As lawmakers, policymakers and pundits debate the future of Social Security and what we should do, some key points are getting lost, according to a University of Michigan economist.

Here are some important things to know getting short-shrift in speeches and talk-show talking points, says Donald Grimes, regional economic specialist with U-M’s Research Seminar in Quantitative Economics:

Why Social Security and Medicare are in trouble:

Politicians and their supporting think tanks never point out the real reason: We stopped increasing the FICA tax rate—the U.S. federal payroll tax that stands for the Federal Insurance Contributions Act. Between 1950 and 1990, we increased the FICA tax (half paid by employers and half by workers) from 2% to 15.3%. This allowed social insurance tax revenue to grow by more than enough to support the growth in social insurance benefits.

Social insurance benefits have continued to grow as a share of wage and proprietors income, but social insurance tax revenue has not. Some people claim the shortfall is because more earnings are going to people earning more than the taxable maximum ($160,200 in 2023), but FICA tax revenue has barely declined (1 percentage point or less) as a share of total wages and salaries or total wages and salaries plus proprietor’s income since 1990. The shortfall is not caused by too much growth in wage income accruing to high earners.

Where we could be:

If we had continued increasing the FICA tax rate by about a third of a percentage point per year, as it did between 1950 and 1990, the combined employer and worker tax rate would be about 25% today, and Social Security and Medicare would have more than enough money. Obviously, the politicians don’t want to mention the idea of increasing the tax rate, although that was a big part of the 1983 bipartisan Social Security deal, which also raised the retirement age and delayed the inflation adjustment by six months. But the media should be telling the full story, even if the politicians don’t want to.

What can be done:

With respect to Social Security and Medicare, I guess the lessons for how it can/will be fixed are from the 1983 legislation. Most of the attention is on the part of the law raising the full retirement age from 65 to 67. But that bill also increased the FICA tax by two percentage points, delayed the cost of living adjustment (which cost beneficiaries about 3% of the value of benefits) and started taxing Social Security benefits.

The income threshold for 50% of benefits to be taxed was set at $32,000 for a married couple (in 1993, the tax was raised to 85% of benefits for a married couple with income over $44,000). At the time, this meant only relatively affluent Social Security recipients had their benefits taxed.

Still, that threshold was not indexed for inflation and has not changed since 1983 (or 1993), so now middle-class people collecting Social Security benefits are seeing their benefits subject to the federal income tax. Note that people pay federal income taxes on the Social Security tax payments they make while they are working.

So even in 1983, the legislation to fix Social Security only imposed a small cost on current social security recipients. Almost all of the burden was placed on younger people, through higher payroll taxes, a delayed social security benefit and taxes on their future benefits.

Ok, but aren’t we overtaxed as it is?

Let’s look at the data: The Congressional Budget Office reports that in 2019 (the most recent data available), the average federal tax rate among all U.S. households was 19%, less than the 22% paid in 1979 or even the average rate (21%) for the entire 1979-2019 period. These data include all four federal taxes: personal income, payroll, corporate income and excise.

The middle 20% of households paid 13% of their income in federal taxes in 2019, compared to 19% in 1979. The past 40 years of tax changes have been even more generous to the lowest 20% of households. In 2019, they only paid 0.5% of their income in federal taxes, while in 1979, they were paying 9% of their income in federal taxes.

Finally, the richest 1% have also seen their taxes cut from 35% of their income in 1979, to 30% of their income in 2019.

By historical standards, everyone is undertaxed.