BOB BALL’S SOCIAL SECURITY PLAN….I forgot to mention this yesterday, but the Century Foundation has published a paper by ?ber-mega-lifetime Social Security guru Bob Ball that outlines a “relatively painless solution” for restoring Social Security to solvency. Basically, it raises the payroll cap a bit, dedicates estate tax revenue to Social Security, and invests a portion of the trust fund in the stock market.
It sounds fine to me. My first preference is still to do nothing, since panicking over minor differences in economic projections four decades in the future strikes me as foolish, but if we do insist on doing something, Ball’s plan is a sensible one.
I do want to point out one clever bit of phrasing, though. A lot of liberals are in favor of raising the payroll cap (currently only the first $90,000 of income is subject to Social Security taxes), but usually this gets presented as simply an increase in taxes on the well off. Instead, here’s how Ball puts it:
Gradually restore the maximum taxable earnings base to 90 percent, the level set by Congress in 1983.
The payroll cap was originally set in 1983 so that 90% of all income would be taxed. It’s been increased since then in line with average wage increases. However, because the wages of the rich have skyrocketed far faster than the wages of the middle class, the median wage has increased more slowly than total income. As a result, the current payroll cap captures only 85% of all income.
In other words, all Ball wants to do is gradually reset the payroll cap to the same effective level that Ronald Reagan originally set it at. Who could argue with that? For anyone who favors raising the payroll cap, this is about the best way of framing it you’re likely to find.