Wednesday, October 19, 2011

Unsustainability: Social Security

Reuters reports:
Americans on Social Security benefits may get good news on Wednesday when the government could announce the first cost-of-living increase in two years for 2012.
Some 55 million Americans on social security got no increase in benefits this year and in 2010 because inflation was too low.

The American Institute for Economic Research, a think tank in Great Barrington, Massachusetts, calculates the 2012 cost-of-living adjustment should boost checks by between 3.5 and 3.7 percent.
Indexing this entitlement to wages can be an issue. Let's say that I double your salary, but only after firing your boss and one of your direct reports. I have effectively taken two of 3 payroll taxpayers out, but pushed up liabilities for the program.

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