The Real Fix for Social Security

The trustees of Social Security — of which yours truly was once a member — say the program will be able to pay full benefits only until 2033. After that, Social Security will be able to dole out only roughly 77 percent of benefits due.

Donald Trump has pledged to protect Social Security but hasn’t offered a plan for how to do that. Instead, he is promising to repeal taxes on Social Security benefits.

This will not save Social Security. In fact, quite the opposite. Without the revenue from Social Security taxes, the Social Security trust fund will run out of money even sooner.

This has been the Republican goal for years: Social Security is one of the most popular and successful government programs ever created, not only helping retirees but also keeping 26 million people out of poverty.

Getting rid of Social Security will, in the minds of Republican strategists, open the way to getting rid of much else Americans depend on.

Why is Social Security running out of money? Not because so many boomers are retiring.

The Social Security trustees anticipated the boom in boomer retirements. This is why Social Security was amended back in 1983, to gradually increase the age for collecting full retirement benefits from 65 to 67. That change is helping finance the boomers’ retirement.

The real reason Social Security is running out of money is something the trustees never anticipated: how much total income is going to the top.

A big part of the American working population today is earning less than the Social Security trustees anticipated years ago — reducing revenue flowing into the program.

Had the pay of American workers kept up with the trend decades ago — as well as their growing productivity — their Social Security payments would have kept the program flush.

But a much larger chunk of the nation’s total income is now going to the top compared to decades ago.

Yet income subject to the Social Security payroll tax is capped. No dollar of earnings above the cap is taxed. The cap in 2024 is $168,600.

So, as the rich have become far richer, more and more of the nation’s total income has escaped the Social Security payroll tax. 

A CEO earning $20 million a year pays Social Security taxes on roughly 1 percent of their income, while a worker earning under the cap pays Social Security taxes on 100 percent of their income.

They both end up paying the same amount of money into the program. That isn’t fair.

The rise in the amount of income above the cap due to inequality has cost the Social Security Trust Fund reserve an estimated $1.4 trillion since 1983. 

The solution is obvious: Scrap the cap and make the rich pay more in Social Security taxes.

One plan introduced by Democrats in Congress would eliminate the cap on earnings over $250,000 and also subject investment income to Social Security taxes.

It’s estimated that this would extend the solvency of Social Security for the next 75 years without raising taxes on 93 percent of American households. 

Bottom line: Trump’s plan will destroy Social Security.

The Democrats’ plan will save it — and do so fairly.

If we want to ensure Social Security’s long-term future, and that working people can retire with dignity, we must make the wealthy pay their fair share.