A Social Security counter proposal.

[Ganja Ninja]

I have a counter proposal to Bush’s Social Security privatization plan. This plan would create private accounts while insuring a continued Social Security surplus and even extend the surplus beyond 2018. The plan would allow people to purchase and hold their own Social Security Treasury Bonds.
The government could create a special class of Social Security Bonds that would be held by the individual account holders. The proceeds from the sale of the bonds would go to the Social Security trust fund the same as payroll tax contributions.
A person could elect to purchase these bonds with a percentage of the payroll tax contributions. They could also elect to purchase additional SS bonds with their own income. The money they purchase these bonds with would be tax exempt. The bonds would also be tax exempt upon sale. The bonds would be protected against judgments and could not be used as collateral. They would mature upon the purchaser’s death, disability or retirement. The holder could elect to roll the money back into Social Security and receive payments the same as if they contributed to the fund all along or they could redeem them all at once.

[SteppingRazor]

1. I got an even simpler one

Lift the cap on payroll taxes, currently set at about $90,000. Any salary made after that is not taxed for Social Security. Just remove that cap and POOF! Solven social security overnight. Of course, that'll never happen. Can't have rich people paying taxes, now, can we?

[BlueEyedSon]

2. I think the argument there is that there is a cap on benefits

so unlimited contributions into the plan would not make sense.

But we could raise the cap to $1 mil income.

:)

[illflem]

18. No doubt the $90,000 cap was

established when 90k was worth more than it is now. Just kicking it up to match inflation and the devaluation of the dollar would make a big dent.

[elehhhhna]

25. No, it's gone up steadily in the last several years. Raising it

was how we got the (stolen/spent) "surplus".

[Ian David]

3. How about BOTH of the above, plus an option to invest in foreign currency

[Ganja Ninja]

5. The idea is to keep money flowing into the trust fund.

People can purchase foreign securities on their own.

[ewagner]

4. Right ...maybe something like this

the current rate is 15.5% of which half is paid by employer and half by employee....

what if:

$90,000 - $150,000 15.5% same breakout
$151,000 - $250,000 10% same breakout
$250,000 - $1,000,000 7.5% Employer 1%, Employee 6.5%
$1,000,000 - unlimited 3.0% Employer 0% Employee 3.0%

Don't know how the numbers would play out but that's the concept....

What do you think?

[BlueEyedSon]

6. Perfect!

[Ganja Ninja]

7. I'm thinking a person could elect to set aside 30% to 50% ..

of their payroll tax contributions and then purchase an additional matching amount from their own income.

[gasperc]

21. no, regressive, a flat tax approach

money is only the abstraction of wealth.

People who earn over $100,000k or $1 million work hard deserve what they earn but thier wealth is generated with the assistance of workers earning far less than them and those same people buying products that these wealthy people sell or distribute. They are wealthy because they work hard and are smart enough to figure out the system and make alot more money than the vast majority of people. But they are getting that wealth from us, we work, we consume, we participate. If we weren't here, the wealthy wouldn't be wealthy. Should a millionaire pay 90% in taxes? no. However, wealthy people are using their money to influence legislators. Individually, higher income people are paying far less of a % of their income in taxes and in many many cases, millionaires are paying $10,000to $20,000 in federal taxes which is the same amount a single taxpayer making $40,000 to $75,000. Even though that $50k a year worker helped the millionaire become millionaire using or buying their product.

The cap should be lifted and the same tax level applied at all income. As it is set up now, as someone's income increases the % that they contribute are close to the values you list WITHOUT the cap.

[ewagner]

23. Thanks for your comments...

It's certainly something to consider.....

Let me chew on that for a while.....

[gasperc]

27. there's a post that says a millionaire is paying less than 1%

pull out a calculator and check it out.

at 1%, a millionaire would pay $10,000 into social security far more than the $5000 cap currently set

[bearfan454]

16. I've said that before too.

It is bullshit 90,000 is the cutoff. Think if Kenny boy Lay had to pay on everything he made.

[Cleita]

8. We already have government retirement savings plans like IRAs.

Social Security is insurance, not a savings plan. To hybridize it is to destroy it. My late husband had an IRA, which his employer paid into. It didn't come out of his salary. They are taxed deferred and can be invested anyway you like. My husband being fiscally conservative invested in CD's. Still he was able to accumulate a lot of interest before he retired.

After he retired we took the interest as income, which was taxed then. Also, when he turned 70, he was required to start taking distributions, which we had to claim on our income taxes, but we seldom paid taxes on it because our income was that low.

So you see Bush is pushing a plan for something that we already have. It was like the prescription drug plans. We already had it, but what he did was give the pharma companies a little gift of allowing them to charge any price they wanted to for the drugs. The end result was that even with the drug benefit the drugs cost more than they did before the prescription drug benefit for the average senior citizen.

Thanks for nothing, Mr. Prezidunce.

[Ganja Ninja]

10. IRA's are not guaranteed by the government.

Currently the government buys Treasury Bonds with the social security surplus. My proposal would mean the individual account holder holds the bonds instead of the government. However they could elect to roll the bonds over into the fund and receive payments as if they had contributed under today's plan. They could also just cash and spend them upon retirement.

