Social Security Is No Ponzi Scheme (Note to Rick Perry): View
By the Bloomberg Editors Sep 2, 2011 8:00 PM ET
As Rick Perry campaigned in Iowa late last month, he made it clear that he doesn’t have much faith in Social Security, one of the most popular U.S. government programs.
“It is a Ponzi scheme for these young people,” Perry said. “The idea that they’re working and paying into Social Security today, that the current program is going to be there for them, is a lie. It is a monstrous lie on this generation, and we can’t do that to them.”
As we celebrate a holiday devoted to American workers, it’s worth asking whether, as the Texas governor and leader of the Republican pack claims, the retirement program created for those very workers is at risk.
The answer, as we have argued in this space, is yes … and no. Social Security’s finances need shoring up. But there is nothing wrong with the program that Congress couldn’t fix in a week. Gradually raising the retirement age to 69, changing the formula for cost-of-living increases, and raising the cap on wages subject to the payroll tax would close most of Social Security’s funding gap for the next 75 years.
Such changes would rely about 60 percent on tax increases and 40 percent on benefit cuts, and would mainly affect the wealthiest Americans by asking them to pay more and get less in return. In the end, Social Security would be more progressive and benefits for the very oldest and the very poorest retirees would be enhanced.
for complete article:
http://www.bloomberg.com/news/2011-09-03/social-security-is-no-ponzi-scheme-note-to-rick-perry-view.html
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