Wednesday, November 14, 2012

Social Security: really, what is going on here?

I keep asking the same question as the commenter on The Incidental Economist asks:
In fact, Social Security is NOT in crisis. If we hiked payroll taxes by two percentage points we would probably take care of the payroll tax deficit. Yes, that’s a regressive tax and we should be cautious about doing it. But our long-run budget problems are mostly in health care. Why the unearthly fascination with cutting Social Security?
I mean, seriously, why is it such conventional wisdom that it needs to be reformed?  It is true that a private alternative would be a great revenue center for finance types.  But a lot of things would be great revenue sources that we don't privatize for good reason (Police, Military), either because it would be inefficient or because only the government can guarentee long term contracts like those required for retirement in 45 years. 

Social security is a popular benefit and something like 80-90% of the population will eventually have it as an important piece of their income.  Just what is going on here? 

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