Wednesday, May 25, 2011

The Social Security Trust Fund could be made sustainable by any of the following solutions EXCEPT A. cutting benefit levels. B. increasing Social...

In order to figure out what the right answer to this question is, you need to know whether Medicaid is part of the Social Security program.  It is not.  Medicaid is not funded through the Social Security Trust Fund.


Social Security works by taxing workers and employers.  The money raised by these taxes is put into the Social Security Trust Fund.  That fund is supposed to be used to pay out benefits to people after they retire.


It would be possible to make the trust fund more sustainable by paying out less in the way of benefits.  This could be done by lowering benefits or by raising the retirement age so fewer people are getting benefits at any given time.  It would also be possible to make the fund more sustainable by taking in more in taxes.  This could be done by raising the tax rate or by raising the limit on earnings that are taxable (this used to be $90,000 but it is now $118,500).


So, the only option given here that would not help make the Social Security Trust Fund more sustainable is taking Medicaid out of the program as Medicaid is not funded by the program in the first place.

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