From: Richard Arsinow <richard.arsinow@rauland.com>
Subject: RE: Question on Charity
[Note to moderator: You have really increased participation on this board since you started e-mailing the questions. What a great idea!]
1. Privatization is not a prerequisite for eliminating redistribution. By changing the benefit formula 90%-32%-15% replacement rates to eliminate the bend points in favor of a 42% replacement rate across the board, Social Security could eliminate it without changing anything else about the program.
Yes, I do favor a privatized system which eliminates redistribution.
2. Yes. We all face choices in our budgets. For some it is more severe than others.
3. If we are able to make Social Security and other government programs more efficient, we may be able to reduce the tax burden. This would leave more income in people's hands, and afford more opportunity for charitable giving. Charity should not be relied on as the solution, however.
Full privatization of Social Security would increase the prefunded retirement funds dramatically for all workers. The gap for charity to fill in would become much smaller.
A reminder to those who oppose privatization based on investment risk: A privatized system need not have any more risk than the trust fund sees now. Individual account funds could be invested in Treasury bonds. There is no requirement for stock market investment. Please stop using this as a reason to oppose having your own retirement savings account which you can watch grow over the years. It can be as safe as you want it to be, but it would be yours to own and control and, if it sadly becomes necessary, to leave to your heirs.
