The conventional wisdom about Social Security is profoundly misguided. According to today’s mistaken consensus, the U.S. as a society cannot afford to allocate the money to pay for the present level of Social Security benefits for retirees in future generations. The solution, it is widely argued, is to cut benefits—either directly by means-testing or indirectly by raising the retirement age or allowing inflation to erode their real value over time. In this narrative, tax-favored private savings vehicles like 401(k)s and IRAs should be expanded in order to compensate for the allegedly necessary cuts in Social Security. [...]Hear, hear! What NAF is calling for is a Social Security, Part B. Social Security as we know it, the earnings-based defined benefit program, would still exist as Part A. It would be shored up by increased revenues, rather than cuts. The new Part B would be a "new universal flat benefit [...] to supplement the traditional earnings-related benefit that would continue to be provided by Social Security A." They suggest $11,669 per year for all elderly earners as the supplement, funded not by the payroll tax, but by new revenue. That would allow Social Security to come much closer to replacing a worker's pre-retirement income. Here's a chart showing the difference:
In reforming America’s retirement security system, we should build upon what works. Instead of compounding failure by expanding private benefits, a category that includes rapidly-disappearing defined benefit pensions, employer-provided 401(k)s and individual retirement accounts (IRAs), we should substantially expand the successful, purely public Social Security program.
This is a welcome answer, from a reputable and thoughtful group of experts, to the conventional wisdom lining up behind Social Security cuts. It's not a plan that's going to pass, but it's a damned fine left tent-pole to stick in the ground, and to start shifting the conversation to the real Social Security crisis the nation is facing: leaving seniors in poverty.