Would raising the cap solve Social Security’s long-term imbalance? At Economics 21, Charles Blahous explains that this is very far from true. Bracketing the economic impact of a sharp increase in the tax burden, there are a number of hurdles:
(1) Because taxable wages are linked to benefits, lifting the cap would increase benefit outlays to the most affluent seniors. We could sever the link, but this would change the nature of the Social Security program.
(2) Blahous argues that it is important to keep an eye not just on the long-term imbalance, but also on the balance of annual tax revenues against annual expenditures. Significant annual shortfalls persist even if we lifted the cap and severed the link of newly taxable wages to benefits.
And there’s more. I recommend checking out the essay.