Joe Heck has his numbers wrong
On Ralston Live, Joe Heck said we need to index Social Security eligibility to life expectancy, supposedly because at the start of Social Security Americans only lived to 61, but now they survive to 78 or 79. Dr. Heck might be surprised to learn that in the half century between 1940 and 1990, life expectancy for 65-year-old men rose only 2.6 years, from 12.7 to 15.3. Women did better, rising 4.9 years, from 14.7 to 19.6. The average for both sexes was 3.75 years.
Not only are people over 65 sicker and less able to work than they used to be, the age of Social Security eligibility has already been raised by two years for future recipients. Raising it further makes no sense, and doesn’t address the real problem with Social Security solvency.
The real problem is that when President Reagan reformed Social Security in 1983, the FICA tax ceiling was set at 90 percent of earned income. That left only the top 10 percent untaxed. That ceiling was indexed to inflation, but thanks to ever-increasing income disparity, more and more earned income became exempt, such that the FICA ceiling is now closer to 80 percent.
Had the FICA ceiling been pegged at the original 90 percent, the trust fund would have enough money to pay full benefits indefinitely, and the FICA ceiling would be around $200,000 instead of only $118,500. Heck should be talking about raising the ceiling over time to get it back to 90 percent, where it should have been all along.