United We Stand, Divided We Fall

There are many options to prevent the Social Security Retirement program from becoming bankrupt by 2033. However, the Congress and the President must take action now. Below are some of the options.
The options to reach this important goal come down to increasing the social security taxes to support the program or lowering its expenditures and in effect the benefits of the program. Where the information is available, the effect on the overall annual Federal deficit (i.e., in 1. below under taxes, we note ‘This would produce $112 billion annually’) as well as the current estimate of the effect on closing the solvency gap within just the Social Security program will be noted (i.e., in 2. below under taxes, we note ‘This will cover 98% of Social Security shortfall.’).

For tax increases to support the Social Security Program, listed below are some of the options that have been put forward.
1. Remove the 2% employee contribution hiatus. This would produce $112 billion annually. This has been done. Wonderful!
2. Subject all earned income to social security taxation as presently is the case with Medicare taxes. This will cover 98% of Social Security shortfall.
3. Subject earned income up to $218,100 to social security taxation from $113,700 in 2013. This will cover 36% of the Social Security shortfall.
4. Subject earned income up to $160,000 to social security taxation from $113,700 in 2013. This will cover 16% of the Social Security shortfall.
5. Raise the earned income limit to 90% of taxable wages. If this is done gradually by 2050, this will cover 35% of the Social Security shortfall.
6. Raise the Social Security tax rate for the employee. Each .25% raise in the tax rate will reduce 11% of the shortfall in the Social Security program.
7. Raise the Social Security tax rate for both the employer and the employee. Each .25% raise in the tax rate will cover 22% of Social Security shortfall.
8. Remove the exemption from social security taxes on salary reduction plans. This step is unscored.
9. Subject Flexible Spending Account withholdings to Social Security Taxes.
This step is unscored
10. Subject Cafeteria Plan Employer expenditures to Social Security Taxes. This
step is unscored.
11. Subject commuting Employer expenditures to Social Security Taxes. This
step is unscored.
12. Subject Health Insurance Employer expenditures to Social Security Taxes. This
step is unscored.

For decreasing social security expenditures, listed below are some of the options
that have been discussed.
1. Increase the age when social security benefits can be first taken. The present age
is 62. This proposal is unscored.
2. Increase the age when full social security benefits can be taken. The present age is
66 to 67 depending on your date of birth. If the age for full benefits is increased to
68, this proposal will cover 18% of the social security shortfall (phase in starts in
2023 and is finalized in 2028). If the age for full social security benefits is
increased to 70, this will cover 44% of the Social security shortfall (phase in starts
in 2023 and is finalized in 2040).
3. Increase the age when full social security benefits can be taken using a longevity
Index. This will cover 23% to 27% of the social security shortfall depending on
the details of the plan.
4. Eliminate the cost of living escalator. This step is unscored.
5. Freeze social security payments for 1 year. This will save $13 billion in FY 2014,
$14 billion in FY 2015, and $15 billion in FY2016.
6. Freeze social security payments for 3 years. This will save $13 billion in FY 2014,
$30 billion in FY 2015, and $48 billion in FY 2016.
7. Change the cost of living escalator from the CPI to the Chained CPI. This will
cover 23% of the Social Security shortfall. It will also reduce expenditures by
$11 billion per year.
8. Reduce the social security payments to the top 25% of earners 15% over a period
of time. This will cover 7% of the Social Security shortfall.
9. Reduce the social security payments to the top 50% of earners 28% over a period
of time. This will cover 31% of the Social Security shortfall.
10. Make the social security benefit calculations more progressive than they currently
are. This will cover 45% of the Social Security shortfall.
11. Increase the number of years in the wage history used to calculate social security
benefits from 35 years to 38 years. This will cover 13% of the Social Security
shortfall.
12. Reduce social security benefits yearly depending on the other income of the
recipient. Depending on the plan, it will cover 11% of the Social Security shortfall.
13. Reexamine the disabled for recipients who can now work. For each 10% found to
be able to work, expenditures fall by $14 billion per year. The estimates range from 33% to 67% of the disabled can work. This generates between $47 billion to $94 billion annually.

We can prevent the 2033 bankruptcy of the Social Security Retirement program easily if the President and Congress will act.
Harry Pukay-Martin