Subject: True Reform is Not About Saving the System
We have talked about "Values" and we have talked about "saving the system" from actuarial collapse. I would suggest that "saving the system" does nothing to further the values we have identified.
Here's a quickly prepared listing of issues that I believe any true reform should address.
I. Social Security is Detrimental to our Nation's Economic Growth and Prosperity
A. Because Social Security is a pay-as-you-go wealth transfer system (instead of a fully funded wealth creation system), its high payroll tax takes away a substantial amount of current income that could and should be used for investment and uses it for current "excess" consumption above what is necessary to prevent poverty.
B. Because of demographics, the amount of current income that has been shifted away from current investment to current excess consumption has been increasing (i.e., higher payroll taxes) and will likely increase further in the future.
C. Census Bureau household real median income data show a progressive decline in real median incomes for all household age groups under age 45. For those age groups over age 45, the increase in real median incomes is progressively lower for each younger age group.
D. Proposition: A wealth transfer system such as current Social Security should be used only to the extent necessary to eradicate poverty. It should not be used to fund other excess consumption. However, a fully funded, wealth creation retirement system can be used to fund consumption above poverty levels.
II. Social Security is a Destroyer of Class Mobility
A. Social Security contains a welfare component (higher wage replacement rate for lifetime lower earners), but funds this welfare component with regressive taxes on wages alone instead of with progressive general taxes.
B. Social Security's high payroll rate makes it impossible for many persons to build the capital necessary to enable them to improve their economic situation.
C. Social Security's high payroll rate means that there is an extra barrier to entry for entrepreneurs (mom & pop operations) to overcome on the way to competing with established businesses. This supports economic inefficiency, meaning that established businesses can keep excess profits, further leading to the gap between rich and poor.
III. Social Security is Unfair to Current Workers
A. Social Security takes money from poorer, less well off, younger families and gives it to more affluent older persons.
B. Younger, poorer persons who pay money for the benefit of current more affluent retirees cannot count on receiving full benefits when they retire.
IV. Social Security is Anti-Family and Anti-Parenting
A. Social Security is funded only by the human capital investment of parents who raise children. Only children become workers and only workers pay payroll taxes. The return on this human capital investment is shared with non-parents, i.e., persons who did not make the additional investment in human capital necessary to provide for their benefits.
B. Social Security's effect on the larger economy (criticism I) above, contributes to the requirement that families have two wage earners, which impacts on the quality of parenting parents are able to provide.
