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Updated on: June 21, 2011 / 11:56 AM / MoneyWatch
In an interview on Monday, David Certner, AARP's legislative policy director, added "that's a broader discussion, and it's a conversation we want to have." It's just that AARP refuses to partake in any conversation that frames Social Security reform as part of a deficit-reduction plan. Certner also mentioned that reaction to the WSJ article and dust-up has "so far been fairly light." Last I checked, there were 178 comments posted on AARP's Facebook page that included the organization's response to the WSJ article. So to recap: AARP is still very much against any attempt to carve into Social Security to reduce the current deficit, but it recognizes that, yes, the program does need tweaks to address its longer-term solvency. That shouldn't be controversial, it's just common sense. As for what specific reforms AARP would get behind, Certner said "we're not even at the beginning" of discussing the various options with AARP's members.
Right now, we all pay a 6.2 percent tax on the first $106,800 of income (the payroll tax is just 4.2 percent this year, thanks to a one-year stimulus break). Above $106,800, the tax disappears, though the cap is adjusted annually for inflation. The non-partisan Employee Benefits Research Institute figured out that we could completely solve Social Security's shortfall if we agreed to lift that income ceiling, and tax every dollar of income. But it turns out we probably don't need to go all out. Robert Reich, former secretary of Labor under President Clinton and a former trustee of the Social Security Trust fund, says we could actually get all the money we need to close the gap by collecting payroll tax on just the first $180,000 of income. That's it. Think the rich would be against that? Hmm. In a January poll, 72 percent of respondents with income above $100,000 said they were behind raising the income limit rather than reducing benefits or raising the retirement age. Not exactly a divisive issue, is it? According to Reich, the last time we reformed Social Security -- yep, this isn't the first tweak; the program was altered in 1983 when the full retirement age was set on its gradual rise from 65 to 67 -- the presumption was that the payroll tax would be levied on about 90 percent of the country's total income. But because the rich have gotten so much richer than everyone else, the payroll tax now collects on just 84 percent of our gross national personal income because it cuts off after the first $106,800. Raising the income cap to $180,000 and then indexing it to inflation would bring us back to the 90 percent capture rate. Is that a new levy on the wealthy? Absolutely. But 7 out of 10 of people who would be impacted say it's the palatable fix compared to other options, and it's really just getting us back to what the Social Security trustees intended nearly 30 years ago. Granted, that doesn't make for a great headline or purported controversy. All it does is fairly elegantly solve a problem. We can debate if we in fact want to solve that problem, but let's all be clear that this is one issue with a clear and -- for these times -- relatively uncontroversial fix. More on MoneyWatch:
Thanks for reading CBS NEWS. Create your free account or log in Please enter email address to continue Please enter valid email address to continue Is the National Committee to Preserve Social Security and Medicare a legitimate?NCPSSM is a member of the Leadership Council of Aging Organizations, a coalition of American non-profit organizations interested in senior issues. The NCPSSM supports lifting the Social Security payroll tax cap.
Are donations to National Committee to Preserve Social Security and Medicare tax deductible?Dues or gifts to the National Committee are not tax-deductible. To be a member you need make no special contributions other than annual dues.
How can I save Social Security and Medicare?Here are the four most promising ways to help save Social Security Now.. Increase Payroll Taxes. ... . Increase the Full Retirement Age. ... . Increase Income Level Subject to Social Security Taxes. ... . Decrease Taxes on Social Security Income.. |