Wednesday, May 7, 2008

What's with the SS Trust Fund?

You are right -- speaking about 2046 -- that upping FICA would not be the easy path I made it out to be, but I was right that it would not be the giant shock that is the usual perception of the move because the usual perception doesn't take into account that it will be a switch in income streams not simply a sudden startup of 33% higher FICA (33% up, 25% down).

God willing, EITC will be a distant memory by 2046 -- thanks to reasserted American labor power in the free market -- average income hopefully doubling by then (which should ease the pain of the switch too).

Average income has doubled since 1967 but the average wage (or whatever SS retirement uses to adjust wages for that year's benefit calculation) is up only one-third. Fix that -- by ending inequality -- and that could extend TF draw down, possibly forever, in which possible case the next question is how do we get rid of the giant size TF (only need a few years of reserve). To me everything begins and ends with getting American labor's mojo back again.

We should draw down the TF most of the way just to take back the regressively taxed FICA dollars that have been spent on what should have progressively funded, regular budget items.

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