Fiscal Cliff: How The Rich Could Save Social Security

Fiscal Cliff: How The Rich Could Save Social Security [Op-Ed]

Commentary | Social Security in a nutshell assumes the populace needs guidance in saving for their eventual retirement. The idea is that everyone is forced to set aside money and the government will manage it, ahem, wisely and invest the money until such time as it is needed. In theory that is how this entitlement program is supposed to work, but in practice the Federal government has mismanaged the money.

Social Security is supposed to start running out come the year 2033. But that estimate assumes Social Security exists in a bubble, which it does not. The Federal debt crisis and other factors related to the Fiscal cliff are likely to encroach on Social Security’s solvency.

Social Security was intended to be a self-financing program that would not add to the Federal deficit. According to, this was true until 2010 when benefit payments began to exceed payroll taxes regularly. In 2010 the Federal government had to borrow $37 billion to finance Social Security. Further borrowing in 2011 added over $130 billion to the deficit, with Congress enacting a “payroll tax holiday” as part of a compromise on extending the Bush tax cuts. According to USA Today, in 2012 Social Security will come up $50.7 billion short although I’m uncertain how much was borrowed, or added to the deficit.

When combined with interest on the debt, spending on entitlement programs like Social Security, Medicare, and Medicaid are projected to devour all government income within 13 years from now. All means all, with no money left over for the military or any other Federal government function. So how could the rich help save Social Security?