Robert Reich: The Real Fix For Social Security – OpEd

One of the reasons I write to you each day is to arm you with the facts and analyses you need to respond to the garbage coming out of the Trump campaign and Trump’s Republican Party. 

Today I want to talk to you about Social Security.

Thetrustees of Social Security— of which yours truly was once a member —saythe program will be able to pay full benefits only until2033. After that, Social Security will be able to dole out only roughly77 percentof benefits due.

Trump has pledged to protect Social Security but hasn’t offered a plan for how to do that.

Instead, he is promising to repeal taxes on Social Security benefits.

This willnotsave Social Security. In fact, quite the opposite. Without the revenue from Social Security taxes, the Social Security trust fund will run out of money even sooner.

This has been the Republican goal for years: Social Security is one of the mostpopularandsuccessfulgovernment programs ever created, not only helping retirees but also keeping26 million people out of poverty.

Getting rid of Social Security will, in the minds of Republican strategists, open the way to getting rid of much else Americans depend on.

Why is Social Security running out of money?Notbecause so many boomers are retiring.

The Social Security trustees anticipated the boom in boomer retirements. This is why Social Security wasamended back in 1983, to gradually increase the age for collecting full retirement benefits from65 to 67. That change is helping finance the boomers’ retirement.

The real reason Social Security is running out of money is something the trustees never anticipated: how much total income is going to the top. 

A big part of the American working population today isearning lessthan the Social Security trusteesanticipated years ago—reducing revenueflowing into the program.

Had the pay of American workers kept up with the trend decades ago — as well as theirgrowing productivity— their Social Security payments would have kept the program flush.

Buta much larger chunkof thenation’s total incomeis now going to the top compared to decades ago.

Yet income subject to the Social Security payroll tax is capped. No dollar of earnings above the cap is taxed. The cap in 2024 is $168,600.

So, as the rich have become far richer,more and moreof the nation’s total incomehas escapedthe Social Security payroll tax.

A CEO earning $20 million a year pays Social Security taxes on roughly1 percentof their income, while a worker earningunderthe cap pays Social Security taxes on100 percentof their income.

They both end up paying the same amount of money into the program. This isn’t fair.

The rise in the amount of income above the cap due to inequality has cost the Social Security Trust Fund reserve an estimated$1.4 trillion since 1983.

The solution is obvious: Scrap the cap and make the rich pay more in Social Security taxes.

One planintroduced by Democrats in Congress would eliminate the cap on earnings over $250,000 and also subjectinvestment incometo Social Security taxes.

It’s estimated that this would extend the solvency of Social Securityfor the next 75 yearswithout raising taxes on 93 percent of American households.

Bottom line: Trump’s plan will destroy Social Security.

The Democrats’ plan will save it —anddo so fairly.

If we want to ensure Social Security’s long-term future, and that working people can retire with dignity, we must make the wealthy pay their fair share.

• This article was published at Robert Reich's Substack