From the CATO Institute: “Social Security reform is not just about solvency”
Social Security taxes are already so high relative to benefits that Social Security has quite simply become a bad deal for younger workers, providing a low, below-market rate of return. In fact, many young workers will end up paying more in taxes than they receive in benefits.Personal accounts or not, this is a point I keep driving on Social Security: it’s an increasingly bad deal for younger workers and when the bottom falls out, the political support for the program will evaporate.
They will actually lose money under the program. While the tax increases and benefit cuts envisioned by Hoyer and Baucus would restore Social Security to solvency, they would also make Social Security an even worse deal for younger workers, who would end up paying more and receiving less.
But the single most important problem with the current Social Security system remains that workers have no ownership of their benefits.
This means that workers are left totally dependent on the goodwill of 535 politicians to determine what they will receive in retirement.
1 comment:
it’s an increasingly bad deal for younger workers and when the bottom falls out, the political support for the program will evaporate.
How I wish that were true. But I just can't see a political landscape in which that will happen. Today's young workers don't vote in high enough numbers to make anything happen. And by the time they do have enough political power, FICA has robbed them of the ability to save for their own retirement, so they're dependent on the system. It's a vicious cycle. This may be one case where things have to get a lot worse before they get better.
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