Social Security does not belong in the current budget debate. The Social Security Trust Fund is independent and separate from the federal treasury.
Social Security did not cause one dollar of the deficits we have had over the years.
Every dollar Social Security has paid its beneficiaries has originated from the FICA tax and interest from Treasury Bonds it owns. At present the Social Security Trust Fund owns $2.7 trillion of treasury bonds.
Social Security has its problems, but they should not be addressed in the current budget debate. The current CPI needs to be modified. However not with the proposed “chained CPI.”
Social Security contains different kinds of beneficiaries. They include seniors, the disabled (including veterans) and survivors (widows, widowers and children).
Each type of beneficiary has different spending priorities. Therefore, they encounter different problems with cost of living increases.
I believe two new CPIs should be developed — one for seniors and one for nonseniors. These two new CPIs will be better able to maintain the standard of living for SS beneficiaries.
In about 20 years the Social Security Trust Fund will be unable to meet the Social Security obligations. The $2.7 trillion of treasury bonds will be expended and the current FICA tax of 12.4 percent will not be sufficient to meet the required expenditures.
I believe the FICA tax rate and the FICA cap must be adjusted to address this situation. These adjustments would be used to equalize income and expenditure on an annual basis. No surplus or deficit of funds would be allowed to accumulate. This would allow Social Security to stand alone, separate and independent of the federal treasury.