September 14, 2011
CEPR has two new issue briefs this month tackling the debate over Social Security, both addressing the argument over the program’s funding. Many workers do not know that any annual wages above $106,800 are not taxed by Social Security. In other words, a worker who makes twice the Social Security wage cap – $213,600 per year – pays Social Security tax on only half of his or her earnings, and one who makes just over a million dollars per year pays the tax on only about a tenth. For the paper “Who’s Above the Social Security Payroll Tax Cap?” Nicole Woo, Janelle Jones and John Schmitt examined Census Bureau data from the most recently available American Community Survey to determine how raising the Social Security cap – which would make some or all earnings above $106,800 subject to the Social Security tax – would affect workers based on gender, race or ethnicity, age, and state of residence. Raising the cap has gotten some attention as a way to help alleviate Social Security’s long-term budget shortfall. U.S. Senator Bernie Sanders plans to introduce legislation to keep the current cap at $106,800, but to also apply the Social Security payroll tax to earnings over $250,000.
In “The Social Security Benefits of Sitting Senators Revisited,” Kris Warner, Alan Barber and Dean Baker updated CEPR’s previous paper (incorporating the newest CBO projections) to show the scheduled Social Security benefit for each current member of the Senate. Some politicians – such as Florida Senator Marco Rubio and Governor Rick Perry of Texas – have recently said that Social Security is bankrupt and will not be there for them or their children. This is not an accurate assessment. The latest projections from the Congressional Budget Office (CBO) show that Social Security will remain fully solvent through 2038. Even if Congress makes no further changes to the program, Social Security will be able to pay slightly more than 80 percent of scheduled benefits from 2039 on.
