social security reform - Democratic style

[hfojvt]

W and the media keep saying that they have a plan, and apparently a plan to save your car by starting the engine on fire is better than having no plan at all to save a car which will not break down until 2052 if it is left alone.

Do Democrats not have a plan? Then let me suggest one. It is very simple.
1. Gradually remove the cap on taxes without changing the benefits formula
2. Permanently reverse the Bush tax cuts for the top 20% to make the Government more solvent, and make dividends fully taxable again.
3. Tie future benefit increases to the rate of increase of the minimum wage which historically has increased less than either wages in general or prices, or
3a. Reduce future Colas by 1/2%

Not a perfect plan I am sure, but also not as full of holes as theirs. Feel free to propose a better one or just show me where it has already been done.

[latteromden]

1. But some people LIKE starting their cars on fire!

It's fun, just like killing people!

[hfojvt]

4. "I dreaded a continuation of the shooting,

which would have meant to me that the Japanese farm boys had developed a taste for killing with guns, which can suddenly become, for the uninitiated, easy and fun." Kurt Vonnegut "Hocus Pocus" 1990 page 245

"On TV he was always so quick to snatch any idea tossed his way, cover it with spit, so to speak, and throw it back with a crazy spin which made it uncatchable." op cit p. 266

[0rganism]

2. Watch out for removing the cap without changing the bennies

All of those FICA payroll taxes go to buying "securities", which are essentially untraded bonds the gov't is obligated to pay back at some later date with interest added. Why does this matter?

Well, if you remove the cap without changing the "benefits formula", then guys making $2 million/year are going to be owed interest directly from the gov't on their annual $250k contributions when they retire.

SocSec's strength is also its weakness. By not being an obvious transfer of wealth, it is invulnerable to most of the usual rightwing critiques of "socialism" and whatnot. However, by not being an obvious transfer of wealth, it is much harder to make it "fair" in the sense of progressivity. Workers end up with what appears to be a flat, regressive tax that funds today's beneficiaries, in return for some probable set of retirement benefits paid for by future workers.

It is a poor stand-in for truly humane welfare, but it is likely the only program of its type that has a chance of surviving these insane times.

[hfojvt]

3. Okay that does not read right

what I meant by "without changing the benefits formula" is that the cap goes up but the cap on benefits does not go up with it.
I need some other way to say it, but the idea is that the cap goes from $80,000 to $100,000, but the benefits are still figured as if the cap was $80,000. That seems a little too harsh, so maybe a large lag like cap/benefits $80,000/80,000 to $100,000/85,000 to $120,000/90,000, and so on, until the cap is eliminated in about ten years.

[papau]

5. not "fair" - and the 15% factor at the high end that we have today is

very progressive compared to the tax paid.

no need to cap the benefit.

but the tie to the minimum wage does not make it - still need a wage index or the Soc Sec as a replacement for before retirement income dies as it goes from todays 30 to 40% to perhaps 10% of pre-retirement income - it has same problem as CPI index replacing wage index.

The crisis is not a crisis - with less than average GDP growth - but still more than the 1.6% assumpted in the 2042 trust fund runs out projection - the system never runs out of funds.

[SoCalDem]

6. and lots, if not most boomers will be dead by then

Once we are gone, the population following us into the golden years is smaller..

Boomers' retirement should have never even been a factor, since we have been "pre-paying our SS" since 1980 when Reagan "fixed" it for us :evilgrin:

The REAL problem?? S T I C K Y ...F I N G E R S ... 40 years' worth..both parties.

They saw that fat piggy bank and decided to crack it open.. Now they need to put the money back, but they are asking the same people who PUT it there in the first place to "help"..

It's like borrowing money from someone, and then asking them for another loan so you can "pay them back".. D U M B ...

[papau]

7. AFTER 2030 the boomer wave is past n/t

:-)