A new budget by a large and influential group of House Republicans calls for raising the Social Security retirement age for future retirees and restructuring Medicare.
For Social Security, the budget endorses “modest adjustments to the retirement age for future retirees to account for increases in life expectancy.” It calls for lowering benefits for the highest-earning beneficiaries. And it emphasizes that those ideas are not designed to take effect immediately: “The RSC Budget does not cut or delay retirement benefits for any senior in or near retirement.”
Biden has blasted Republican proposals for the retirement programs, promising that he will not cut benefits and instead proposing in his recent White House budget to cover the future shortfall by raising taxes on upper earners.
“Medicare is projected to become insolvent in 2028, and Social Security will follow in 2033. After that, benefits will be forcibly cut unless more revenues are added.”
As of today, payroll tax contributions only apply to the first $168,600 of income.
https://www.ssa.gov/news/press/factsheets/HowAreSocialSecurity.htm
If you remove that cap, or apply it to other forms of income besides payroll, the funding problem pretty much goes away.
Except that’s a sham way of framing things that most people use.
The US is monetarily sovereign and can always issue enough currency to meet any demands upon it.
Uncle Sam doesn’t go around collecting dollars like a beggar to apply to things. It creates money directly through spending, or backstops the creation of demand deposits by private banks via the reserve system. Money has to be created before it can be destroyed through taxation.
The issue isn’t, “Where will we get the money?”
The REAL issue is, “Will we have the infrastructure to care for our elderly?”
Warren Mosler goes over this in one of his better short pieces of literature.
https://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
Yes. When congress appropriates funding and it’s signed into law, the effect is that the US Treasury spends that money into existence. The mechanism, of course, is that Treasury directs the fed to issue bonds to create the money, and when you pay taxes that money doesn’t go into an account Congress can spend from, it goes back to the fed to zero out the bonds used to create it.
Of course, if we continue cutting taxes the way we have, that will eventually balloon the amount of currency in circulation and that can be problematic if it’s untethered to reality
And if we take both your comments together, we end up with “should we get rid of the cap so the rich pay a fair share or keep it and collectively pay for things by way of inflation?”
Personally, I’m all for uncapping it.
It’s not about the rich paying their fair share.
We need to tax them specifically to reduce their insane power in our system.
The federal government doesn’t need them to finance a damn thing. It can finance anything it wants to with the stroke of a pen.
We are not reliant on the rich.
The problem with the latter is honestly that inflation hurts the poor a lot more than it does the wealthy and if anything, gives the wealthy a lot more power. Power is really the issue here- when the rich have the ability to override democracy by spending money, that’s a big damned problem