What Social Security needs is a policy of year by year monitoring. On balance both Shortfall and Depletion have been pushing back in time, the latter at a rate of more than a year per year. The reason is pretty simple, the economy has been outperforming the forecasts and given how dismal those numbers are can be expected to continue. At this rate any amount of Real GDP above 2.2% medium to long term backfills the entire projected gap. Nobody has made a principled case of why we can't grow at the rate needed.

Exactly right!

Given that the system is running high levels of surplus today and for most of the rest of the decade the effect of raising the cap is simply to lend even more money to the General Fund with the side effect of creating a greater interest burden going forward.

This is the sort of sentence one should read and reread until the message sinks in.

The idea that "if we act now, it will be much easier to deal with" sounds like common sense, but it is a myth.

The idea that Social Security is regressive has been taken up by many progressives, but really in origin this was a Right talking point designed to subvert support for Social Security among workers. Another version of this is the "Unfair to Blacks" theme. Both fall apart on examination.

Social Security is a system of government administered insurance funded by workers for the benefit of workers. Viewed as such, from within the system if you will, the insurance plan is actually mildly progressive, lower income workers gaining a slightly greater share of gains from future productivity than higher income workers. It can only be seen as regressive if it is viewed as another Government welfare plan. Well it is not welfare, it is insurance. Which is what gives Social Security its fundamental strength. Since it demands nothing from capital by rights they have no right to meddle. If people keep this distinction in mind they can see by Huckleberry Fred's plan is outright theft, he is cutting promised benefits well before there is any need to do so, with the only beneficiaries being a reduced need for the rest of the country to replay the money we lent it. Well no, as long as there are assets in the Trust Fund I want my full benefit. If we collectively have to take a mild cut in benefits after 2041 (which is all that 'Crisis' is in context), well so be it.

The Right likes to divide spending into two categories. In one is spending we can't afford, like SCHIPS. The other is spending we can't NOT afford, like anything military. The only reason they have not been able to move Social Security into the latter category is that they have not actually been paying for it. Raising the cap simply allows them to assert a measure of control that is both unneeded and unwanted.

Not sure if this diary makes it to the recommended list, but it deserves to up there...

Bruce, could you also talk about the effect of undocumented workers paying into the social security system. Also, my dad who is retired and is still working, also pays into social security. But now that he collects social security already, the FICA taken out of his check does not contribute to his social security benefit level. I think a lot of baby boomers/recently retired people will be in the same position as my dad--working even after collecting social security. That pile of money like undocumented workers isn't accounted for in the social security actuaries is it?

Thanks....

There is rather an odd sense that raising the cap is politically feasible, that the popularity of Social Security will simply carry the day. But what raising the cap does in practice is to add 6.2% to the top marginal rates for whatever range of wage income the cap increase covers.

The Right is dead set against letting the Bush tax cuts lapse, yet somehow they are going to roll over and let the 33% rate effectively revert back to Clinton levels? Politicians may not understand that this is the effect of a cap increase, and some economists either, but you can bet their accountants do.

Bring it down to earth. You are expecting every member of Congress to simply accept a 6.2% tax increase-for themselves. Man if we actually had that much political mojo we wouldn't even be talking taxing hedge fund managers at 15%, that job would be done.

Yet certain politicians and commenters simply assume that this cap increase is the simplest thing in the world. Well when you actually bring it down to dollars and cents plenty of powerful people are going to squeal. This is a fight we don't need. If we really think we have the power, then lets get SCHIPS done.

Moreover people who make their money on earnings from capital are grinning ear to ear. Raising the cap means Free Lunch, the General Fund gets bailed out all at no cost to them. That ain't progressive.

Thanks for this diary.  I will certainly recommend it.