Old Age vs. Disability Programs

Interesting article submitted by bizgrrl on Fri, 2011/01/07 - 6:34am 

Social Security is two separate programs, one for the Old-Age and Survivors Insurance (OASI), which pays retirement and survivors benefits, the other for Disability Insurance (DI). Of the 6.2% taken out of payroll for Social Security, 5.3% is designated for OASI and 0.9% for DI. In 2011, the SS payroll tax has been reduced to 4.2% to theoretically help boost the economy.

As reported in the Los Angeles Times, the OASI program has a surplus, whereas the DI program is losing money.

In fact, if it wasn't for existing assets, the DI program would already be in the red. According to the article, raising the retirement age to help the OASI program may, in fact, hurt the Social Security program.
According to a Social Security website, 2010 and 2011 are the first two years the earnings subject to SS taxes has not increased since 1972. Maximum earnings subject to SS tax for 2011 is $106,800 and has been this amount since 2009. The earnings limit is based on a national average wage index. 2009 was the first year the national average wage index went down since 1951.

What's the message? It's the economy, and taxation. Something needs to be done to boost the economy and apparently it hasn't been done yet. I have to wonder if it has to do with confidence and credibility. No one yet has confidence that the economy is recovering, thus few are willing to invest in the future. Then, it would appear our government needs to change the law on how maximum earnings are taxed to enable a higher taxable earnings for Social Security not dependent on a national average wage index.













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