The Mofford Social Security Plan (generations, solution, crimes, myth)
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You're hallucinating. The retirement benefits of the baby boomers have already been covered in full. No new SS revenues are needed in order to cover those. Actual problems, if any, will be primarily with respect to assuring the scheduled benefits of those who have not yet begun their working lives.
saganista,
I respectfully disagree - the retirement benefits are mostly paid by current FICA taxes of those in the work force. The trust fund is largely a myth - it's not really a fund, and it should not be trusted - those funds have been treated as general-revenue by the government over the years and have already been spent...
So when you say that the benefits of baby boomers have already been covered, I've heard that the fund is going into the red by anywhere from 2020 - 2030 - the estimates constantly change -but the gist is that the fund - as it currently stands - cannot be sustained. Either benefits have to be lowered, or taxes raised, or both. I for one think benefits have already been cut enough (by constantly raising the retirement age) and that taxes should be increased by modifying the income limit at which FICA stops...
Putting a means test on social security is something I personally would be opposed to. To say that because you have "too much" that one cannot get back THEIR money - they money reduced THEIR take home pay would be, to me, stealing.
There is a valid equity argument here. SS is an insurance plan under which current premiums are paid in exchange for future benefits. Just as with other insurance plans, equity would require that when the time came, the benefits that were paid for were actually delivered. Not quite on the up-and-up for a homeowners company to show up after your mansion burned down and say, well look, you've made out a lot better financially than we thought you would when we sold you this policy, so even though you paid all the premiums over all these years, we're only going to pay you 10% of your claim. The same argument can be (and regularly is) made with regard to SS. Politically, however, it's simply unpopular to send checks to rich people. That's where the problem comes from.
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Originally Posted by Greatday
I support the partial privatization of Social Security.
This is because you are handicapped by an inate bias in favor of "private" over "public" anything and don't fully recognize or understand the actual wealth redistribution effects inherent in such privatization plans as are typically put forward.
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Originally Posted by Greatday
For those who are in their mid 40's or older, nothing would change. The deductions would remain as they are....
As a guess, I'm going to say that such a plan would result in the creation of a trillion dollars worth of new debt. It's probably more, but a trillion is a nice round number. How woulkd you finance that sort of shortfall?
Meanwhile, workers of every age and occupation already have access to all sorts of tax-favored investment options, so many that most people couldn't manage to name them all. Insurance and investment are EACH an important part of any well-constructed financial plan. Why all the urgency to chase so many people out of one and into the other?
For those who are in their mid 40's or older, nothing would change. The deductions would remain as they are.
I care about younger tax payers too, they dont want to pay in for 100 million retired people, many of whom that collect SS do not need it. They are going to bear the brunt of this, and wont be able to afford it.
For those in their mid 30's and older, I would allow 25% of that which is deducted from their checks to go into a 401K type program. This is not mandatory - it would be strictly voluntary.
Is it possible to lose your 401K in any kind of economic downfall, company bankruptcy (enron), ect ? If there is even a small chance that it can be lost, I would have to say not. It also diverts money from the SS system, good for the rich, not for the poor.
And personally - I have no problem with allowing workers to totally opt out of social security all together - and forfeiting any future rights to social security.
This goes directly against the SS program. Its there so that no matter WHAT happens, you will have a retirement income. People sometimes make foolish errors with their money. Accidents happen, gambling debts, stock market crashes, but with good old SS, your always at least partially covered for retirement.
This goes directly against the SS program. Its there so that no matter WHAT happens, you will have a retirement income. People sometimes make foolish errors with their money. Accidents happen, gambling debts, stock market crashes, but with good old SS, your always at least partially covered for retirement.
As one of millions who has "opted out" of social security, I disagree.
Not only can I, and millions of others, never get social security or medicare, it is of absolutely no concern to us. I (and millions of others) are far better off -
Is it possible to lose your 401K in any kind of economic downfall, company bankruptcy (enron), ect ? If there is even a small chance that it can be lost, I would have to say not. It also diverts money from the SS system, good for the rich, not for the poor.
And, it is possible for the sun not to come up tomorrow.
Over the last 30 / 40 years - what has been the trend with the stock market?
However, we both know the government would never do it - they want to keep a good thing to themselves...
You know, I hear this kind of thing pretty often -- that Congress and other government people have some sort of super-benefit program going for them. In actuality, government benefits are not much different from those that would be found at most large enterprises or corporations. If you believe otherwise, why not suggest what a few of these supposed super-benefits actually are....
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Originally Posted by HubbleRules
I think what is far more likely (and what I totally support) - is Obama's plan to lift the limit on FICA taxes - with a doughnut-hole so that between the current income limit and 250,000, no additional taxes would be collected, but wages above 250,000 would be subject to FICA. From what I've read, that would make the system extremely sound....
From what I've read, that might provide an incentive to those currently earning wages in excess of $250K to shift the form of their compensation into something other than wages. Once you plug that effect back into the loop, you might end up with a lot less new revenue than what you thought.
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Originally Posted by HubbleRules
I actually think that all sources of income (not just wages) should be subject to FICA if that's what it takes to make the system sound and to prevent benefit cutbacks from those who are currently in the system...
That's another proposal that has considerable support, but suggesting against the reasoning stated above would be the fact that the system is sound now and that there are no benefit cutbacks looming for something like the next 50 years.
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Originally Posted by HubbleRules
The average FICA rate could probably be reduced big-time if that were the case....
No, that won't happen. One thing that SS alarmists are right about is that the worker-retiree ratio is falling. That will preclude in general any signfiicant rate reductions unless SS funding from non-SS revenue sources were to be added in at the same time.
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