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How to Eliminate Social Security
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Government & Elections
How to Eliminate Social Security
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What's going on in Congress? Cut Social Security spending, eliminate Social Security, cut Social Security medical benefits ... They don't get it. Congress thinks eliminating Social Security is a viabl
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Cat:d51398b3-89f9-463d-bf1b-4b885f02c9eeForum:af978875-5bc6-4b07-a6fb-b18062132f95
Cat:d51398b3-89f9-463d-bf1b-4b885f02c9eeForum:af978875-5bc6-4b07-a6fb-b18062132f95Discussion:c635a3a5-6563-421d-9779-83bf85dd9131
Forums » Politics & Society » Government & Elections » How to Eliminate Social Security
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How to Eliminate Social Security
posted at September 21, 2011 9:30 AM EDT
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Posts: 2
First: September 21, 2011 Last: September 22, 2011 |
What's going on in Congress? Cut Social Security spending, eliminate Social Security, cut Social Security medical benefits ... They don't get it. Congress thinks eliminating Social Security is a viable plan to reduce government spending significantly in the current economic crisis. They're absolutely right: immediately eliminating social security would reduce government spending significantly. Unfortunately, they don't understand that there's simply no way to do that without breaking all sorts of social contrats. If it can't actually be done, it's not a viable plan. Now, I have a plan for eliminating most] of Social Security spending. Notice I said most. We can't elimintate it all; the reasons will become clear in a moment. Social Security, as you know, supplies more than just a glorified 401(k) fund. Social security supplies:
That leaves Retirement. Retirement is big. Can we eliminate retirement then? Let's look at a few plans for this... Immediately Eliminating Social Security Retirement Benefits Eliminate the tax. Maybe a 1.5%-2.5% payroll tax to cover Social Security Disability. Medicare/Medicaid is covered as a separate tax already. Immediately stop paying retirees. This won't work. This will immediately drop taxes and reduce government spending by a lot. Unfortunately, it will also leave retirees with severely reduced income. This violates our social contracts: they paid taxes under the understanding that they would receive a benefit, regardless of the mechanics of the thing. The more important social contract violation is more obvious: retirees just can't live on no money; they need to buy food and pay rent or property tax. So, immediate shutdown doesn't work. Keep collecting the tax, but don't pay out to the next generation Wind back the tax as retirees die off. Don't pay out to new retirees; they've been warned, they know they need to save up some cash. This won't work either. Yeah, save up your own retirement money. I don't know. Find it somewhere. Ask the Tooth Fairy for a raise. Tell your girlfriend to be a stripper for a while, that'll bring in some cash. We can't do that. The economic drain of social security is HUGE. Keeping that drain but also taking away the supplied benefit would put too much weight on the system at once. The sudden shock would devastate the economy. Besides that, this would take time. About 40 years, maybe more. So not an immediate strategy. Roll Back Slowly The last plan--and my newest revision (the above was my first, but it had problems)--follows a balance between the last two. To roll back Social Security safely, you need to tick down the Social Security tax by, say, 1%. This will put some strain on social security, but eh; it's manageable over time. In fact, you can pull a dirty trick to draw magic money out of the system. I often cite 401(k) for this, but you could use IRA as a base. 401(k) is easier, but relies on employee retirement benefit. Given that, I admit that my plan here requires some deeper thought (perhaps the percentages could confer as a total of retirement contribution--i.e. rather than, say, 6% salary in 401(k), you say 6% of income in all retirement accounts; but this makes ROTH and Traditional account disparities complex). I digress. Let's sketch the basic (albeit incomplete) plan for examination. The median 401(k) contribution rate is, let's say, 6%. Most people contribute roughly 6% to their 401(k). Let's start there. So, day 1. We'll say that the Social Security system can handle a drop of 1% in taxes for the short term (currently Obama has a 2% reduction in place). With a median of 6% 401(k) deferral, we'll ammend the tax code: For 1% above 6%, all pre-tax deductions into 401(k) are 100% covered by a reduction in Social Security tax equal to that deferral not covered by a reduction in other taxes. Blahblahblah. What this means is, say 1% of your pre-tax income is $10 and you pay 30% in taxes. If you raise your 401(k) deferral by 1%, then $10 comes out of your income. Your tax burden is reduced by $3, and thus your paycheck is smaller by only $7. Under this policy, that $7 comes out of your Social Security tax for your contributions between 6% and 7%--your paycheck isn't reduced at all. Up to 6%, nothing happens; above 7%, nothing happens; but between 6% and 7%, the government gives your contributions back, for free, no future obligation. What actually happens here is people gain 1% more retirement funding for free, but Social Security takes in 0.7% less. That's a stress of 0.7% initially, with a gain of 0.3% in a generation: the new retirees have paid less into the system, and thus have fewer "Credits" and will receive less benefit. In other words, they have:
