Economic Perspective: Expanding Social Security

MARY WALDEN: 

“Today’s program looks at expanding social security. Mike, last month the trustees of the Social Security System projected the system will deplete its reserve account in about twenty years. Meaning, after that recipients won’t receive amounts they were promised. Yet, now I hear some want to actually expand Social Security to more people. How could this happen?”

MIKE WALDEN:

“Well first of all, the folks who want to expand Social Security, they have good purposes at heart. For example, some want to increase the amount of Social Security money received by those who are receiving the very lowest payments. You have to remember that Social Security, how much you get when you retire in your Social Security check is based on the income you had when you worked. So if you worked at a very low income job, you’re not going to get very much in Social Security. So some want to increase that.”

“Others have focused on increasing Social Security payments. For example, for the people who may have retired early, earlier than they wanted to in order to care for an elderly parent as well as to widows and widowers. So they want to increase payments there. So these are the rationale behind those who want to expand Social Security. Now, the point about, ‘Hey, where are we going to get the money,’ is a very good one.”

“Social Security does still face a fiscal problem, and so the proposals to expand Social Security are usually accompanied by a proposal to expand the revenues that Social Security would get. For example, raising the tax rate on Social Security or raising the income cap on which people pay Social Security taxes, but above which they don’t. So again, this is something that is, I think, in the political debates now, and it is a matter of weighing the benefits of increasing payments and Social Security against the cost of raising various kinds of taxes.”