The Biggest Contrast in the Upcoming Election (Other Than Democracy vs. "Blood in the Streets" Fascism)
That’s because the American population is aging, with a rising ratio of retirees receiving Social Security benefits to workers paying into Social Security.
The Congressional Budget Office expects that over the next 20 years, spending on Social Security and Medicare will rise by about 3 percentage points of GDP.
In their annual report, the trustees of the Social Security Trust Fund said that Social Security will be able to pay full benefits for another decade but thereafter faces a significant funding shortfall. Unless something changes, after 2034 it will be able to pay only about 80% of scheduled benefits.
But this pending problem in no way requires cuts to Social Security benefits or increases in the retirement age.
In sharp contrast to Trump, Biden correctly asserts in his new budget that Social Security (and Medicare) can remain solvent by raising taxes on high incomes rather than by cutting benefits.
The problem isn’t that the giant baby-boom generation is sucking up too many Social Security benefits. 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 retirements of boomers (like me).
So what did the trustees fail to anticipate in 1983 when they raised the retirement age for collecting full benefits? Answer: the degree of income inequality in 21st century America.
Put simply, a big part of the American working population is earning less than the Social Security trustees (including me) anticipated decades ago — and therefore paying less in Social Security payroll tax.
Had the pay of American workers kept up with what had been the trend decades ago — and kept up with their own increasing productivity — their Social Security payroll tax payments would have been enough to keep the program flush.
At the same time, a much larger chunk of the nation’s total income is going to the top than was expected decades ago.
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