Discussion in 'Political Discussion' started by BlueTalon, Feb 20, 2006.
Let the games begin!
I guess I don't need to add anything
Abolish Social Insecurity as well as the IRS, IMHO.
The first thing I'd like to see is some truth in advertising. Let pay statements reflect the entire amount of the payroll deduction as being taken from the worker, rather than perpetuate the myth that the employer "pays" half. That half is part of the employee's compensation coming out of the employer's pocket, but many people never think it through (and are never encouraged to do so) and just accept it. I think if people saw what was actually coming out of their check, they'd be quite a bit more upset, and there would be more pressure to do something about it.
And that's something that can be done immediately, no restructuring of any kind needed.
Social Security is not supposed to be an investment plan. It's part of our compact with our government to work hard and in return to be protected from all that can go wrong when we reach old age.
Investments can go wrong, savings can be drained by an emergency, people can be victims of terrible scams, the stockmarket can decline for many years at a bad time for someone who has already organized his/her retirement.
Now, you know darn well that we are not going to let senior citizens die in the streets because they were victims of bad luck or bad decisions. We will help them. Social Security is a guarantee to Seniors and provides the minimum amount necessary to get by. I'm not against IRAs, 401(K)s, and so on, but they serve a different purpose. They are designed to encourage people to invest in order to have a better retirement. Social Security is designed to prevent a major social problem. If we want to tamper with retirement, then let's enhance other programs, such as the Roth IRA.
Social Security is not supposed to be an investment plan. It's also not supposed to be insurance, and it's not supposed to be a pension, but it has turned into a lumpy mix of all of those.
The biggest problem with Social Security is at its core. (There are other mojor problems with it that I'll address in another post.) It's structure is based on demographics, particularly the demographics of the 1930's and 1940's, when people had many more children than they do today, and their elderly died a whole lot younger. To put it another way, it's a pyramid scheme -- is just happens to be one created by, and forced down our throats by, our government. Unfortunately for us, the same thing is happening now that happens with all pyramid schemes, it has reached its saturation point, and the latest inductees into the pyramid are the ones who are going to get screwed.
There are only two options at this point, if the goal is to maintain the current structure of Social Security. Option One is to raise the taxes of the young, reduce the benefits of the elderly, raise the retirement age, or some combination thereof. Option Two is to return to the demographics of the 1940's -- force families to have more kids (outlaw abortion?), and have our old people die younger (no medical care after age 60? Euthanasia?). THAT'S ALL THERE IS! THERE ARE NO OTHER ALTERNATIVES! (If the primary goal is to maintain the current structure.)
Any other option involves restructuring Social Security, and this is the only long term fix that will keep it solvent and avoid bankrupting the country.
The problem, Patters, is SS isn't what you've described. It's become a retirement plan for everyone. If we want to make it a safety net . . . and with this reduction cut the amount we contribute by about 75%, I have no problem with that. But the current system of taking my money and yours for 30-40 years and then returning it to us with the most paltry interest is a joke.
A perfectly viable option would be to keep SS tax as is but have 75% in private accounts that have to be put in diversified accounts (like the S&P 500). The 25% would be the safety net. Everyone would come out ahead and the S&P 500 has never made less than 6% annually over any 30 year period. All the scare tactic yahoos point to Enron but only a fool puts all his retirement into one company.
I don't want a compact with the government. I want a compact with myself to save what I can and the government is getting in the way of that.
p.s. my plan for 75% Individual accounts would be phased in over several generations to deal with the differing amount of time we all have to adjust, varying from no time to our whole working life.
I'm not sure what you mean by "maintain the current structure" but the other option is to invest the money and have it grow. Wow, what a concept.
There are other choices, BlueTalon. You can eliminate SS benefits for the wealthy, but liberals tend to be against that because it's unfair to those who invested in the program. I do think the government should encourage wealthy people to decline their benefits. Some would.
You can let Social Security continue as is, knowing that you'll have to use the general reserves or borrow to sustain it. The fact is that's pretty much how our government has been working for many, many years. Most of us would rather take a $400 billion loan to help our elderly than to invade Iraq. Conservatives are constantly predicting economic doom and gloom from entitlement programs, but it hasn't happened in Europe and it won't happen here, provided we take measures eventually.
I think we should leave Social Security alone, but gradually raise the retirement age. We should use some of the money from estate taxes to support Social Security.
One problem with that is it encourages people not to save for retirement. I put a lot into my 401K and mutual funds and miss out on things like new cars because of it. Is it then fair to cut or eliminate my SS payment because I was responsible ?
