How to close the Social Security shortfall?

Sen. Bernie Sanders (I-Vermont) wants to raise taxes on the wealthy in order to close the Social Security shortfall. Why should Elon Musk pay the same amount into Social Security as an American earning $184,500 a year, the Social Security cap. Lifting the cap would end the shortfall for 75 years and increase Social Security benefits by $2,400 a year.

In an op-ed for the Washington Post, Ramesh Ponnuru argues against Sanders. He admits that Congress needs to address the shortfall. But, he opposes eliminating the Social Security cap because it would be a tax increase on the wealthy, which he thinks would be more harmful than increasing Social Security benefits for older Americans and people with disabilities

Ponnuru likes the idea of no one receiving more in Social Security benefits than they make in Social Security contributions. While Social Security is an earned benefit–people make contributions over their working lives to cover its costs–it should benefit lower-income workers more. To some extent, benefits should be related to contributions but benefits should also be somewhat redistributive.

Ponnuru would like Social Security to be means-tested. What he doesn’t appreciate is that only about eight percent of retirees have annual incomes over $184,500. With health care, housing, food and utilities costing as much as they do, almost every retiree depends on Social Security benefits. Means-testing the program would weaken it and generate minimal savings.

Sanders wants the top income tax rate to go from 37 percent to 49.4 percent. He would increase the top capital gains tax rate to 36.2 from 23.8 percent. Ponnuru wants to keep taxes low and cut Social Security benefits. He does not see helping low-income retirees pay for basic necessities as a priority. He argues that they would save more if forced to. He fails to recognize the large number of working people living paycheck to paycheck and unable to save.

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