[Cleita]

12. I guess you missed my point. I will be blunter.

Leave Social Security alone. There are other programs, or could be other programs designed, to achieve those ends than those the Bushistas are promoting. The Bushistas real intent is to destroy Social Security, so any compromising proposals will be twisted to gain those ends.

[Ganja Ninja]

15. What I'm proposing is an alternative that would have the same

protection as social security and even more. Currently if you die and have no dependents your social security account stays in the fund. Right now the government can elect to cut the amount you receive and you have no recourse. If you hold the bonds they're yours. You wouldn't be able to cash them until you retire but you won't have a politician stealing your money. And if you elect to roll the bonds over into the fund upon retirement you could collect Social Security same as ever.

[Cleita]

19. This is the way insurance works. When you die it's over with.

Ask your health insurance company to give your heirs the money you put into it and when they stop laughing you will have the answer. Incidentally, the widow and children continue to get reduced benefits. Now this is something that could be fixed. I am going through this now. My husband's SS has been chopped off 40% for me, however, my expenses are the same. But no doubt that was some tinkering done by a Republican in a committee way back then that put the plan together in the first place.

DON'T FIX WHAT ISN'T BROKEN!

[Ganja Ninja]

20. They just cut your husbands SS by 40% and you say it ain't broke?

If a percentage of your husbands contributions had been placed in bonds that you held instead of the government they wouldn't be able to just arbitrarily take that money away from you.

[Cleita]

22. Honey, it needs mending, not re hauling.

Yes, and they can arbitrarily take your money away from you, if they get the laws passed that they want to. Under today's laws alone, I have a friend, also a single elderly woman, who applied for Medicaid because Medicare doesn't cover her medical needs. To qualify for Medicaid you can't have any assets over $2,000 other than your home if you are a home owner and your car and personal stuff like clothes and furniture. She is not a home owner, so she couldn't even fall back on a reverse mortgage arrangement.

So if Social Security and Medicare, even if somewhat inadequate, but really don't have too many strings attached, is messed with and disappears, Seniors with some assets like mutual funds that they also receive interest from as income, would have to spend all their savings down to $2,000 to qualify for Welfare and Medicaid. Here's the catch 22. Medicaid has a deductible of $836 a year, so a person that has $2,000 in the bank would have to spend that as a deductible and there after come up with $836 a year deductible from a welfare payment that isn't anymore than $600 a month.

So if you are rich and have assets over a quarter of a million dollars, you can make enough interest to have a modest income. If you get sick and don't have Medicare anymore and can't afford private insurance anymore, which among the elderly often costs more than $600 a month for bare bones coverage and they can cancel if you get a chronic disease, you are left with spending down your assets, which cuts down your income until you have nothing.

Everyone will get a chronic disease in old age. That is a given. Health care is very expensive. My husband's last trip to the ER, where he died, was almost $10,000 for medical procedures, drugs and other charges. Since we had a Medi-gap policy that we could barely afford along with his Medicare, it will be taken care of. This doesn't even count in the $3,000 plus a month for his medical care up until then. Imagine if all this is piratized and nothing is left? I guess you'll have to send grandma out to the ditch to die with the feral cats.

[Ganja Ninja]

24. I understand that people on Social Security and Medicare are

in a hurt. I'm not saying SS is in trouble or that it needs fixing. But the GOP won't go away without creating personal accounts. If we can provide an alternative to their proposal that would be optional and wouldn't cause anyone to lose their Social Security than we need to. Otherwise the GOP will get their way and then we're screwed.

[Cleita]

26. Okay, you identified the problem, which is stop the GOP in their

tracks before they screw the whole system. Don't "fix"; don't change until we get progressives back in power. Sometimes in battle, it's better to pull up the moat until the siege is over. Trying to wave a white flag and compromise only invites the Trojan horse into your city.

[ferg]

9. But that's what happens today

That's how the social security trust fund works today. Last year it earned something like 6% on its treasuries.

So you're really just proposing that social security work like it already works.

The change in your proposal is letting you invest more in social security than the current system.

Also, the social security surplus lasts until 2028, not 2018, because the trust fund earns interest on its treasuries (the 2018 date assumes the Republicans steal the interest.)

[Ganja Ninja]

11. No I'm proposing the individual account holder hold the bonds

instead of the government. They would have the same protection as the trust fund but you could also leave them to your inheritors upon your death.

[ferg]

14. annuities: why that doesn't work

That doesn't work because social security is an insurance program, not an investement system.

Social security pays you benefits no matter how long you live. So it's also insurance against living "too long."

If you make the benefits inheritable, you lose the main point of social security, which is its insurance aspect. If you live "too long" with an inheritable account, then you're out of luck. Start buying that dog food.

[Ganja Ninja]

17. There might be some fine point to iron out but the concept

is to preserve money going into the trust fund and allow people who don't need Social Security or don't trust it an alternative.

[Cleita]

13. Thanks for clarifying this.

I couldn't quite find the words.