Washington Post columnist Robert Samuelson says that Social Security reform should be included as part of larger budget talks. He argues that three main objections to doing so don’t hold much water:
“One argument is that most elderly are poor; benefit cuts will further impoverish them. Not so. The Administration on Aging reports that in 2010, 25.9 percent of households headed by someone 65 or older had incomes exceeding $75,000; 19.4 percent had incomes from $50,000 to $74,999; and 18.8 percent had incomes from $35,000 to $49,999.”
“Another argument is that recipients "earned" benefits through their payroll taxes, which (many believe) were saved. But they weren't saved; they paid the benefits of earlier retirees. Even had they been saved and earned interest, they typically wouldn't cover lifetime Social Security and Medicare benefits, estimate the Urban Institute's Eugene Steuerle and Caleb Quakenbush. A couple with average wages retiring in 2010 would receive $966,000 in benefits against taxes of $722,000.”
“Finally, it's often said that Social Security -- no one makes this argument for Medicare -- doesn't add to the budget deficit because benefits are still covered by payroll taxes. Again, not true. In 2010, benefits exceeded taxes and are expected to do so indefinitely. The Congressional Budget Office estimates the gap to average 10 percent over the next decade and to be 20 percent by 2030. This bloats deficits.”
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