We’ve all heard the statistics: the Social Security trust fund will run out of money in the year … (fill in your own blank). And the expenses for Medicare will bankrupt the country at some point (again, fill in your own year).

I’m not a Chicken Little but I do agree there is legitimate concern. And it’s not just that I, myself, am getting pretty close to being a recipient of those government programs. I don’t envy policy makers who are struggling to come up with the best solution. It’s complicated. And I don’t believe it’s selfish of those who want to lower taxes on the wealthiest among us. They honestly believe that by lowering or keeping the taxes low for wealthy people, that will lead to more jobs being created. The argument is that those are the folks who create small businesses and therefore hire people. Hiring people and creating businesses will then grow the economy.

I have two responses to that. One, I ask, “How’s that working for you?” Not so well, eh? The Bush tax cuts have been in place for several years and yet jobs are just not being created are they? Maybe it’s time to start a new tactic and stop pretending that tax savings spur job growth. Tax savings enable wealthier people to spend more (which could help growth) but mostly, save more. That has no effect on the economy.

My second response is based on a report recently that said most job growth does not come from small businesses. This report said that about half of job growth actually comes from large companies. And another portion comes from public service jobs. So the thinking that by lowering taxes for small businesses the economy will grow is wrong. Or at least half wrong.

How does that tie into the tough choices we have to make for Medicare and Social Security? I hope the connection is obvious. Unless we fix those two programs, we won’t be able to grow our economy enough to keep the programs strong and effective. And that will severely hurt what this blog is all about, that is, "caring for your aging parents."

My solution? Twofold.
  1. Raise the upper limit of earnings from which FICA is taken. Right now it’s about $106,000 meaning that every dollar earned after that figure is not taxed for social security. I ask why? Oh yeah, I understand it’s about the formula tying the tax collected to your eventual payout. But that’s artificial. Medicare is not capped at that salary. Social Security should not be either. Based on the numbers I’ve read, raising the salary cap on FICA will solve close to half of the problem.
  2. Raise the age of eligibility for Social Security. It was done with my generation – I can’t qualify for full benefits until I’m 66, as opposed to the 65 it was when the program began – so why not do it again? If we gradually raise the age to 69, we could solve the other half of the problem. Or close.
A lot of policy wonks agree so I hope the legislators accept this thinking. And, by the way, in the spirit of full disclosure, my family would suffer a little from raising the salary cap. I’m willing to accept that loss and it won’t stop me from creating a new job with my small business.

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