Harvard, Dartmouth Professors: Social Security System Faces Crisis

Wednesday, 09 Jan 2013 07:54 AM

By Dan Weil

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Don’t give credence to the election-campaign claims by President Barack Obama and his Republican challenger Mitt Romney that Social Security is just fine, say Gary King, a professor of government and director of the Institute for Quantitative Social Science at Harvard, and Samir Soneji, an assistant professor at the Dartmouth Institute for Health Policy and Clinical Practice.

“[B]oth were utterly wrong,” they write in The New York Times.

If Social Security tax revenue doesn’t increase and benefits remain the same, Social Security’s trust funds will turn insolvent in less than 20 years, the duo estimates.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

So how do we save Social Security?

The retirement age, which is gradually rising to 67 from 65, could be pushed higher, to 69 or 70, they say. The increase to 67 isn’t enough to compensate for increased longevity.

In addition, revenue could be lifted by taxing wages that are higher than $113,700, the current earnings limit, King and Soneji write. Moreover, how the cost-of-living adjustments are calculated could be changes, and benefits also can be cut, by lowering payouts to those who earned a lifetime salary above the national average — now $43,000 a year.

Evan Soltas of Bloomberg View chides both political parties for inconsistent views on Social Security.

“Neither party's approach consistently treats Social Security as a retirement-savings program or a welfare program, but the road ahead will require committing to one of these two visions,” he writes.

“Yes, the finances of Social Security are much less dire — and easier to fix — than federal health programs. But doing so will require policy choices that reflect what we think Social Security is meant to be.”

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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