The Republicans are proposing radical cuts to Social Security. The funny thing is, the program is actually a pay as you go system. The democrats portray it as a retirement program but its not. The Republicans portray it as a unjustified entitlement but its not that either.
Its a economic and social safety net that was built to keep our aging population out of dire poverty and provide for at least food and shelter during those years after you have fulfilled your commitments to society.
Well, as a pay as you go system the benefits meant to be paid out were a result of those collected. Collect taxes from those working, and then divide the money collected by those claiming retirement benefits. Simple and elegant. Currently benefits are reasonable, not fantastic, but generally acceptable. Yes, why shouldn’t it be better, i think it should, and that is a bigger question for society, should we supplement it?
But on to economics, the proposed republican solution is to radically change the system. The system works. The proposal is to provide more flexibility with the investments, unfortunately there are no investments. Also, most people have no idea how to invest and would lose more than they might gain. This is a program that is supposed to be off the government budget sheet. But we borrow from it. Anyway, back to the deal. The republican proposal would cut benefits up to 50% as published. It would raise retirement age to 69. It would raise the tax to the individual and lower the tax to business.
But the truth is, and has been demonstrated and proven out by republicans, democrats and the Congressional Budget Office, is that if just left alone; retirement age remains at 67, taxes remain as is, deductions remain as is, the program will continue to pay benefits indefinitly, slowly increasing, but below the rate today. At that rate it would decrease to 74% of current benefits in todays dollars by 2090.
So if left alone, it will pay more and to more people, indefinitely and at a higher rate than proposed by the republicans. Leave Social Security alone.