Why we need Social Security Reform
...It's one thing to argue that growing health care costs make Medicare and Medicaid a more daunting long-term fiscal challenge. But to say Social Security isn't a driver of the debt is to ignore math and huddle in a state of liberal denialism.
More money is spent on Social Security than on any other single program in the federal budget, including all defense spending. By 2022, nearly 25 percent of federal spending will be devoted to Social Security, according to the Congressional Budget Office, up from 20 percent last year. In contrast, even if Congress votes next month to avert automatic defense cuts, the share of the budget devoted to defense spending is projected to shrink from 19 percent in 2011 to 12 percent by 2022.
All told, the federal government will spend $10.5 trillion on Social Security over the next decade (2013 to 2022), according to the Congressional Budget Office. To say this will have no effect on deficits is preposterous on its face.
Defenders of Social Security would argue that because the program has a theoretically dedicated revenue stream in the form of payroll taxes, it doesn't really add to the debt burden. There are a number of reasons why this reasoning is flawed.
To start, in practice, money raised by payroll taxes is used to finance all government spending, not just Social Security. But beyond that, it's important to consider the tradeoffs involved with imposing a 12.4 percent payroll tax on the economy (split between workers and employers).
If there were no payroll tax, the government could raise income taxes or other forms of taxes to help pay for government spending. It would be cheaper for employers to hire and maintain workers, which would translate into some combination of higher salaries, greater employment and increased corporate profits. Any one of these developments would open up more income to taxation. It's also worth noting that because Americans aren't subject to payroll taxes on income over $110,000, the tax falls disproportionately on the middle class.
...Disclosure--I currently get a Social Security payment each month. My main concern in this area is that there will be not much there for those who are currently paying the tab for these payments. Democrats' refusal to deal with this foreseeable event is part of their irresponsible attitude toward dealing with their spending addiction.