Social Security gets a clean bill of health

Two pervasive myths about Social Security, repeated again and again without fact check, are that: (1) Social Security faces eventual bankruptcy, and (2) Social Security somehow contributes to the national budget deficit. Neither allegation is true.As some know and others don’t, the Social Security Trust Fund is sustained entirely by its own “Payroll Tax,” quite separate from the regular IRS “Income Tax,” and it has nothing to do with the U.S. national budget or the current budget deficit.The Office of Management and Budget and virtually all economic experts agree that the actuarial health of Social Security is good, and its promised benefits are secure for at least 20 years, even if we do nothing further about it right now. But there’s much we can do.If there is a problem, it is that the previous administration and Congress decided to “borrow” $2.5 trillion from the Social Security Trust Fund (a sum which is coincidentally nearly twice the current U.S. budget deficit) in order to pay “off budget” for the wars in Iraq and Afghanistan, and thus to wage war without appearing to raise taxes.Normally, when you borrow you repay. But an obstructionist clique in Congress now refuses to pay the money back into the Social Security Trust Fund, and they would seek to reduce future Social Security benefits. Three things we can do right now are: (1) pay back the Trust Fund, (2) don’t borrow from it again (“Lock the Box”), and (3) stop talking about Social Security in connection with the budget deficit.Looking to future projections, what we can do is simply raise the “cap,” currently set at $113,700, on income subject to payroll tax to, say, $150,000 or $200,000, which is closer in value to the original level of the cap in real terms.Today, a person earning a million dollars a year pays payroll tax on only the first $113,700. He pays no payroll tax on the remaining $886,300 up to a million. Why so?If the cap is raised to $150,000 or $200,000, so that tax is paid on that amount, Social Security will generate a permanent surplus and ensure the future sustainability of Social Security benefits for all Americans for all time.Sharon resident Anthony Piel is a former director and general legal counsel of the World Health Organization.