.

It does an odd thing with the cap. It doesn’t eliminate it, it would still remain at 132k (indexed). But taxes would begin again at 400k and up.

So it creates a ‘donut hole’ between 132k and 400k where marginal income is not taxed.

That seems wrong to me. Eliminate the cap altogether and them maybe you wouldn’t need as much of an increase for everyone else. Or eliminate, don’t change the tax, and make the benefit even more generous. Perhaps goosing what low earners would get.

But still, I heartily support this over the current trajectory.



https://www.nytimes.com/2019/0...curity-2100-act.html

DOA, I'm sure.

Krugman has been arguing for years that the supposed "insolvency" of the SS system was a useful myth for some people, and that relatively minor tweaks are all that's needed to ensure a solvent system as far as the eye can see.

The reason it's a myth is that the law itself specifies automatic reduction of benefits if the fund is exhausted and current payroll tax can't pay the current benefit. So it can't technically ever go insolvent. But that will seem academic to the seniors who's checks suddenly get smaller...

Neither party can afford to let that happen. Seniors are too big a voting bloc, and they vote. It would get fixed somehow.

quote:

Originally posted by jon-nyc:
The reason it's a myth is that the law itself specifies automatic reduction of benefits if the fund is exhausted and current payroll tax can't pay the current benefit. So it can't technically ever go insolvent. But that will seem academic to the seniors who's checks suddenly get smaller...

Yep.