New proposal would cap Social Security benefits
By: Daniel de Vise
USA Today
.... A think tank has proposed capping annual Social Security benefits at $100,000 for couples and 450,000 for singles as a way to shrink a looming deficit in the retirement trust fund.
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The Centrist, nonpartisan Committee for a Responsible Federal budget says a $100,000 cap could save Social Security $100 billion to $190 billion over the next decade, depending on how it was implemented. The Social Security program for retirees is projected to run short by 2032. at that point, recipients could see a 28% cut in monthly benefits.
..... The idea might sound reasonable enough: Only the wealthiest Americans can collect 4100,00 a year from Social Security, a program that was meant to ease poverty, not pad wealth.
..... The appeal of a $100,000 cap is that it affects only top earners, said Marc Goldwein, senior policy director at CRFB: "This is for people who already have millions and tens of millions in assets."
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But the "Six Figure Limit" has drawn swift rebukes from retirement advocates, who see any cap or cut as a slippery slope. they also say any shortfall or benefit cap goes back on a fundamental promise of Social Security: that Americans who pay into the trust fund can count on getting the money back.
..... At the same time, the cap has prominent supporters, including the editorial board of the Washington Post.
..... "The Six figure Limit is the right idea for a program that currently pays about one-third of benefits to retirees with incomes over $100,000," the broad wrote. "The wealthiest members of the wealthiest generation in human history do not need more government largesse."
..... According to the Social Security Administration website, the top monthly benefit for someone who retires in 2026 at 70 works out to $62,172 a year.
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The proposed cap would vary with age: A couple retiring at 62 would face a $70,000 limit, whereas those who retire at 70 could collect up to $124,000. the cap might rise with inflation over time.
..... Several voices in the Social Security debate applauded the think tank for starting a conversation about how to short up the trust fund.
..... The proposed cap "is a worthily thread as part of a broader discussion that needs to take place at the highest levels, as well as at kitchen tables across America,: said Mark Hamick, senior economic analyst at Bankrate.
..... "All ideas should be explored," said Catherine Colinson, CEO of the Trans-america Center for Retirement Studies. "If the funding issue could be easily solved, they would have been addressed by now."
..... Other economic experts voiced skepticism that a benefit cap is the right approach.
..... "The short answer is that it's a bad idea - a distraction from what would really make a difference" taxing all earnings at the same rate," said Monique Morrissey, senior economist at the progressive Economic Policy Institute.
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Her organization favors eliminating an existing cap on the payroll taxes that fund Social Security. In 2026, earnings above $184,500 are not taxed for Social Security. Ending that could fund nearly three-fourths of the Social Security shortfall, EPI estimates.