It is already cash-flow negative and this does not even consider the problem that the assets held by the Social Security Administration are U.S. Treasury securities for which the government has no ready cash to redeem.
What a great time to expand SS benefits, which is just what the Social Security 2100 Act that has been introduced on Capitol Hill in the House by Rep. John Larson, D-Connecticut calls for.
Social Security recipients would get an increase of about 2 percent from current average benefits. And, the yearly cost-of-living adjustment would be changed in a manner that would more accurately reflect rising costs for beneficiaries.
How will this be paid for?
By higher taxes.
The bill would require that earnings above $400,000 be immediately subject to the payroll tax that funds the program. Currently, earnings above a certain level — $132,900 for 2019 — are not subject to Social Security taxation.
In addition, the bill also would gradually increase the payroll contribution by workers and employers to 7.4 percent each by 2043 from 6.2 percent (to 14.8 percent altogether from the current 12.4 percent).
Of course, the fact that the government doesn't have the ready cash, mentioned above, to redeem the Treasury securities that the SS administration will have to liquidate to meet upcoming obligations under the current plan (or the future Larson plan) is never taken into consideration.
In other words, a typical government plan lacking deep thought that will raise taxes but still keep everything a mess.
Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.comand Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bankand most recently Foundations of Private Property Society Theory: Anarchism for the Civilized Person Follow him on twitter:@wenzeleconomics and on LinkedIn. His youtube series is here: Robert Wenzel Talks Economics. More about Wenzel here.
Editor's note: This article was originally published at Economic Policy Journal and has been rerun with permission.
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