Megan McArdle hits my favorite topic in "No easy way to fix Social Security":
Liberals who think this nonetheless sounds pretty swell [raising the cap on taxable income w/o raising benefits] should also reflect upon the fact that this would suck up any room they have to propose new spending funded by tax increases on the rich. If this is how we decide to pay for Social Security, every single other social program ever proposed would have to be paid for with either unpopular program cuts, or tax hikes on the middle class. Moreover, overruns in existing programs, such as . . . oh, I don't know, just off the top of my head, our new health care entitlement . . . would also have to be paid for this way: cut the program, cut another program, or tell average voters that it's time for another hefty tax hike.Megan's thesis here is that raising the cap on taxable income would be the largest marginal tax in U.S. history and – once the trigger is pulled to save this government program – there's nothing left for every other program in crisis. Frankly, I think this argument is unpersuasive to the class warriors who don't give a fig about how the "rich" earned their money. They just want "somebody else" to pay for everything.
I prefer the equally unpersuasive argument that Franklin Delano Roosevelt set up Social Security to be a "universal" benefit in that everybody gets back something proportional to the taxes paid in. However, he knew that fat checks sent out to J. Paul Getty would not be popular, hence the cap on taxable income which also limits the maximum benefit. Lifting the income cap without raising benefits would destroy Social Security's universality and turn it into another welfare program.
If we're serious about making Social Security solvent, can't we at least be honest that a program formulated when people were still traveling around on horses might not be relevant to modern society?
The program was implemented in 1935. What are the odds that its structure and retirement age are suitable for the current era?At the time Social Security was set up, it was unlikely most Americans would live to 65 to collect benefits. Also, the purpose of an old-age pension was that the elderly could not perform the physical labor of Depression-era jobs. Now there are computers and Walmart greeting to be done. Nobody's digging ditches with short-handled shovels anymore.