Some reforms are designed to phase in changes very gradually. This idea, called “grandfathering”, exempts workers in or near retirement from reform on the theory that older workers wouldn’t have enough time to ramp up their savings to offset the effects of benefit cuts. The problem is, between now and 2030 the baby boomers will be retiring at a rate of 10,000 a day. They ARE the problem!
One reform idea, means-testing, would cut the benefits of the richest households. Here’s the rub: there aren’t enough rich guys. In 2005, only in one in twenty households made more than $126,300, and only one in a hundred made more than $307,500. Means-testing that exempted the middle class would save little. And it could mean that the more you save, the more your benefits will be cut.
Some people hope that we can cover the entitlement shortfalls by taxing corporations and the rich. Yet the total wealth of every millionaire in America was $11.3 trillion in 2006—less than 20 percent of unfunded liabilities. In order to pay these costs, tax rates on businesses and affluent households eventually would need to top 88 percent. People in the middle would face tax rates of 63 percent.
Allowing workers to put their Social Security “contributions” into private accounts is sometimes cast as a painless reform. The problem is that your contributions are really taxes—and all of these taxes, and then some, have already been spoken for. In fact, the system is badly in debt. Without our tax payments, we would either have to borrow the money to pay benefits or cut benefits to those depending on them.
Simply cutting Social Security for all recipients, today’s and tomorrow’s, would be generationally fair. But each year, more and more of the Social Security benefit is being eaten up by Medicare premiums co-payments. Simply cutting benefits—for example, by slowing cost of living adjustments—would leave many elderly having to choose between medicine and food.
Some reforms are designed to phase in changes very gradually. This idea, called “grandfathering”, exempts workers in or near retirement from reform on the theory that older workers wouldn’t have enough time to ramp up their savings to offset the effects of benefit cuts. The problem is, between now and 2030 the baby boomers will be retiring at a rate of 10,000 a day. They ARE the problem!
One reform idea, means-testing, would cut the benefits of the richest households. Here’s the rub: there aren’t enough rich guys. In 2005, only in one in twenty households made more than $126,300, and only one in a hundred made more than $307,500. Means-testing that exempted the middle class would save little. And it could mean that the more you save, the more your benefits will be cut.
Some people hope that we can cover the entitlement shortfalls by taxing corporations and the rich. Yet the total wealth of every millionaire in America was $11.3 trillion in 2006—less than 20 percent of unfunded liabilities. In order to pay these costs, tax rates on businesses and affluent households eventually would need to top 88 percent. People in the middle would face tax rates of 63 percent.
Allowing workers to put their Social Security “contributions” into private accounts is sometimes cast as a painless reform. The problem is that your contributions are really taxes—and all of these taxes, and then some, have already been spoken for. In fact, the system is badly in debt. Without our tax payments, we would either have to borrow the money to pay benefits or cut benefits to those depending on them.
Simply cutting Social Security for all recipients, today’s and tomorrow’s, would be generationally fair. But each year, more and more of the Social Security benefit is being eaten up by Medicare premiums co-payments. Simply cutting benefits—for example, by slowing cost of living adjustments—would leave many elderly having to choose between medicine and food.