Paraphrased from a quote in a Reason Magazine article by Mike Lynch.
Insurers would administer the funds in "separate accounts" ( not co-mingled with their own assets ), and audited frequently by the US Treasurer, as they currently are by every state insurance department in which they operate. The funds would be as safe as all such funds have proved to be.
The concept of SocSec was, and should remain, taking at least a base amount out of our hands to guarantee that each of us does not become a burden on the rest of us, in the event of death, retirement, or disability. Let's keep the SocSec system as it is, but the money away from Congress, and our own hands, and out of the general budget.
There are sectors of society who do not participate with the rest of us in the SocSec’s obligations, but have their own programs; ALL such programs should be melded into the SocSec - even in the face of the loudest cries of foul we’ll ever hear. It’s just not fair for anyone to be excluded, including Government employees. As for Congress, they may very well believe the system to have no future, but they had, in 1986, withdrawn from the system, and reworked their own plan to compensate. We should demand that lawmakers return to the system.
In the case of firefighters, who’s dangerous occupation doesn’t permit the restrictive disability and retirement requirements of the SocSec program, they can have benefits within SocSec be as they are for the rest of us, with modified definitions of disability. Their own programs would bring it all up to par for their particular needs and preferences, just as it should be, and is, with everyone else.
As for the fact that many people in low income brackets pay more into Social Security than they do in income tax, I propose the following:
*They should continue to receive credits on income below a certain amount, ( $10,000 ? ) without paying the FICA tax. This will increase their take-home pay, improve their lives, and the economy within their neighborhoods.
( No one should have to pay income taxes either, if they receive less than $10,000 annually-singles, $15,000-childless couples, and $20,000-families- regardless of the number of children. )
But, as I say in my tax brief, there’s a better way than over-taxing the earnings on labor of the low and middle class.
*Eliminate all benefits for those who, at death, disability, or retirement, have a net worth exceeding two million dollars.
( SocSec long ago ceased to be anything near an insurance program.
Giving the funds over to private insurers would release the money for *safe* investment within our economy, and tie survivorship, disability, and retirement, benefits to earnings, which would then provide more favorable final expense death benefits, *and* increase all benefits relative to the return. It would then be real “Insurance.” )
I am categorically opposed to citizen investment options. There is no way it can be made to work and inject more stability to the system; it will, in fact, make it more unstable. ( Which is what President Bush, Jr. wants: eventual elimination of the SocSec. )
Personal investing of SocSec retirement funds is a benefit for the relative few, to the detriment of the multitude.
Social Security should be a sound, actuarially-based insurance program, which, of course, calls for a limit on premiums. So the rich not paying FICA over a certain earning level, is appropriate. However, due to the present instability of the program, I favor requiring the *very* high income earners to save it by paying, temporarily, a never-ending FICA tax on actual income over two million dollars, or, we could instead, stop their outrageous write-offs from gross income. Either approach will do; both would be better.
One point I want to make relative to the cries that our contributions to SocSec earn very little, and we should personally invest our own fund would earn more, Social Security is supposed to be, and should be, an insurance program pure and simple; because it is insurance, and must be guaranteed, the funds must be invested safely. The idea that our money is not returning much - even if there were actual money in the accounts, earning a return that *will* actually be paid - challenges the essential safety these funds should enjoy. The safer the funds, the less they can earn; higher potential earnings demands higher risk; there can be no risk in a guaranteed contract. Let the idea of greater profit from risk investments find its way into the dumpster.
Regarding the complaint that if we die after the kids are gone, and leave a widow, there will be a very bad return on our “investment.” Relative to the cost of term life insurance, it’s a bad deal to start with, but it can’t work if it were not. Insurance and annuities are supposed to do that: those who die early support those who don’t. Let’s not ignore reality to promote an idea we like, for the mere sound of it.
Then there is what no one in the public arena talks about: SocSec benefits include disability income equal to the death benefit if we remain disabled longer than six months. Care to put a value on *that*? Get premium quotes from your broker.
(You should have a policy of your own in addition! But you don’t. Right?)
A Revue:
* Withdraw SocSec fund control and administration from the President and Congress;
* Return the money borrowed from it, fast!
* Let insurers handle the whole thing, under supervision, leaving to the private sector the responsibility of securing and delivering on an insured guarantee.
* Eliminate SocSec benefits to those worth two million or more.
* Require all government retirement, and disability programs to merge into the SocSec. Our “servants” should be in the boiler with us!
One more point, when SocSec benefits are actually funded, the money earns investment returns, which would result in the funds hedging inflation, or decreasing SocSec taxes as the funds become self-sustaining. Nah!!!!!
WE INVITE YOUR COMMENTS. But please be civil.
© 1997 burtonridgeway@yahoo.com
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