Commission's Report Only Half the Story, Reality Much Worse
July 24, 2001
NCPA'S Moore Argues Commission "Low-Balls" Crisis by Focusing Solely on Social Security
DALLAS (July 24, 2001) - Contrary to assertions by critics that the interim report of the President's Commission to Strengthen Social Security paints a picture that is "overly bleak," the report actually "low-balls" the impact of maintaining the status quo on future payroll tax rates, according to an analyst with the National Center for Policy Analysis (NCPA).
"The commission's report clearly and correctly points out the demographic problems facing Social Security," said Matt Moore, NCPA policy analyst. "They are absolutely right when they say that the government will have to either slash benefits, boost payroll taxes or explode the public debt in order to maintain the status quo. But that's only half the story.
"The payroll tax pays for more than just Social Security. It also funds part of Medicare, which will also run short of money beginning in 2016. To talk about future payroll tax rates without also taking into consideration Medicare and all other elderly health benefits, is to look at the problem with one eye closed."
"By 2040, the time today's college-age workers begin to retire, the payroll tax rate will have to steadily rise to about one-third (30.82%) of a workers earnings, just to pay for all elderly benefits promised under current law. And that's just the intermediate assumption. The worst-case scenario points to a total payroll tax rate of nearly one-half (49.15%). If you believe that would be uncollectable, then you understand the need for reform," said Moore.
To find out more about Social Security reform issues, visit http://mysocialsecurity.org.