A February 2005 paper put out by the National Academy of Social Insurance provides an expanded and updated inventory of proposals that would address Social Security's solvency problem in whole or in part. Click here for the full paper and here for a table showing, in percentage terms, how much each would contribute to resolving Social Security's long-term deficit. The inventory does not include personal accounts, for as my discussion paper notes they don't address the funding challenge and may, if they divert taxes from OASDI, exacerbate it.
With the aim of eliminating the full 75-year deficit, which proposal or combination of proposals (limited to your top three even if your ideal reform package would have more components) would you favor (in order of preference)?
First component: 1. Remove cap on tax (but not benefits) 2. Remove cap on tax and credit 3. Increase cap so that 90% of earnings covered 4. Cover newly hired state/local workers 5. Speed up FRA increase and extend to 68 6. Speed up FRA increase and extend to 70 7. Cut benefits by 3% (2005) 8. Cut benefits by 5% (2005) 9. Shift PIA formula from wage to price indexing 10. Lower annual COLA by 1% 11. Lower annual COLA by .5% 12. Shift COLA to "chained" index 13. Raise tax rate to 7.2% (2005) 14. Schedule future tax rate increases 15. Earmark estate tax beginning in 2010 16. Earmark some portion of General Revenues 17. Invest 40% of trust fund in equities (assuming 6.5% real return) 18. Invest 40% of trust fund in equities (assuming 5.5% real return)
Second component: 0. First component alone 1. Remove cap on tax (but not benefits) 2. Remove cap on tax and credit 3. Increase cap so that 90% of earnings covered 4. Cover newly hired state/local workers 5. Speed up FRA increase and extend to 68 6. Speed up FRA increase and extend to 70 7. Cut benefits by 3% (2005) 8. Cut benefits by 5% (2005) 9. Shift PIA formula from wage to price indexing 10. Lower annual COLA by 1% 11. Lower annual COLA by .5% 12. Shift COLA to "chained" index 13. Raise tax rate to 7.2% (2005) 14. Schedule future tax rate increases 15. Earmark estate tax beginning in 2010 16. Earmark some portion of General Revenues 17. Invest 40% of trust fund in equities (assuming 6.5% real return) 18. Invest 40% of trust fund in equities (assuming 5.5% real return)
Third component: 0. First two components alone 1. Remove cap on tax (but not benefits) 2. Remove cap on tax and credit 3. Increase cap so that 90% of earnings covered 4. Cover newly hired state/local workers 5. Speed up FRA increase and extend to 68 6. Speed up FRA increase and extend to 70 7. Cut benefits by 3% (2005) 8. Cut benefits by 5% (2005) 9. Shift PIA formula from wage to price indexing 10. Lower annual COLA by 1% 11. Lower annual COLA by .5% 12. Shift COLA to "chained" index 13. Raise tax rate to 7.2% (2005) 14. Schedule future tax rate increases 15. Earmark estate tax beginning in 2010 16. Earmark some portion of General Revenues 17. Invest 40% of trust fund in equities (assuming 6.5% real return) 18. Invest 40% of trust fund in equities (assuming 5.5% real return)
Would your ideal package include a personal account component? Yes No Unsure
If it would, please indicate briefly how it would relate to "traditional Social Security."