Yesterday, all of the S4 staff attended an event at the American Enterprise Institute (Video Here). Its aim was to put together a starting point for reform.
Here's the idea: Lock three people in a room -- A former Clinton White House advisor, a member of President Bush's reform commission, and an advisor to Senator John McCain and tell them they can't come out until they have a compromise they could all live with.
What they came out with was a great start for reform proposals. Here's the plan in a nutshell (Full Proposal Here, Detailed summary at CNN Money):
Raise the worker's half of payroll taxes from 6.2 to 7.7 percent.
Raise the cap of wages subject to tax from 83 to 90 percent of wages.
Raise the retirement age to 68 and the early retirement age to 65.
Create Personal Retirement accounts of 1.5% (carve out) and 1.5% (add on).
Cut future benefits progressively with higher earners taking the greatest reduction.
We at S4 certainly hope this encourages lawmakers on both sides of the aisle to put forward their reform plans. It's important that we fix this problem soon because as we approach 2017, we have fewer options for reform: we can no longer prefund the system and we can't adjust benefits of those already in retirement, which leaves us with the only option of ratcheting up taxes.
Hopefully, this gesture shows that the gap between the two parties on Social Security reform is not unbridgeable, and we really can work together to fix this problem.
