Social Security
What seems to be missing in the debate is that shoring up Social Security and personal Savings Accounts are two different issues, although the second ones cost will make the first goal even more difficult. The President bravely mentioned the proposals needed to return the program to solvency, he even made sure that we knew democrats had proposed each one of them. My feeling is that social security has worked rather well so far and solutions like rasing the age, reinstituting the payroll tax on those making over $80,000, means testing, lower benefits or some combination of those would solve the problem for those that think Social Security as originally envisioned should be maitained.
On PSA's, what i don't understand is whether we want to view Social Security as a safety net or an investment program. Lets not confuse the two, if people who aren't market literate make their own investment desicions, we will have more elderly in poverty at the end of the day. This may be a reasonable trade off, since others will retire with more money then they would have otherwise. If the Federal Gov't administers this plan is there a danger of state interference in markets? If the goal is to expand investment to grow the "ownership society" why not expand the 401(k) plan?
I credit the President with having the stones to get this discusion started but hopefully I wont heave to hear how those who disagree with PSA's hate freedom and think that gov't can spend your money better than you can.....
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I just want to say welcome back to MC Leiberman, I hope the time he spent at the Hip Hop Kibbutz was as rewarding for him as for the Hasidic children left in his care, boooyyyyy!
Just as MC Leiberman points out, we are redefining social security and perhaps even government's roll in the retirement arena. This is a good discussion to have from time to time. PSA's do not trump social security but they will create wealth for all of us. And this new wealth should be able to reduce the need for social security payments easing the high cost of the program. The risk of ruin is just about zero as the choices will be limited to safe mutual and bond funds, probably of the index variety. Market savvy will not be necessary.
Another good point is about 401ks and IRAs. They absolutely should be expanded. You can only set aside $3,000 of your own money...money you already paid your taxes on...in your Roth each year. Why is this so low? (Granted it is going to increase slowly over time) Because government doesn't get to tax the growth so they limit you're ability to secure your future. If someone sees this differently please educate me, but I find the limits outrageous.
No, no, if you're against PSA's it doesn't mean you hate freedom...just the children.
I agree with Stalin Malone on caps. I don't see why there are any caps at all. Increasing savings has been a goal for decades. Get rid of caps, and encourage people to save. As a side note, I'm generally a fan of anything that helps on taxes. I think its ridiculous that the Government taxes earnings, savings, purchases, gifts, and death. Just pick a point to tax, (purchases?) and be done. The current tax regime is out of control. I would love it if Bush used his political capital to abolish limits on 401(k)’s and Roth's instead of the PSA deal.
Overall, my point is that I think PSA's are great, and they're called 401(k)/Roth IRA's. Why create a new bureaucracy? Social Security needs fixing, and the answers are well known (see McLeiberman’s list). I'm not sure the two are linked.
My question for Stalin Malone is more of a clarifying one. What expense are you referring to? The expense to the wage earner, or the expense of running the system? I haven't seen a number as it relates to the cost of running the system and I'm very curious to know that number.
Do you mean my "high cost of the program" statement, or are you referring to another thread?
As far as the cost I would say that the way we are calculating benefits needs to be changed. We currently tie benefit increases to the growth of wage earner salaries. The increases should instead be linked to inflation. This would acheive significant future savings and delay the moment of reckoning.
I would also complain about the high cost to administer the program. Government inefficiencies are well known and reducing the size of any program creates savings unrelated to the strict cost of the program.
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