TO: Presidential 2020 Candidate Mayor Buttigieg
FROM: Shivam Vakil
SUBJECT: Social Security Platform
Social Security is one of Americas most prolific and respected programs. Throughout the years since its inception, it has saved millions of Americans avoid poverty after retirement, in the face of a serious disability, or after the primary caregiver (their significant other) passes away suddenly. However, Social Security is at a major crossroads since at its current status, it faces a long-term deficit and over time, if we project out to say 75 years, the deficit is an alarming 1.2 percent of our GDP. While this seems like a major disaster in the making, I would not recommend major changes, instead a more progressive reform will be just what the doctor ordered for this. The Social Security deficit should be reduced via a combination of tax increases and benefit reductions, which might involve painful decisions for some parties, but are low-risk and a semblance of real reform which is what this nation needs.
Addressing Our Increasing Life Expectancy
The first area of focus will be to deal with our increase life expectancy. According to our nations most recent statistics, since, life expectancy at age 65 has increased by four years for men and five for women, and will be projected to rise even more in the future. More life expectancy means more Social Security payments down the line. In order to offset these compounding costs, my proposal to dealing with this is a balanced plan of benefit reductions and tax increases. These costs can be offset by half of it coming from a reduction in benefits for all workers age 59 and younger, while the other half can be made up via increasing the payroll tax rate. . Implementing this proposal would reduce the seventy-five-year actuarial deficit by 0.55 percent of taxable payroll, slightly less than a third of the currently projected deficit.
Addressing The Increasing Earnings Inequality
The rising deficit of Social Security has been affected by two recent trends: a rising of the earnings that are above the maximum taxable amount, and the growing disparity of the differences of life expectancy between the lower income tax bracket and the higher income tax bracket. Over these past 20 years or so, the aggregate earnings above the maximum taxable amount has ballooned to around 16 percent or so. My recommended plan is to gradually raise the taxable income amount, so that this disparity can return to a normal level in the next 30 years or so, specifically making our aggregate earnings above the taxable amount back to 13 percent, where at the moment its sitting at a high end of 16 percent. My plan would affect the 15 percent of workers with the highest lifetime earnings, which would thus reduce the 75 year deficit by 0.43 percent of the taxable payroll.
Addressing Our Legacy Debt
Lastly, my plan addresses our legacy debt issue. Our legacy debt can be attributed to the Benefits paid to the past and present cohorts and the revenue they contributed years earlier.
These ideas will solve our nations Social Security problem. Progressive reform is the key, instead of hopefully wishing this deficit goes away and transferring trillions of dollars from other accounts or borrowing money. Through these tough decisions, we shall remove our Social Security deficit and revamp this program to where its needed. Sources
Saving Social Security: The Diamond-Orszag Plan, Lecture Assigned Readings. Found on TritonedLecture Slides : Lectures 3-5, Social Security. Found on Tritoned