Ways to reform Social Security
- From: "smith" <spam@xxxxxxxx>
- Date: Sat, 02 Dec 2006 20:58:22 GMT
Say you had the power to reform social security however you saw fit, how
would you do it to best meet the economic needs of the public?
Personally, the first thing I would do would be to split SS into three.
Presently, the money Americans pay into SS acts as life insurance, disablity
insurance, and retirement all in one which causes confusion for the American
public. Under my system, each person then would have 3 different types of SS
payments. By splitting SS, it would make its problems much more transparent
and manageable via the divide and conquer strategy. Government retirement
yields could be compared to market yields, and surviver benifits and
disability benifits could be compared to commercial life insurance and
disability insurance rates.
2)Presently SS allows you to pass on your SS benifits to a spouse which is
grossly unfair. Gay people say it discriminates against gay marriage, but it
doesn't. It discriminates against all single people. Single people should be
able to add any benificiary (like a friend or family member) to be fair.
This would actually be complex, so it would be best to yank SS's recognition
of spousal benifits all together.
3)Through surviver benifits, SS allows members to pass on surviver benifits
to kids. This is grossly unfair to people who decided not to have kids. If
anything they should be rewarded for not overpopulating which creates
economic and ecological problems. Those with kids, also tend to mooch off
their offspring as a form of insurance/retirement anyways (many won't admit
it, but subconsously many people decide to have familys as a form of
security which is why the poorest nations have some of the largest
families).
4)Many government workers do not have to pay SS tax, which is a stealth tax
on the public, so I would get rid of these exceptions.
5)Businesses presently have to match what employees pay to SS, which is
actually again another stealth tax on the public and has to go. You pay 6.2%
and then they match that 6.2%. But because all businesses pay this tax they
won't compete to shoulder this cost for employees, which means the employee
pays 12.4% of their salary in SS each year, which is absurd. Government is
in essence punishing businesses for hiring people. An additional plus for
getting rid of the SS tax businesses pay would be that it would make
accounting life for businesses much easier if they didn't have to worry
about handling this tax.
6)Government should get rid of tax deductions for 401k's, because 401k's
have a made a mess of the private retirement system in the US. The system is
so chock full of middlemen (HR, the retirement management company, mutual
funds, broker fees, specialist fees), that the median yield for Americans'
401ks is paltry 4% (according to PBS's Frontline on retirement). Most
American would be far off better paying off their debt, then after that
investing in bond funds, (individual bonds or stocks for smarter investers).
So not only do 401k's give you inferior returns, they limit your investing
opportunities and ability to pull out of investing should the need arise
because of all the tax complications. The extra tax money from getting rid
these excemptions could be funneled back to the public in other ways. With
the private savings system fixed, this would represent a superior rate of
return to investors compared to SS.
7)Get rid of the SS trust fund. Presently SS invests all surplesses in this
fund, and they go to buy government securities. Because government
securities have an inferior rate of return to many alternitives, this
represents a loss for the public, and a stealth tax for government.
Corporate bonds, stocks, or low fee funds that contain a combination of
these assets could easily beat this rate of return (presently at roughly
5%). That or most people have debt that exceeds 5% interest rates and this
would represent a superior savings vehicle.
8)Finally, I think the system is so broken, the government should default on
all SS 'obligations' completely, x-out the SS trust fund (which would lower
the national debt) and get out of the system completely. This would have
numerous advantiges:
a)Gets rid of all complications associated with SS and the management needed
to oversee those complications (who gets what credits, when can you retire,
are you REALLY disabled, and many more prickly subjective issues like that
which bog the system down).
b)Gets rid of the SS number which is a defacto national ID and causes
numerous privacy concerns. What governments knows, it controlls, so by
giving government a national ID number, you are giving up a lot of controll.
c)This would make taxes and the whole hiring process much easier.
d)SS fraud would be ended. You can't fraud what doesn't exist.
e)Offers the public superior options, flexiblity, and returns in the manner
in which they seek to save for retirement and acquire life and/or disability
insurance.
The one problem with this is that according to the US Constitution the
Federal Government can't default on debt, but SS never was a proper
investment vehicle, so I'm guessing while this would be challenged in court,
the absolution of SS would prevail.
.
- Follow-Ups:
- Re: Ways to reform Social Security
- From: Lantern
- Re: Ways to reform Social Security
- Prev by Date: Re: Need help with a GDP calculation problem...
- Next by Date: Re: Need help with a GDP calculation problem...
- Previous by thread: Re: North Korean Famines
- Next by thread: Re: Ways to reform Social Security
- Index(es):
Relevant Pages
|
