Social Security payroll taxes do take a hefty bite out of the paychecks of most wage earners, and more revenues are coming in than are needed to meet current payments to beneficiaries. Estimates released this week project that the so-called Social Security trust funds won't fail to meet all payments until 2038, a year later than previously expected. And the Medicare hospital trust fund won't be drained until 2029, four years later than the previous projection. This still means the long-term health of the two major elderly social welfare programs is in doubt. During the campaign, President Bush suggested allowing younger workers to voluntarily divert a sixth of their Social Security payroll taxes to private investment accounts of their own choosing, so they could take advantage of the long-term growth rates of the private markets.
Stocks go down as well as up.
Outlays in the trust funds are expected to exceed receipts in the year 2016. Mr. Bush has proposed that a commission look at his proposed solution along with others and report within the next few months. Mr. Bush's tax plan would reduce the number of tax brackets from five to four and cut the rates in all of the brackets. Senate Democratic Leader Tom Daschle of North Dakota this week suggested voting on decreasing the rate of the lowest bracket from 15 to 10 percent, but taking no action on the rest of the president's proposal. Others in the Senate are talking about making more taxpayers' income subject to the lowest rate.