Social Security Modifications I Could Live With

[stopbush]

1. Get rid of the cap on income subject to SS taxes. Tax ALL income, period.

2. Change the law to put SS funds into Al Gore's lock box, and

3. Once in the lock box, make it illegal to borrow SS funds to pay for tax cuts for the rich, etc.

That's about it.

[Atman]

1. I have no problem with any of that.

If only our President had the spine to demand those "changes."

[proud patriot]

2. agreed

[emulatorloo]

3. Sounds good n.t

[SammyWinstonJack]

4. Well that's not on the right track, now is it?

:evilgrin:



I agree with you.

[PoliticAverse]

5. WTH was AL Gore's lock box ?

Does anyone have a _specific_ explanation of what he meant by "lock box" and how it differs from
how Social Security funds are handled now ?

[Zen Democrat]

6. I think that they can't be borrowed from in the "lock box." No more IOUs piling up.

[exboyfil]

12. The only way that you can have a true lock box is

if you run a surplus and purchase other countries' sovereign debt (or other assets like stocks or other types of bonds). As far as I am concerned the whole surplus idea was horrible, and we are seeing the results of it now. Not only did the slush afforded by the Trust Fund allowed deficit spending - we went even far beyond that cushion. Now that the people want their bonds repaid (and it is the people's money given the highly regressive nature of Social Security withholdings) we are told we don't have the cash flow to make good on their promises???

This may get a lot of criticism on this board, but, when they were discussing upping the withholdings to create a "Trust Fund" we should have been moving towards letting individuals have control of that delta percentage of money to fund their own assets for retirement (and I am not talking about Treasury bonds). We could have further boosted that percentage by bringing all income into the S.S. system and adjusting the rate downward for everyone. Now it is too late to do anything.

Things I think we should do:

1. We should still assure a minimum income for everyone out of S.S. on the order of $10K/yr.
2. Bring all income into S.S., but make that over $105K withheld at a lower percentage, and do not calculate any additional benefits for that income (this would make it equivalent to the $50-$105K who currently subsidize the system).
3. Bring pay as you go back to S.S. by adjusting withholding rate downward (somewhat moot unless 2. happens).
4. As economy gets better draw down the Treasuries from the Trust Fund until it is depleted. Do this by not raising the withholding rates.
5. Make a firm promise that no more than 7.5%/7.5% is ever going to be withheld by Social Security (it is currently 6.2%/6.2%).
6. Have a sliding scale reduction in benefits in the Pay as You Go system if the 7.5%/7.5% proves to be too little for paying the promised benefits (ie the $10K is guaranteed by slide it down from there). This should apply to everyone - not just to future, new, or recent retirees. Everyone has to step up to the plate.
7. Ensure that we do not add a whole bunch of additional low wage workers to the system (this goes along with immigration reform, and I know it is unpopular on this board).
8. Do not screw with the CPI/COLA unless it is to reflect food and energy in the COLA. The chained CPI is an abomination.
9. Force the delta from 6.2% to the current withholding rate be held in assets other than Treasuries by those who are retiring in something like a 401(k). Actually the 401(k) law can be changed to absorb this. I know that this is somewhat privitizing S.S., but the Trust Fund and defined benefits pensions have not worked out too well. Remember this is money most workers would never see because it would have been withheld - it is actually coming from higher income workers. I don't know about you, but I like knowing that my money is invested in my name. I could loosen the argument about Treasuries somewhat to make it voluntary participation, but mandatory participation gives us the same problem we now have.

[Warren Stupidity]

25. there is nothing wrong with t-bills as an investment.

However, as we have seen, Congress cannot avoid the temptation to cut other taxes while FICA runs a surplus, and then that same Congress cannot seem to find a way to put those taxes back when the wheel turns and the trust fund has to be paid back.

So the real answer is to take SS and Medicare out of the trust fund entirely and make them part of the general budget. No FICA, no surplus. Put the income tax rates back to where they were in 1980, and put everyone on Medicare.

[FogerRox]

29. Please.

tp://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1526144

[exboyfil]

30. Did you even read my suggestions?

One of the biggest bangs for your buck is eliminating the cap on S.S. withholdings according to your table. I suggest this, and I further suggest that we make the system a Pay as You Go now by reducing the amount of withholdings for everyone. Eventually we need to draw down the Treasuries to pay back the Trust Fund, but I think that can wait until the economy improves. The cap is the most unfair thing about the Social Security system, and I think, with the right politician with the right explanation, we can generate enough political will to do something about it. We sweeten the pot (buy voters so to speak) by reducing their withholdings rate because of the additional revenue which is collected.

You are right that S.S. in isolation is not the issue right now. I tend to agree that, so long as the Trust Fund repayments are honored, it is a minor issue compared to other issues. A far bigger nut to crack is Medicaid Long Term Care, and the suggestions for block reductions to Medicaid are asinine and disingenuous. Us spending 4.7% of GDP on Defense when our allies spend less than half that amount is another major issue. Unfunded Medicare liability is a third issue which is tied in with the overall Health Care debate. The fact that the tax rate is too low with too many outs from paying taxes is probably the biggest issue.

[FogerRox]

31. Scored by the CBO the shortfall over 75 yrs is .6% of GDP

Raising the cap to 250k is .5% of GDP. And you want to remove the cap? What on earth for? Youre locking up 100's of billions of dollars, for potentially hundreds of years. Capital that cant be used for tax breaks to build solar panel and wind turbine factories. money that never be used to stimulate jobs.

Why would anyone want to over fund SS algorithmically ?

The cap was put there for a reason, which apparently escapes you, if we take nothing from capital we owe nothing to capital.

