Social Security is currently broken, as the deficit gets larger and reforms fail this issue only becomes more difficult to solve. Social Security is struggling because of several factors. First off is the outstanding legacy debt that the initial generation of beneficiaries incurred. These people took out significantly more benefits than they paid in, thus creating the largest portion of the Social Security deficit. The next issue is that the government dipped into the Social Security surplus to pay off their own budget deficits. This money could have instead filled the legacy debt or helped fund future generations of Social Security beneficiaries. Instead, Social Security barely gets by because, as the baby boomers retire, there are less workers supporting the benefits. It is because of these system flaws that we should institute a new reform that seeks to generate larger Social Security funds that will help pay off the legacy debt, keep Social Security solvent, and prevent the government from re-allocating Social Security funds to other government budgets and agencies.
The first part of this policy would eliminate the taxable maximum income of $106,800 thus expanding the money that Social Security will acquire. The current return on payroll taxes for social security is 2.9 percent for low income, 1.9 percent for medium income, 1.2 percent for high income, and .6 percent maximum. We would create a highest income bracket after $106,800 at the return of .2 percent. This elimination would create large amounts of money for the Social Security trust while the scaling percentages ensure that Social Security does not pay significant benefits to the wealthy who can easily afford retirement off of their previous income and other likely investments. An increase in taxes on the wealthy may contract the economy some but not significantly, furthermore it would put Social Security onto the path of solvency. This expansion of Social Security tax would create a surplus that could be put towards paying off the legacy debt. Overtime the debt would be paid off and surpluses could be used to fund future generations. This leads into the second part of our policy that seeks to address government management of the Social Security Trust.
The Social Security debt crises could have been averted if politicians had correctly implemented reforms in the 1980s when Social Security had significant surpluses. Instead they dipped into those surpluses to solve budget deficits in their own programs and agencies outside of Social Security. This miss-management of the Social Security fund created a situation where Social Security barely had enough to pay out current benefits. Our policy would seek to create a mandate passed by the legislative branch that will dictate that funds collected by the Social Security tax are meant to stay in that trust and cannot be removed from the trust for any circumstances other than paying of the existing legacy debt. This mandate would favorably pair with an elimination of the maximum taxable income because the increased money flow would not be drained by any type of government agency. Instead the money would go directly where it was always supposed to be, the Social Security Trust. If the government wants more money for their operations then they should raise general taxes instead of sneaking in extra funding from Social Security.
