I agree that one of the fixes he proposes will do little, and that is to allocate proceeds from the estate tax to SS. Like you, that simply seems like reallocating scarce tax dollars to SS that could be allocated elsewhere.

The other two approaches, though, have merit, I believe. Increasing the SS wage base will definitely bring in more money. It’s a tax increase, of course, but only the upper-milddle-class and wealthy would pay it. Investing in equities also has merit, though there are some drawbacks he doesn’t mention.

Currently, I beleive SS funds are invested in government paper, such as T-bills and T-bonds. The return is anemic. Investing in equities, as a long-term investment, is very likely to increase the size of SS funds with very little long-term risk. In fact, if the long-term stock market crashes, we are in for many more problems than SS shortfalls. The trick is simply to ensure there is enough liquidity to meet short term obligations.

Investing in equities does have a substantial downside, though. The SS pool is so enormous that investing in equities can distort the market, driving up prices and creating at least a small bubble. Attempting to invest in individual stocks could easily create huge bubbles in some areas. In addition, pulling out 20% of SS from the T-bill and bond market will increase the US’s cost of borrowing overall, and increase the tax dollars that go simply to service the debt.

At any rate, any investment in equities should probably include foreign companies in order to avoid an artificial surge in US stock prices stemming from the SS Administration’s need to buy equities.

In the long run, the only viable solution is probably to reduce SS benefits as retirement income increases, so that the wealthy end up with small or no SS checks. That will badly undermine SS’s popularity and political support, but there’s probably no help for it.