Economists on Social Security
What raising Social Security taxes in advance of higher spending on benefits does is to increase the share of Federal spending financed by the regressive payroll tax. A big premature raise in the Social Security tax took place during the Reagan administration, at the behest of Alan Greenspan (who is now telling us we have to reduce benefits). As a result, 20 percent of regular government spending which used to be financed by income taxes is now being financed by money from the regressive Social Security tax. Raising the Social Security tax again would be just a sneaky way of making the tax system less progressive.
Bergmann argues that there is plenty of time to decide whether to raise taxes or trim future benefits.
I am not a politician. But speaking as an economist, I do not believe that the best argument for Social Security reform is the financial state of the system. As I wrote here, I think that the issue of whether Social Security is going “broke” ought not to be central to the debate. Instead, the issue ought to be what benefits the program provides relative to its costs.
For Discussion. Bergmann warns that if young people do not support Social Security, then their elderly parents may wind up moving in with them. Is this a valid concern?