Many financial experts and analysts believe that the national debt and high deficits will mean that the federal government will have to make tremendous cuts in spending before the end of the decade. Former White House Chief of Staff Erskine Bowles and Sen. Alan Simpson are co-chairs of the National Commission on Fiscal Responsibility and Reform and they have hinted that Social Security will have to be cut sharply in future years.
None of this is terribly surprising based on the portion of federal spending devoted to the defense budget, Medicare, and Social Security. The burden on the US retirement fund will rise as the population rises.
It is hard to imagine how the trend can be reversed but many Americans believe that the wealthy will save Social Security and will not compromise the fund’s ability to pay citizens.
The two contributions that the rich can make is that they can pay Social Security taxes on all of their income and can forgo payments from the fund when they retire. A full two-thirds of people polled by Gallup recently believe that those who are well-to-do need to make payments into the fund based on every last dollar they earn, even if that is into the tens of millions of dollars. Sixty-three percent would like to see the wealthy have limited benefits upon retirement.
According to Gallup, the poll which it did with USA Today shows that the highest percentage of Americans in a Gallup survey to date saying the Social Security system is “in a state of crisis” or has “major problems.” Both young and old Americans would like to see the wealthy carry a larger burden
The trouble with all tax increases is that they may be regressive. Clever accountants can help keep the money earned by the wealthy from being “wages”, but at some point those with the highest earnings will do the mathematics and determine that if they will get a lower payout from the Social Security fund and will have to pay higher taxes that there is a tipping financial tipping point that may limit what they want to earn.
The other and perhaps more vexing issue is what all Americans were “promised” when they paid for their Social Security benefits. A cut in the benefits of people with high income will be challenged in federal court. The wealthy can afford the legal fees.
Douglas A. McIntyre