Social Security has a surplus of over $2 trillion. For over thirty years, however, It collected more in payroll taxes and other income than it paid in benefits and other expenses. The Treasury invested the surplus in interest-bearing Treasury securities, ultimately reaching a total of $2.9 trillion in trust fund reserves.
Social Security remains beloved and has bipartisan support among American citizens. Yet the program faces an insolvency crisis. It pays out more in benefits than it collects in taxes and is, therefore, devouring its trust fund. By 2034, when the fund is projected to run dry, it's estimated that 81 million Americans will face automatic benefit cuts of 20%. This is not an option, but I do have a plan.
To make Social Security solvent for the next 75 years, legislators could raise the tax rate from 6.2% to 8.1%. According to current actuarial projections, this would fix the problem until 2095. So, it is fixable but painful.
Legislators could close three-quarters of the long-term deficit by immediately abolishing the maximum taxable wage base (currently $147,000), thus subjecting all wages to taxation. I would do this.
