A popular idea that's oh-so-wrong
Writing in the NY Times, Thomas Edsall spills a lot of ink to propose essentially one idea to save Social Security: raising the income limit subject to the payroll tax. His argument boils down to: 1) it will work and 2) it is popular with Americans. Yes, and robbing Peter to pay Paul will always have the support of Paul.
The problem is that Social Security was supposed to be a "universal" benefit for all Americans where the size of your benefit is proportional to your income (with some progressivity built into the system). But FDR also understood that the political popularity of the program would be undermined if John D. Rockefeller was getting a fat benefit check in the middle of the Depression. Thus, the income cap also capped the maximum benefit received.
What Edsall never explains is whether lifting the limit on income subject to taxes would also lift the benefit - and I think it's safe to assume not. The benefit will be capped but the taxes will not so Bill Gates will get his fat $1,261 check. Otherwise, where would the savings come from? Initially, there would be in influx of new FICA taxes but the future liabilities would also rise.
Interestingly, Edsall doesn't support means testing of entitlements because it would undermine the political support of these so-called universal programs. But if he thinks these programs will be unpopular with means testing, he should wait until Social Security is broke in 20 years and everybody's benefits are automatically cut. The current rate of return for an American worker is already negative and there's no political will to make any reforms. Edsall's article does nothing but muddle the issue. If you want Social Security to be a welfare program instead of a universal benefit, then just come right out and say it. It's heading that way anyway.