Re: Opinion, “How to Fix Social Security, in Six Words” (July 22)
Kathryn Anne Edwards promises the best of both worlds in her plan to fix Social Security—higher taxes to satisfy liberals and government investment in the stock market to appeal to conservatives. Instead, her proposal would deliver the worst of both: it avoids the difficult but necessary task of slowing Social Security’s unsustainable spending growth while expanding the government’s role in both the economy and financial markets.
Eliminating the payroll tax cap would push top marginal labor income tax rates above 60 percent in many states. This would discourage work, investment in human capital, and innovation among America’s most highly skilled professionals. According to the Bureau of Labor Statistics, 19 of the 20 highest-paying occupations are medical professionals, including surgeons, radiologists, psychiatrists, and cardiologists, whose services Americans increasingly struggle to access.
Raising taxes to finance government stock purchases doesn’t create new wealth, either. It transfers ownership of investment capital and the future returns it generates from workers and private investors to the federal government while expanding the government’s influence over capital markets.
This poses political risk. Once politicians control trillions of dollars in investment decisions, pressure to direct capital toward favored industries, companies, or policy goals becomes difficult to resist. Washington’s track record in making investment decisions is questionable at best.
Congress should confront Social Security’s unsustainable spending growth instead of fueling it with higher taxes and government-directed investments. Real reform would refocus Social Security on protecting older Americans from poverty and enabling workers to build wealth without Uncle Sam robbing Peter to pay Paul.
Romina Boccia
Washington, D.C.
The writer is the director of budget and entitlement policy at the Cato Institute.
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