This morning over at National Review Online, IWF’s Carrie Lukas talks about Speaker Pelosi’s concern “for the children.” If Pelosi is really concerned with future generations, Carrie is happy to offer some policy suggestions:
“Speaker Pelosi should begin her analysis by looking at one of the federal budget’s leviathans: Social Security. This program has been referred to as a ‘generational compact.’ Young people are supposed to happily hand over their payroll taxes that are used to pay Social Security benefits to today’s senior citizens, knowing that they’ll be able to demand the same from the next generation. Think of it as a kind of generational hazing.
“The problem is that Social Security’s demands are becoming increasingly severe. When Nancy Pelosi graduated from college in 1962, payroll taxes to support Social Security were 6.25 percent on the first $4,800 of income, for a maximum tax of $300 per year. Today, Social Security’s walloping tax rate of 12.4 percent applies to the first $97,500 of income, for a staggering maximum tax of $12,090. For most Americans, Social Security’s payroll tax is the largest they pay.
“Unfortunately, things are only getting worse. When Speaker Pelosi’s youngest grandchild (born just as the Democrats were taking over Congress) turns ten, Social Security will be taking in less from payroll taxes than will be needed for benefits. Social Security then will turn to its so called ‘trust fund,’ which simply means that Social Security will demand a portion of general tax revenues to supplement payroll taxes. By 2040, when the Speaker’s 33-year-old grandchild will likely be entrenched in the workforce and trying to raise Pelosi’s great-grandchildren, Social Security will require the equivalent of 17 percent of payroll, or taxes nearly 40-percent higher than they are today.”
Read the whole article here.