I suggest that someone in Congress propose a law to balance Medicare and Social Security tax collections and expenditures. Radical idea? It's supposed to work that way! In fact, the payroll tax scheme was set up to withhold more than expended to build up a trust fund for future beneficiaries.
Here's Our SituationMedicare/Social Security spending is $1.3 Trillion per year (last year) and total collections are only $700 billion meaning that the entitlement deficit is about $500 billion (approximately 1/2 of the US federal budget deficit). If you agree that we should pay-as-we-go, then payroll taxes should rise to cover what is being spent, right? To balance accounts then, you'd need to raise the collections by 75% to cover what's being spent (or reduce expenditures or a combination).
And don't be fooled by talk about trust funds---there isn't any money in them. We strictly have a pay-as-you-go system. However, we aren't paying for the monies going out!!
Get Ready For The ShockThe proposed legislation would require that, this year, every working person's payroll taxes must increase from 7.65% to 13.3%. SS/HI/Medicare taxes on employers would increase by the same amount. Self-employed persons would pay 26.775% rate (all increased by 75%). Furthermore, if spending rises next year, then taxes also go up. What could be more simple?
There, that should shake up people out of their stupor. Let's see if people want the tax increase, or do they want to reduce benefits. The younger generation of workers need a wake-up call to make them realize the burden that they bear. They will either bear the burden today or tomorrow due to the accumulating national debt unless we act responsibly.
Proposing a law to balance income and expenditures would revive a much needed debate. Let the debate begin!!