This works, but not fast. This is the only plan that vaguely works. It also takes around 100 years to roll back Social Security retirement benefits. This plan addresses the following social contract issues:
That takes a hundred years, or more. What part of that says, "Big red button that gets us out of the current debt crisis"? The politicians just don't get it. They put Social Security on the chopping block, but it's simply not viable to chop it off. You have to whittle it down slowly, and build society up to handle that. |
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Re: How to Eliminate Social Security
posted at September 21, 2011 1:28 PM EDT
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Posts: 11519
First: February 21, 2009 Last: December 14, 2012 |
Just a whole lot of: (1) Not understanding SS (2) Not understanding Medicare or Medicaid (3) wasting a lot of our time reading an inane attempt to Privatize SS - been there done that. If this is a sample of your new board - - bye! |
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Re: How to Eliminate Social Security
posted at September 22, 2011 9:34 AM EDT
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Posts: 2
First: September 21, 2011 Last: September 22, 2011 |
You think it's inane, than what do you suggest? Be mindful that there isn't a big pile of money to move from Social Security into 401(k)s or IRA or other private funds; it's taken from current tax payers. This means that if you just do a hard cut-over, you throw everyone currently collecting right into the gutter. Congress has been arguing hard over this lately. They want to drop social security hard to get out of the current debt crisis. The only way to eliminate the Social Security retirement benefit is to do something close to what I outlined above--and, as I said, that takes a hundred years (or more). There are good arguments for reducing Social Security (as I said, it supplies some functions that can't be eliminated for socio-economic reasons). Still, Congress is wasting the country's time trying to propose any such thing as a way to handle current debt problems, because there's no way to pull out of this thing in any time frame that can be described as "current." Dropping social security is a big, complex problem and thus interests me from an engineering standpoint (and, of course, as an economics exercise). Watching our idiot leaders trying to solve the wrong problem is annoying me, though. |
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Re: How to Eliminate Social Security
posted at September 23, 2011 5:30 AM EDT
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Posts: 12532
First: February 29, 2008 Last: May 17, 2013 |
HOW ABOUT DOING AN AUDIT OF THE SS TRUST FUND On Friday the 29th of July, 2011 during C-Span’s Washington Journal1 it was revealed that the Social Security Trust Fund has a surplus of $22 Trillion while various politicians have indicated there is only $2.6 Trillion in the trust. This is a difference of $19.4 Trillion and would indicate all the rhetoric of how Social Security is a ponzi scam, is going broke, needs to be overhauled or done away with all together is not true at all, but rather it is a robust federal run insurance policy for the American people to ensure their livelihood during retirement. (See: http://www.c-spanvideo.org/program/OpenPhones7411) In 1983 while Ronald Reagan was President, the Greenspan Commission came up with a plan to save Social Security; this plan was agreed to by the Congress and became Law. Under the plan excess monies where to be made available to the US Treasury in the form of bonds to be paid back through the raising of revenue by tax increases to the wealthy when the baby boomers started to retire. The repayment was to begin in 2018 or sooner if necessary.
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Re: How to Eliminate Social Security
posted at September 25, 2011 10:16 AM EDT
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Posts: 1
First: September 25, 2011 Last: September 25, 2011 |
In Response to Re: How to Eliminate Social Security: HOW ABOUT DOING AN AUDIT OF THE SS TRUST FUND On Friday the 29th of July, 2011 during C-Span’s Washington Journal1 it was revealed that the Social Security Trust Fund has a surplus of $22 Trillion while various politicians have indicated there is only $2.6 Trillion in the trust. This is a difference of $19.4 Trillion and would indicate all the rhetoric of how Social Security is a ponzi scam, is going broke, needs to be overhauled or done away with all together is not true at all, but rather it is a robust federal run insurance policy for the American people to ensure their livelihood during retirement. (See: http://www.c-spanvideo.org/program/OpenPhones7411 ) In 1983 while Ronald Reagan was President, the Greenspan Commission came up with a plan to save Social Security; this plan was agreed to by the Congress and became Law. Under the plan excess monies where to be made available to the US Treasury in the form of bonds to be paid back through the raising of revenue by tax increases to the wealthy when the baby boomers started to retire. The repayment was to begin in 2018 or sooner if necessary. Posted by JANMB I too have wondered how much money was actually in the SS trust fund. For years the media has voiced the opinion(?) that Congress wa taking money from the fund and using it for other programs(maybe even pork barrel programs). Why has the media not researched this issue and reported on it recently? Why have the political parties not done the same. Is it because there is enough money for the S.S. bills but they intend to keep using it to cover war debt; prescription drug debt; health care debt and of course existing pork barrel debt? |
Forums » Politics & Society » Government & Elections » How to Eliminate Social Security
