Has Social Security Been a "Success"?
In acknowledgement of Social Security’s seventieth anniversary, here’s a blogpost of mine that was originally published on January 27, 2005.
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Sometimes opponents of Social Security reform take this sort of tack: “Yes the system faces some challenges based on the demographics of the Baby Boom, but that’s temporary. The system itself is a success and should not be fundamentally changed.“
Does this look like a success to you?
Year. . . . . . OASDI Tax Rate
1937-49. . . . . . .1.000
1950-53. . . . . . .1.500
1954-56. . . . . . .2.000
1957-58. . . . . . .2.250
1959. . . . . . . . 2.500
1960-61. . . . . . .3.000
1962. . . . . . . . 3.125
1963-65. . . . . . .3.625
1966. . . . . . . . 3.850
1967. . . . . . . . 3.900
1968. . . . . . . . 3.800
1969-1970. . . . . .4.200
1971-72. . . . . . .4.600
1973. . . . . . . . 4.850
1974-77. . . . . . .4.950
1978. . . . . . . . 5.050
1979-80. . . . . . .5.080
1981. . . . . . . . 5.350
1982-83. . . . . . .5.400
1984-87. . . . . . .5.700
1988-89. . . . . . .6.060
1990-2005. . . . . .6.200
And of course, your employer has faced those same rate hikes right along with you (or, for the self-employed, those rates are simply doubled).
A “success”?
Need more? Try this:
Year. . . . Wage Cap
1937-50. . . .$3,000
1960. . . . . .4,800
1970. . . . . .7,800
1980. . . . . 25,900
1990. . . . . 51,300
2000. . . . . 76,200
2005. . . . . 90,000
I ask again, does this look like a “success” facing a temporary “challenge” caused by the Baby Boom? (Complete annual data here.)
Just one more: here is the product of the two numbers (i.e., the maximum annual Social Security tax a worker had to pay):
Year. . Max Tax
1937. . . .$30
1940. . . . 30
1950. . . . 45
1960. . . .144
1970. . . .327
1980. . . 1316
1990. . . 3181
2000. . . 4724
2005. . . 5580
If my math is correct, that’s almost an 8% average annual increase in the maximum tax paid. Almost 8% more, every year for 68 years, with no end in sight.
I ask yet again: A “success” facing a temporary “hiccup”?
Part of the reason the crisis is now being acknowelded as real is because the politicians are, finally, beginning to realize that Social Security has essentially “maxed out” the possible tax burden (except for those who advocate scrapping the wage cap altogether, which would represent the single biggest tax increase in American history).
Compare and contrast: Some opponents of reform sneer that Medicare is actually in worse shape than Social Security. But of course there is no Medicare “crisis” — yet — because the Medicare tax is “only” 1.45% of wages (again, matched by the employer, but with no wage cap). There is plenty of room for the tax-and-spend crowd to start hiking the Medicare tax rate (which of course will catalyze more generous benefits, and so on, and so on, and so on, until there is indeed a real Medicare “crisis”).
In other words, to socialists and redistributionists there’s never a crisis until there’s nothing left to tax.
POST SCRIPT: Also don’t forget the increase in the retirement age, another “tweak” to the “successful” system.
Similar Posts:
- Has Social Security Been a “Success”?
- Bush Caving on Social Security Wage Cap?
- Social Security: On Autopilot (Straight into the Mountain)
- Today’s NYT Social Security Lie
- Obama’s “Little Bit More” for Social Security
Filed under: Social Security
"We have a moral obligation to stand up and protect Social Security for the next 70 years and beyond — that means stopping privatization and dropping partisan demands for private accounts," said Rep. John Salazar, a Colorado Democrat, in his response to President George W. Bush’s radio address.
Kip – I'm not sure why you want to destroy Social Security. It sure as hell won't bring on your low-tax utopia — I bet they use any "savings" from SS reform to "shore up" (expand) Medicare instead, so it's just moving your money from one government program to another. Why not stick with what we know works? A known devil is always better than an unknown one, after all.
I'm paying a higher percentage of my income than some fellow 50 years ago – yes. My retirement benefits will also be a greater share of my lifetime income. You seem to have left off this second important point. By doing so, yor critic of the program was not honest. Not honest all.
The Bear doth protest too much.
First of all, since Social Security replaces only a portion of lifetime income, that means that workers are paying an ever higher marginal tax burden for an ever decreasing marginal benefit. That, I submit, is a much more dishonest omission than anything I did or did not include.
Second, wages have increased over time, so even if tax rates had been held steady, more taxes would still have been paid into the system to fund those higher benefits that PGL thinks I am somehow sweeping under the rug. That does not explain the need for higher tax rates. What does explain it is the fundamental instability of the system.
My thesis is simple: If Social Security is such a "success," then why does the program need ever-increasing tax rates to finance it? There is nothing "not honest at all" about that question.
Oh, and how about proofreading before you post?
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