By current structure, I mean the pay-as-you-go aspect of it. Currently, theoretically, the money being paid out to recipients today is collected from workers today. As Patters pointed out, though, there's a lot of diverting of funs and borrowing going on, so it isn't a stricly pay-as-you-go system. (What we have now, with the borrowing, is actually worse.)
BelichickFan, Social Security needs to guarantee a minimum amount on which people can survive. Having only 25% go towards some kind of guarantee would leave our seniors well below the poverty level. Further, you have to take into account the fact that many people do not know how to invest, especially people who are lower income. If we don't have protections in place, they will buy into scams or into programs that are not right for them. I think every investor has been fooled at some point or another at least to a small degree, and the less educated ones will be easy pickins for the crooks.
There may be a solution to SS that no one has thought up yet, but I believe strongly we have to ensure that our seniors have some level of protection.
I don't want to start talking taxes just yet, but my view and your view of taxation are very different.
That's why it would be phased in. Those over 50 years old would have no change. Those 30 (or so) to 50 would be reduced somewhat. Those 18 and under would be reduced way more. That's because they have more time to plan and prepare. The 75% reduction would be over time, not immediate.
Honestly, I don't care. Why should I pay (which I am, as I'll have less at retirement under this scheme) for others' ignorance ? Anyway, under my plan the money would still be taken out of the paycheck and invested in diversified mutual funds in which people couldn't mess it up. I'm talking about 5 choices, S&P 500, Small Cap, Large Cap, International, and one other. Or you could go to the Lifetime Funds that Mutual Fund companies offer now which automatically move from higher risk to lower risk as you get closer to retirement.
No, there aren't any other choices. Everything you just named here is a variation of those choices.
You were explicit in naming a raised retirement age.
Eliminating the benefits for wealthy people is a form of cutting the benefits (and I would contend that conservatives are far more opposed to the idea than liberals, since we're the ones who believe it's our money to start with).
And subsidizing Social Security with the general fund or borrowed money is certainly a form of Social Security tax increase, just called by another name. The same with using estate taxes.
Raise the retirement age...
Like I said, that's all the options there are, keeping the current structure.)
(Unless you want to make people have more kids and die younger...)
Or invest the money and have it actually grow outside of the damn lockbox.
Stop collecting. Period.
The whole "allow people to invest SS withholdings" defeats the purpose, no? The reason SS exists is so people will have insurance when they no longer have income, yes? Protect them from themselves, yes? So we have two options for overhaul:
1. Don't collect SS, and let people invest as they see fit.
2. Collect SS, then allow people to invest it, while paying some Bush cronies millions of dollars of the pie to administer these investments.
What is the difference between 1&2, except the SS payer actually will receive less on his/her investment, and Bush's pals get a nice income? I'm 32, I figure I'll never see more than 10% of my SS contributions, but not planning on any.
But it would force retirement savings. If you just cancel the whole thing then too many people would be stupid and spend everything. A "forced 401K" would make people save, even against their wishes, but would allow their money to grow.
I think your concerns are overstated. Do you have direct deposit by any chance? Everyone in the military is paid by direct deposit. We used to get checks, with all their advantages and disadvantages. But the government, in order to save money (a lot of money), required servicemen to enroll in direct deposit. But the thing is, I couldn't have the money sent to my uncle Hank or my best friend Dave or even my parents -- I had to have a bank with a routing number. By your definition, I would call that a protection.
With Social Security, it would be relatively easy for the government to set up fund requirements for investment firms in order for them to be eligible to get involved (conservative requirements governing diversity and risk and what sort of investments can be included). That also would be a protection. Then, lets say there are 20 companies that have a Social Security/retirement fund that meets the requirements. A person who knows nothing about investing would simply pick one, it doesn't matter how. Since they would all be basically very similar funds, the person would not face any risk of having his money perform poorly because of a poor choice.
And if I'm writing the rules, I would make it so that people could transfer money between those funds with no penalty (another protection). That way, each company had the incentive for its fund to do well so more people would put their money into it.
And the great thing about doing something like this is that if you die at age 58, your children ages 23, 24 and 27 would be able to inherit that money! (Under Social Security, they would all get squat.)
In case I haven't made myself clear, I'd really like to pull the plug on Social Security as it exists. Continue paying current recipients from the general fund, give everyone not yet receiving it the option of staying with the system or cashing out and have their Social Security tax be diverted into a fund such as what I described in the previous post.
I agree with your post. The question is whether the government should invest it (which I have a big problem with) or letting us invest it.
Surely something better can be done with SS. Whether it's this plan or a compromise plan.
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