Senator Marco Rubio (R-FL) this past week released a proposal to fix some of the problems with Social Security. He laid out three goals:
- Make it easier for Americans to save for retirement;
- Insure the long-term financial stability of the Social Security;
- Save Medicare.
Too the surprise and consternation of many on the Left and Right, Senator Rubio’s proposal doesn’t call for the privatization of Social Security. Rather, his objective is to put Social Security on a more stable financial footing in order to preserve it for future generations. Reihan Salan at National Review writes: “Rubio made it extremely clear that he doesn’t just begrudgingly accept Social Security as a concession to political reality that he would eliminate if he could. He makes an affirmative case for Social Security, which he characterizes as a central element of the American dream.”
The senator’s reforms include: (1) allow workers who don’t have an employee pension plan to enroll in the federal government’s Thrift Savings Program; (2) eliminate the payroll tax on those workers who reach retirement age; and (3) end the Retirement Earnings Test, which in affect is a 50 percent marginal tax rate on wages.
One of the best ways to reduce the mounting future liabilities of Social Security is to increase the retirement age—a proposal that faces stiff opposition in Congress. Yet as anyone who has taken an economic course knows is that incentives matter. Senator Rubio’s latter two proposals gives workers the financial incentive to work longer if they choose.