Watch out: Democrats’ big ideas for “saving” Social Security — now set to go bust in 2032 — range from lunacy like boosting payouts to madness like job-killing tax hikes.
The program’s trust fund empties out in just six years, forcing automatic 22% cuts in payments, yet the Democrats who just won control of Congress look to worsen the outlook, throwing the system’s finances even further out of whack.
Last year, Social Security’s Old-Age, Survivors, and Disability Insurance trust funds shelled out $160 billion more than they took in, red ink on track to grow to $400 billion by 2033 as the population continues to age and the ratio of workers-to-beneficiaries plunges.
The shortfall is now covered by the funds’ reserves; when they dry up, payouts automatically shrink about a fifth.
Cue Democratic plans to jack up taxes (and not just on the rich!) to pull in more cash.
Meanwhile, other Democrats want to boost payments and offer more generous cost-of-living increases, deepening the hole and bring doomsday closer.
The cap on Social Security taxes now kicks in at $184,500 of income, rising to $192,300 next year; Dem plans to raise (or eliminate) it wouldn’t hit just millionaires and billionaires, but far more modest-income folks.
Other Dem plans would keep the current cap but impose a new tax on incomes over $250,000, or create a new “Social Security” levy on net investment income.
Such hikes would have a brutal impact on economic growth, socking Americans whose earnings are far closer to zero than six figures and bringing far less cash than Democrats’ project.
Yes, if benefits are left as is, some of the tax hikes might reduce the system’s yearly deficit — but none would totally eliminate it, merely pushing Insolvency Day a few years down the road yet.
And hiking benefits would deepen the problem.
No one — not even Republicans — wants to lower payments or boost the retirement age to make the system sound, so the 22% benefit cut may happen.
But even that not’s the end of the mess: The finances of Medicaid, Medicare and Obamacare are in even worse shape.
And it’s hard to see a Democratic Congress working to shore up any of them, at least not without massive federal borrowing that would bring back Biden-era hyperinflation and slam average Americans the hardest.
Uncle Sam is hurtling toward crisis in every entitlement program; Democrats will need to work with Republicans on real, bipartisan solutions, or the whole country’s in for a world of hurt.
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