Reply #29: It is in my nature to be a contrarian [View All]

[lumberjack_jeff]

Social Security is intended to do two things;
1) Guarantee a minimum retirement pension so that retirees have a minimum level of dignity in their old age, and
2) Guarantee disability income for people who are unable to work, or if they die, for their dependents.

The "premium" for this insurance coverage is a tax shared between employee and employer. A certain level of premium entitles the worker a certain level of retirement income. At $90,000 per year, the retirement income that the premium entitles the worker to is considered ample, and thus above the system's mission.

So, IN MY VIEW, lifting the cap means one of three things;
1) IF the benefit schedule is expanded upwards to provide commensurate benefits to high income SS tax payers, then Social security is now for something more than minimum sustenance to avoid poverty. On the other hand,
2) if the benefit schedule remains as it is, so that a retiree who earned $200,000 gets the same benefit as a retiree who earned $90,000 as a worker, then it's not insurance anymore. At that point it becomes partially a wealth redistribution system (welfare).
3) benefits are still cut, but the excess revenues remain available to pay for tax cuts and wars.

My feeling is that Bush is doing whatever it takes to avoid the need to tax capital. A wealthy worker is still a worker and thus a better
Republican target for taxes than an investor or a corporation.

Not that there's anything inherently bad with the wealth redistribution, but it opens a can of worms that Social Security has thus far avoided, and is the reason for its popularity. I think you only raise the cap if there's a demonstrated crisis. At likely levels of GDP growth, the Social Security System has ample resources to pay benefits for everyone alive today, and predicting the economy beyond that timeframe is not useful.

Our grandkids will die in the next ice age anyway.

http://bulletpoint.blogspot.com/2005/02/17-trillion-in-unclaimed-property.html

* edited for organization *