Tom H. made a statement, which was a fair statement. He stated that I showed the problem with Social Security, but failed to provide a solution. And he was right, I didn't provide a solution. It got me thinking about a way to get rid of the burden of Social Security and the attendant problems it has generated.
The fact of the matter is the solution is going to take time and it is going to require Congress to get off of its collective posterior and do something that are not going to be popular. But here it is, I estimate that it will take somewhere around 10 to 15 years to correct the mistake called Social Security. Keep in mind that I don't have a full-blown solution that is computer modeled, etc. etc. What I have, are a number of actions, which if taken as a cohesive whole, should work. And, yes, I do know they are not fully developed, and I am not going to say "if these are done" it is going to work.
Step 1: Make Social Security "Fully Funded"
The first step will be to make Social Security a "fully funded" system, as it was when first passed in 1935 with a rider that Congress can no longer touch the money, it does not become part of the general fund for them to spend or barrow against.
Step 2: Increase The Maximum For IRA Contributions And Deduction.
Currently, you can contribute a maximum of $7000 (of which only $3500 is deductible from your taxes) to an IRA (Individual Retirement Account) [source IRS Publication 590 (2006) Individual Retirement Arrangements (IRA)]. Increasing this will encourage more an more people to set up IRA's.
Step 3: End Social Security Benefits For Immigrants That Have Not Been In The Country More Than 15 Years
The second step will be to end Social Security benefits for immigrants (legal immigrants that is) that have not been in the country more than 15 years. This is one of the single largest drains on the SSA system, the come into this country at ages 55 & 60 and in 5 to 10 years they get to collect SSA benefits without ever having paid into it. This is something congress has been going round and round about for the last 15 odd years. It has been debated over numerous times; I have seen special orders speeches on the subject on C-SPAN. This should prevent an estimated $250 million a year drain on the system.
Step 4: End Corporate Subsidies And Foreign Aid Then Funnel The Savings Into Social Security
The third step will be to end all corporate subsidies. This should create a savings of over $250 billion a year that can be funneled into Social Security to take care of those already in the system.
Step 5: Refund Those Who Have Been Paying Into The System, But Will Not Be Collecting Benefits For At Least 15 To 20 Years.
This step is the one that will cause most of the Left to go up in flames. But here is the basic idea, if steps 1 thru 4 are enacted, SSA Trust fund should be solvent enough to start refunding with interest, the money taxed from those who have contributed but will not be seeing SSA benefits in the near future. Then the individuals can, without being taxed, put the moneys into their personal IRA's without penalties.
Step 6: End the Social Security Tax
Given enough time to getting the US public used to the idea that SSA is going to be gone, and they are now going to have to look after their own retirements. Self-Interest is such a wonderful thing to invoke. And the final step, after the majority of SSA recipients have died off, is to finish paying off those who have been paying into SSA and end the program.
Conclusion
Now, this isn't a complete list of things that more than likely need to be done to get rid of SSA. My time line of 10 to 15 years maybe woefully inadequate. Steps 1 thru 3 will buy time for the system, but without steps 4 thru 6, the system is doomed. It isn't a matter of if; it is a matter of when.
These are just basic ideas and what they could accomplish, the basic problem lies in the fact that getting Congress to do them is going to be the real kicker.
In Liberty,
Joseph V.
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Comments: 4
Part of what make this issue so screwed up, is the fact that the current congress isn't going to do the first 4 steps, let alone 5 and 6.
Congress isn't going to do step one because then they can't use it to scare older folks into voting the way they want them to vote. Keep in mind, at this juncture in time, the Baby Boomers out number the Gen Xers. Actually had SSA remained "fully funded" and not changed to a "pay as you go" system, we wold more than likely not even be having this discussion.
In Step 2 I forgot to add somthing, the amount you are allowed to put into 401K plans, unfortunately I can't seem to find the exact ammount you are allowed to contribut on a pre-tax basis, their are 7 different IRS publications and there are conditional modifiers for the ammounts you allowed to contribute tax deffered.
Robert A. Heinlein wrote in 'Time Enough for Love' "Never appeal to a persons better nature, they might not have one. Instead appeal to their self-intrest, it gives you more leverage." What this means is by invoking peoples self-interest in providing for their own retirements, and rewarding them (by way of tax incentives, or evn cuts in their taxes) it will encourage people to actually save. Add the fact, if the government ever gets around to doing it, getting rid of SSA safety net, will encourage even more to save for their retirements.
Step 3 isn't punative, its pragmatic and fair.
Now, lets takea look at Step 4. you state "End corporate welfare? Sounds great! End foreign aid? Great if you mean military-style aid. If you mean anti-hunger programs, I think that's short sighted. We fund those problems there so they don't become refugees here."
I am about to bounce your reality check. Considering the number of corrupt governments this money is going to, do you honestly belive that money is being used to feed thier people? Because the truth is, it is not, hell even UNICEF food stuffs are more than likely to end up on the black market than in the hands of those who really need it. There have been exposes over the last 25 years in papers like the Wall Street Journal, New York Times, Washington Post, USA Today etc. over the fact that foriegn food aid monies are not spend on food, but lining the pockets of those government leaders.
Now on to a slightly more pragmatic matter, why in the nine billion names of the lord and lady is money, that isn't even reaching who it is supposed to help, going to other countries, when we have a mess in our own backyard.
A friend of mine who was looking over my shoulder when I was writing the article, told me that there is no way in hell the current make up of congress would do any of that, because they would allienate not only thier corporate masters, but every senior citizen in the country. As I stated early, the current set up only benefits our congress critters so they can maintain power.