RE: Raising the Wage Base

[National Dialogue Moderator <moderator>]

The fundamental answer is that we need to move to a two tiered
system based on the current pay-as-you-go model and add a component
for individual accounts.  In order to fund this transition, we will
have to make some tough choices.  One option is to raise the wage
base from $72,600 to $100,000 -- this will add money to the income
side of the system and will provide more funds for the safety net.
This is a reasonable approach.

We cannot raise the wage base any higher than $100,000, however,
unless we are willing to make the same adjustment on the benefit
side of the equation.  Current benefits are calculated based on a
retiree's working salary.  Are we really willing to increase the
benefits of upper income workers by 25%?  In this case, the cash
flow generated in the short run would damage the system in the long
run.   The benefits we would be forced to pay out to upper income
workers would be too heavy a burden on the system.

Sam Beard, Economic Security 2000