I haven't noticed much support in these postings for maintaining the status quo of the current system. There seems to be a majority of support for some sort of privatization. Suggestions have ranged from total privatization, with the individual having full control over how much is invested and where (virtual voluntary savings), to the Government continuing to tax the individuals and then doing the investing in the equities market. Concern has been expressed over how the equities market can absorb that much capital without destabilization -- I think that is a valid concern, and investing Social Security funds (or whatever they are to be called) in the equities market must be done slowly so as to allow them to be used for capital growth as opposed to inflating equity prices. As I expressed before, I don't feel comfortable with the Government doing the investing since, sooner or later, it will inevitably be done in such a manner as to attempt to Social Engineer. I believe also that, left to their own choices, a lot of individuals will choose not to save -- the truism of this is the fact that Social Security was started in the first place. So, the obvious long term goal should be eventually end up with a system where contributions (or savings) are mandatory and they are all invested in equities or bonds of the individual's selection (subject to some rules to prevent undue risk).
The problem is the transition. There are those who would have Social Security stopped immediately and the present (and soon-to-be) retirees left to shift for themselves. God help us if this becomes the predominant viewpoint. We would be well on our way to anarchy. What would be next -- do away with those who are no longer productive? Euthanasia? One wonders if they will be so anti-senior when THEY are seniors and someone suggests canceling THEIR benefits.
Philosophically, except for protection from foreign enemies and regulation of interstate commerce, the Government doesn't owe us a thing. However, when Social Security was started the Government made a contract with the workers of the United States that, if they paid into the system over their lifetime of work, when they retired at age 65 they would receive benefits based upon those payments for the rest of their life. And, those payments would provide them with a retirement base upon which they could build through their own savings. If that contract were to be broken (or abridged) with current retirees and with those who will retire in the near future (the true Baby Boomers), one could no longer have any confidence at all in the word or promises of the Government. For those, that contract must be kept, and without any FURTHER reductions in benefits -- due to recent changes, the marginal Federal income tax rate on some retirees is now at 42%. This is much higher than that of those who are so vehemently anti-senior.
Any change that is made must aim to maintain benefits at current levels for present and near-future retirees until the transition is complete. That represents a huge unfunded liability, but it is there and cannot be repudiated. We cannot tolerate any additional tax increases. The only other avenue is to reduce Government expenditures and use the monies that are saved to fund the transition. I have suggested (gradually) eliminating the current cap on wages that are subject to FICA -- I see no reason for the cap, other than providing another loophole for the wealthy (and this is not meant to be "take from the rich, give to the poor" -- it is meant only to be "fair" in the context that the present benefit to contribution ratio is "fair". I suggested also that we go to a 17% flat tax, and this was immediately ridiculed by some as being unrealistic and not backed by numbers. There are some pretty well informed individuals pushing for a flat tax and using this number -- unless refuted by a fully credentialed analyst, I would prefer to believe their analyses. However, regardless of the actual rate that would be required, the proportion of income tax revenues that is used just to enforce the tax laws, coupled with the amount of time and effort that is required by the public to comply with them, amounts to a tremendous waste of money -- money that would be saved with a flat tax. Further, a flat tax would eliminate all of the current loopholes that are used only by those who can afford accountants to reduce their taxes. A consumption tax would be totally unfair as it would penalize those who were spending out of earlier savings that had already been taxed as income. There are many $ billions of potential savings that have been identified by Citizens Against Government Waste, without cutting back on existing programs. Then, there are many Government programs that have outlived their usefulness and original intent but are continued only for political purposes, and there are many that exist only for political purposes. These MUST be eliminated!!!!!
It won't be easy, but Congress has to bite the bullet and start facing up to reality. Social Security has to be changed, the liability has to be recognized, and provisions have to be made to fund it during the transition.
I've been vocal. I've contributed all that I can -- anything further would only be repetitive. I have to go back to paying attention to supplementing my "very overly generous and undeserved" Social Security benefits so that I'll be able to pay my bills and medical expenses. Therefore, I'm outta here.
