Social Security - A Radical Proposal
With all the debate over private accounts, key facts are either ignored or misrepresented. There are two parts to the current system. There is a pay-as-you-go part, which, as the Democrats say, cannot go bankrupt. There is also a trust fund created around 1972 which is basically a bank account where the government deposits excess wage taxes. The trust can and will go bankrupt (as the 'Pubs say). The actual date varies depending on whose data is used to make the calculation.
Another key fact is that the entire federal government is not covered by Social Security. Congress really has no interest in fixing the problem for two reasons: 1)insolvency will not impact their retirement, and 2)it is such a vote-getting, polarizing issue that they are wary to do anything that can be utilized by the other side at the next round of elections.
Perhaps the single biggest fact which is never spoken is simply that Social Security is an entitlement program that has outlived its usefulness. It was created as part of the New Deal legislations in 1933 at a time when the country desperately needed to know that the government was doing something to help the citizens who had lost so much. What Congress failed to do, perhaps because there was a general lack of optimism, was sunset some of the entitlement programs created by the New Deal. Make no mistake - Social Security is a socialist entitlement program that comes with no strings attached.
Contrast that with the New Deal version of welfare (known then as workfare). In order to get your welfare check in 1933, you had to perform some sort of public service (mostly it was chopping wood). Bachelors were required to chop wood for themselves plus a widow. This was not an entitlement program per se, but rather a reflection that there was an inherent dignity in work of any sort. Workfare more or less died during WWII because virtually every work-age person was employed in some manner in support of the war effort.
In the intervening 70 years since Social Security, we have turned into an entitlement society. We expect government to provide for our needs, but we sure as hell don't want to pay for it. The 'Dems keep talking about the health care and retirement systems of European countries, but they never talk about the costs of such systems. In some countries, workers pay as much as 60% income taxes.
Forget about the "taxing the rich" scheme as a means to pay. Under the current plan (yes folks, that means Bush's tax cuts), the wealthiest 10% of Americans now pay a higher percentage of the government budget than at any other time since the income tax was reinstated in the early 1900s. This fact is often hidden using a clever marketing ploy - focus on the metric that gives the biggest difference. Instead of talking about percentage of total revenue and percentage of tax cut, the "tax the rich" crowd likes to use whole dollar amounts. Remember the presidential debates in 2000? Gore adds told you that the rich got enough money back to buy a new Mercedes, whereas the average family only got enough back to replace the muffler on their used Toyota.
This ridiculous argument was so popular that it is now used to justify the belief that repealing the tax cuts for the rich would pay for Social Security plus all of the other entitlement programs that people now expect government to provide. Even were that true, however, that would not solve the problem of paying for a socialist agenda. Federal expenditures are budgeted and paid for in advance whereas revenues (i.e. taxes) are collected in arrears. That means that should a market event (think dot com bust) occur which substantially lowers tax revenue, the socialist agenda would still be under funded. One thing that is painfully clear with the current crop of Congress Critters is that they are loathe to cut any program for which they have already voted funding. As Ronald Reagan once said, "the government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other."
So here is my radical proposal. And true to the name of this blog, it's not rocket science. Phase out Social Security. Eliminate payroll taxes and let everyone control their own destiny. Better still, let everyone put their money in the government's own system. Instant solution to the problem. Don't believe for a minute that the government system is not good - if it weren't, the Critters wouldn't use it.
A phase out is the best solution for the country. It protects those who are in the system now, it eliminates a socialist program from a capitalist society, it generates better returns (assuming adoption of the federal system), and most importantly, it eliminates the solvency problem for good.
Another key fact is that the entire federal government is not covered by Social Security. Congress really has no interest in fixing the problem for two reasons: 1)insolvency will not impact their retirement, and 2)it is such a vote-getting, polarizing issue that they are wary to do anything that can be utilized by the other side at the next round of elections.
Perhaps the single biggest fact which is never spoken is simply that Social Security is an entitlement program that has outlived its usefulness. It was created as part of the New Deal legislations in 1933 at a time when the country desperately needed to know that the government was doing something to help the citizens who had lost so much. What Congress failed to do, perhaps because there was a general lack of optimism, was sunset some of the entitlement programs created by the New Deal. Make no mistake - Social Security is a socialist entitlement program that comes with no strings attached.
Contrast that with the New Deal version of welfare (known then as workfare). In order to get your welfare check in 1933, you had to perform some sort of public service (mostly it was chopping wood). Bachelors were required to chop wood for themselves plus a widow. This was not an entitlement program per se, but rather a reflection that there was an inherent dignity in work of any sort. Workfare more or less died during WWII because virtually every work-age person was employed in some manner in support of the war effort.
In the intervening 70 years since Social Security, we have turned into an entitlement society. We expect government to provide for our needs, but we sure as hell don't want to pay for it. The 'Dems keep talking about the health care and retirement systems of European countries, but they never talk about the costs of such systems. In some countries, workers pay as much as 60% income taxes.
Forget about the "taxing the rich" scheme as a means to pay. Under the current plan (yes folks, that means Bush's tax cuts), the wealthiest 10% of Americans now pay a higher percentage of the government budget than at any other time since the income tax was reinstated in the early 1900s. This fact is often hidden using a clever marketing ploy - focus on the metric that gives the biggest difference. Instead of talking about percentage of total revenue and percentage of tax cut, the "tax the rich" crowd likes to use whole dollar amounts. Remember the presidential debates in 2000? Gore adds told you that the rich got enough money back to buy a new Mercedes, whereas the average family only got enough back to replace the muffler on their used Toyota.
This ridiculous argument was so popular that it is now used to justify the belief that repealing the tax cuts for the rich would pay for Social Security plus all of the other entitlement programs that people now expect government to provide. Even were that true, however, that would not solve the problem of paying for a socialist agenda. Federal expenditures are budgeted and paid for in advance whereas revenues (i.e. taxes) are collected in arrears. That means that should a market event (think dot com bust) occur which substantially lowers tax revenue, the socialist agenda would still be under funded. One thing that is painfully clear with the current crop of Congress Critters is that they are loathe to cut any program for which they have already voted funding. As Ronald Reagan once said, "the government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other."
So here is my radical proposal. And true to the name of this blog, it's not rocket science. Phase out Social Security. Eliminate payroll taxes and let everyone control their own destiny. Better still, let everyone put their money in the government's own system. Instant solution to the problem. Don't believe for a minute that the government system is not good - if it weren't, the Critters wouldn't use it.
A phase out is the best solution for the country. It protects those who are in the system now, it eliminates a socialist program from a capitalist society, it generates better returns (assuming adoption of the federal system), and most importantly, it eliminates the solvency problem for good.
posted by exsubdriver at 8:40 AM
2 Comments:
"Better still, let everyone put their money in the government's own system. Instant solution to the problem. Don't believe for a minute that the government system is not good - if it weren't, the Critters wouldn't use it."
Inquiring minds want to know. Pray tell who funds the "government's own system"? Can you say tax revenue. I thought so. So, using your logic above, the Government program would be replaced with Congress folks funding their retirement from their own pocket. Not going to happen in our lifetime. Q.E.D., the Government program is not the solution.
exsubdriversdod
No, the "government system" I am referring to is the investment options federal employees have available to them, not the pension system. I am proposing that instead of Social Security, workers be allowed to invest their former payroll taxes in the same program Congress uses. The Criters pension comes from the general fund, not Social Security taxes. Thus there would be no impact to them.
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