The Plan for Social Security - or Lack Thereof
A few days ago, we wrote an article critical of the Paul Ryan plan for Social Security. Our main point of contention is that it isn't fair that the younger generations be forced to pay for the full benefits of the baby boomers while those later generations get their benefits slashed tremendously. From Congressman Ryan's point of view, the system is in trouble and needs to be radically changed to survive. He is doing what is necessary.
However, Governor Romney doesn't share this immediate concern. His view is that the system can be saved by making two changes that do not affect those already within the system. First, the retirement age will be slowly raised for those not already on Social Security. The age it will be raised to is not set. The second change is removing Social Security benefits from those with higher incomes. The rates of income that would be required before your benefits are lowered is not addressed.
This a very weak plan. The lack of specifics is troubling, especially in the means testing area. Not to mention the troubling fact that a "conservative" would support means testing, or moving Social Security to a wealth redistribution system. The fact that Governor Romney is asking the American people to support implementing a reform package that doesn't describe whether it reduces benefits to 1% of the population or 49% should concern everyone involved.
As weak on details as the Romney plan is, at least he has a plan. The Obama campaign website only addresses Social Security in stating that it will continue to support the system. In fact, in both the official Democratic platform and the statements made on President Obama's website do not directly address Social Security, but rather have pages devoted to "Retirement Security" which addresses their desire to support Social Security and their support for allowing more people to enroll in private retirement accounts outside of the Social Security system.
As a matter of fact, I would invite everyone to go to the Barack Obama campaign website and find any statements concerning Social Security directly linked from that main page or from the economic plan linked at the center of that page. After searching the Obama campaign website for the phrase "Social Security" we came across the "Security in Retirement" page.
In 2008, President Obama supported the solvency of the system and stated that removing the cap on income that is taxed for Social Security is all that is necessary to overcome the baby boomer bump. None of his current statements address this issue, but it can be assumed that he still supports such a measure given his current position on the Buffett Rule.
So, now we have a problem. We have selected the candidates for the two main parties, and neither of those candidates can describe in acceptable detail what they would do to address Social Security. This is especially important given the changes made to Social Security in recent years. Under President Obama, the amount taken in through Social Security taxes was reduced by 2% in the so called "Payroll Tax Cuts." However, the amount of money taken into the Social Security system remains the same as money is now diverted from the general revenue fund. The longer that this situation remains, the more likely it is that when the Social Security system finally does go belly up money will simply be taken from general taxes to make up whatever amount of funds necessary to pay out benefits.
This back end taxation on the next generation is likely the real solution planned by both administrations. Unless either party can show that a new plan isn't necesary because the system is currently solvent or they put forth a plan to change the system, we must assume that their belief is that it doesn't matter what funds remain in the system as there is no longer a limit to the funds that can be committed to save the system.
Either way, we deserve at least a plan.