[exboyfil]

32. Pay as you go and reduce the rate for everyone

Not tying up capital - I am freeing capital. Right now those making $50 to $105K (especially at the top end) are subsidizing the system. The current system is structured to say that, after a certain fixed amount irrespective of your income, you no longer have an obligation to support the lower income earners. I don't think this is fair. I can go along with adjusting the withholding percentages downward to reflect no additional benefits for this group, but they must step up to the plate to support the system. Wouldn't it be nice for the poorer workers, instead of having 6.2%/6.2% withheld from their checks that they have 4.2%/4.2% (or whatever percentage it works out to), and they can invest the rest in a 401(k) (picking Treasuries bonds if they elect to). It will not impact their future benefits, but they will have some ownership of their retirement.

[indurancevile]

8. good qurstion.

[metalbot]

10. The issue is what to do with the money

Each paycheck, both you and your employer pay something to the federal government towards Social Security. The government is obliged to give you that money at a later date, when you retire. The problem is, what does the government do with the money over the years waiting for you to retire? If the government put the money into a bank account, that would be giving a loan to a bank, in exchange for interest. But what would happen if the bank went bankrupt? We need a safe investment vehicle - someone who ALWAYS repays their debts. Well, the federal government itself has a great credit rating, so the government loans your social security savings to itself in the form of treasury bonds. The government pays back your money to the "trust fund" with some small interest.

The lock box approach basically says "take the money, convert to cash, and put it in a really big safe". This is ok, but you'd have to expect a drop in benefits, since there would be no way to accumulate any interest on your money.

[exboyfil]

13. It is worse that that

Cash in a vault is a depreciating asset thanks to inflation. Treasuries in lock box is a shell game that allows the government to understate deficit spending, and when you need the money most - the government is least able to satisfy its obligation either by selling other Treasuries or raising taxes.

[Enthusiast]

15. It doesn't matter what it ACTUALLY is,

it just means that those funds can not be spent on wars of choice or tax cuts for millionaires. If we have to have a war a special tax should be enacted to pay for it. No more FICA piggy bank.

[Selatius]

23. He basically means respecting the difference between the General Fund and Social Security.

As it stands, revenue generated from the SS tax is not included with the revenue generated through the income tax, tariffs, etc.

The division between SS and the General Fund was put into place because it was originally feared that if Social Security were funded through regular income taxes, then it would become victim to right wing elements, who would promptly defund the program the minute they gain control of the House, Senate, and White House.

If Republicans want to pay for the cash shortfall that would occur if they gave another tax cut to billionaires and multi-millionaires, they can pay for it another way than to raid the SS Trust Fund. That's basically what Gore was saying.

[Stuart G]

7. ok

[Kaleva]

9. I'd invest the surplus in state, municipal and school bonds.

I'd also consider converting the Trust Fund bonds into non-interest bearing ones (The govt. will pay an expected 116 billion this year on the money borrowed from the Trust Fund) and compensate the loss of interest with removing the cap.

[indurancevile]

11. there's no reason to "live with" ANY modifications. when you concede that, you've already acceded

to the proposition that social security has some bearing on the debt/deficit, or that something needs to be done now to fix a problem that MIGHT happen 25 years down the road.

[FogerRox]

27. True, with job creation and real wage growth SS might make it thru 2085

The Trustees say that with job creation and real wage growth, the lost cost scenario shows SS good thru 2067, (by then all us Boomers are dead) and from there assets climb quickly thru 2085, when they stop doing the math. The Stohastic model has SS good till 2055.

[Enthusiast]

14. I've got more.

1. Lower the retirement age to 64.

2. Give social security recipients a one time increase in benefits as a economic stimulus measure.




If those two and your's were enacted seniors and others would be inspired to buy something, to stimulate the economy. This would be a far greater stimulus than tax cuts for millionaires and new extra fun wars.

[damntexdem]

16. No, there are more, in particular: increase benefits when possible.

Will not always be possible, perhaps seldom; but when it is, then the benefits should be raised.

[Cleita]

17. Hear, hear!

:thumbsup:

[eallen]

18. So, you don't want the trust funds to earn interest?

Why not? Do you keep your money under a mattress?

:hippie:

[Kaleva]

19. It's not my money anyways. The Supreme Court decided that back in 1960.

[Selatius]

24. If you had done that under eight years of Bush, you'd have a better return on your money.

If, on the other hand, you had invested your money in the stock market through your 401K, chances are you lost money in that time frame.

[eallen]

26. The point is: earning interest means lending it. Which means, someone borrowing it.

The previous poster seems to object to the notion that funds are borrowed from the trust fund.

:hippie:

[sfpcjock]

20. MEDICARE:

1. Dump the ridiculous GOP Part D middle-of-the-night restriction that Medicare cannot bargain for drug prices with Pig Pharma.

[donheld]

21. k & R

[Lugnut]

22. That works for me! n/t

[FogerRox]

28. Do you realize that would completely over fund SS? Exponentially?

The 75 yr shortfall is only .6% of GDP. Your solution overstates the problem algorithmically.

.6% GDP is represented by increasing FICA by 2% over 20 yrs. .5% of GDP is equal to raising the cap to 250k. Significant job creation and real wage growth, enough to drive the economy to GDP of 2.8% or higher, is also equal to .6%.

I'm all for taxing the Uber rich, but making them pay that huge increase is punitive. And is in no way relative to the problem. There is no way that SS will need that money for 100's of yrs, if ever, and once the money is in the trust fund, it can never be used for other uses. If we're going to tax the top .1% lets use the money to stimulate jobs, and the use of solar and wind, and do it thru income taxes, cap gains and the corporate taxes..


FDR put the cap in place for this reason.... if we take nothing from capital we owe nothing to capital.

Heres my review of the 2011 SS Trustees report

tp://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1526144