Can the rich, famous save Social Security?

So asks USA Today. What fame has to do with it, I cannon guess, except to say that USA Today headline writers assume fame and wealth are coincident. The plan discussed by Dennis Cauchon, who has 982 hits coupled with "social security" at Google, suggesting he's their man on the subject.

The plan discussed proposes that the payroll tax cap be removed and that benefits be capped. Such a tax raises $100 billion dollars a year (according to USA Today, CATO offers a figure of $541 billion over five years which throws in productivity growth and inflation which reflect a higher burden in the later years) but would probably only extend the life of the program's solvency by less than seven years. This is because, an economics professor I had often said, there are more of us on Main Street than there are on Wall Street. The demographic problem is huge, a shift from 3 workers per retiree to 2 workers. Taxing the very wealthy won't fix the problem, just dent it.

My own program to reform social security includes removing the payroll cap, but is also part of a full privatization plan which means that only the employer side of the tax is collected, and is used to pay the transition costs. [My plan is to privatize personal accounts fully, invest the trust fund surplus in the stock market (rather than T-bills where it is now), and removing the cap on the payroll tax.]

The problem with the proposal in USA Today, which the piece clearly acknowledges, is that collecting this $100 billion without paying any benefit in return risks turning the program into a welfare benefit, along with the stigma which the pension/insurance model was supposed to avoid. The article quotes the socialist Economic Policy Institute's Micheal Ettinger in opposition to this plan. It may at first, strike one to question why the socialist would oppose such an obvious income redistribution program, but as EPI writing makes clear, they are aware that anti-poverty programs that get stigmatized, get cut. In America, income redistribution must provide handsome benefits to the middle class. The same is true in Europe, which is also saddled with generous middle-class benefits. Everyone pays, everyone gets, that is the mantra of the modern socialist.

Indeed, its hard to see where support from such a proposal could come from. Advocates for the proposal mentioned claim they cannot find a base of support.