This post appears here courtesy of the John Locke Foundation
. The author of this post is Brian Balfour
Seniors on Social Security will receive an 8.7% cost of living adjustment (COLA) in their benefits next year, in an attempt to keep benefits on pace with inflation.
While this is certainly welcome news for seniors in the short term, it also means benefit cuts and/or tax hikes will come even sooner if the program is going to avoid insolvency.
From the Washington Examiner:
Even before this large COLA increase, Social Security was projected to run out of money to pay scheduled benefits in 2034. ... Paying out COLAs that exceed workers' wage gains (and Social Security's payroll-tax revenues) will cause Social Security's trust fund to run dry sooner, subjecting more people to benefit cuts, and beginning at an earlier date. ... According to the Social Security trustees, maintaining current benefit levels would require an immediate payroll-tax increase from 12.4% to 15.8%, which would translate into an extra $2,400 in Social Security taxes per year and $11,200 in total Social Security taxes for the median household with $70,800 in earnings.
Aside from, or in addition to, tax hikes to shore up the broke Social Security system, there would be a reduction in benefits or an older age eligibility requirement.
In sum, not only are working people getting hammered today by runaway inflation, they'll be paying thousands more in Social Security taxes and/or receiving smaller benefits when - or if - they retire.
The Covid hysterics thought they could paper over the devastating impacts of shutting down large swaths of the economy by printing an unprecedented amount of money.
We're now feeling the pain of that decision, and it's just beginning. Tens of millions of people will be suffering for decades from multiple waves of financial agony:
- Cost of living today rising faster than wages, especially devastating low-income households
- Higher payroll taxes during future working years to help shore up a Social Security system made more broke due to the aggressive COLA compelled by the rising cost of living
- Lower Social Security benefits when they retire due to the heightened fiscal distress of the bankrupt SS system
How many Americans will be thrown into generational poverty because of "two weeks to slow the spread?"