My Idea For Social Security

[iamjoy]

OK, tell me what you think of my idea to help boost Social Security. I mean, aside from the obvious the government should keep its grimy paws off the trust fund. I welcome all constructive feedback, but the Democrats can only hammer Dubya's plan so long before not coming up with one of their own (or sticking their heads in the sand about the problem) backfires.

1) Currently, workers only pay payroll taxes (for Social Security) on the first $90,000 of their income. We should eliminate this cap (Frame: is it right that some one making $200,000 pays a lower percentage of their income in payroll taxes than some one making $20,000?)

2) The government should invest the money in a variety of funds to earn a higher return, but not change the guaranteed benefit to recipients. Yes, this means in a down market time the government will be paying out more than it is taking in, but should be saving up during times the market is performing well. Yes, this is still a gift to Wall Street, but it protects individuals from fees and unscrupulous investment companies.

3) Encourage more employer plan participation - such as 401(k). This would have several parts
a - For companies that do not offer them, find out why. See if the government can help sponsor a plan for small employers to buy into so these workers can invest directly from their paycheck.
b - Educate people (real public service announcements) about the benefits of such plans, including employer match AND how contributing 5% to your 401(k) does mean you go home with 5% less in your paycheck because the money is taken pre-tax, thus lowering your taxable income. Also provide FREE information about how to make wise investment decisions - make it easy to understand.
c - this is for the wealthy (must throw them a bone after #1): do away some of the restrictions on what Highly Compensated Employees can contribute to an employer sponsored plan. It's kind of complicated, but in summary, other restrictions on these plans may mean that some one making $100,000/yr are restricted from contributing as much as some one making $30,000/yr. Allow them to contribute as much as they desire (up to the standard IRS limit for all workers) regardless of what employees making less contribute


*** I know this isn't perfect and has plenty of gifts for Wall Street, but it does help protect the most needy. The thing about a compromise is no one is totally happy, but no one walks away empty handed either.

[papau]

1. Looks like a fine proposal to me!

:-)

[Warpy]

2. First, getting the overpayments out of Congress's greedy hands

is absolutely necessary, because only then will the working stiff out there see exactly what those tax breaks to billionaires have actually cost this country. Unless we do this, nothing else we do to "fix" social security, including raising or even eliminating that laughably low earnings cap, will work. Congress will just squander any new funds the way they're squandering the 40% of FICA that represents overpayment to the system now.

Only a return to a truly progressive tax system, scraping wealth off the top and recirculating it back down at the bottom, will bring a return to any semblance of prosperity. The money pump has ALWAYS worked from the bottom up, not the reverse. No rich man has EVER given you a job. The poor people who have money to buy goods and services are who give you that job!

Supply side economics is a scam and a hoax, and it's about run its course. It's time for a return to demand side economics, and getting our FICA payments out of the general fund is only the first step in that.

[Inland]

3. Here's what I think.

1) No tax hike. Just none. For one thing, it just creates a bigger pot of money for Bush to steal. Since he has made it clear that the surplus is a nullity, what good does it do to make it bigger.

second thing, for SS to actually go into default, we would have to have thirty years of growth at about half of the previous thirty years. In that case, there is no way benefits won't be cut, with our consent, because all governmnet will be unfunded.

Third, I expect Bush to blame us for tax hikes and just give it back in tax cuts for the rich.

2) You point out what Krugman said--if huge returns are guaranteed, why doesn't the government borrow a trillion, invest it in the markets, and then pay it back and a trillion more in thirty years? Fact is, few think this sort of leveraged investment by the government is worth the risk, either because they don't trust government or don't trust markets.

3) A lot of this going on. One thing that seems to work: employees signed up automatically and have to opt out, rather than not and opt in.