RE: The Red Herring of Social Security

[Michael Jones <powderfinger99@yahoo.com>]

<<<<
Mr. Hart did not show what the survivors benefits would be to his wife
and children.  Nor, did he calculate them with respect to the typical
worker who dies at age 38.
>>>>

The disability benefits are only one aspect of the total program.
The cost of these benefits is actually quite low compared to the
costs of the other benefits. Actuarily, the benefits are paid
for with about 1-2% of the total 12.4% payroll tax.

<<<
And, unfortunatley, many of the privatizer plans before 
Congress do cut benefits to disabled workers, and do push 
up the retirement age.  Both of which would have very 
disproportionate impacts on African Americans.
>>>

The costs of the current system cannot be sustained. The
benefits must be analyzed within the context of the whole
system. In addition to promising the disability benefits,
the program provides retirement benefits to workers and
survivors who reach retirement age. 

The reason why these disability benefits might be cut is not necessarily
because they are deemed unworthy, but because the total costs
of the whole program (over the long term) cannot be sustained
by the amount of expected revenues.

The question going forward is, how can all these needs be met:
retirement, disability and the safety net?

There are only a couple of ways that I can think of:

1) Cut benefits to everyone except the neediest.
2) Raise taxes.
3) Borrow the money.
4) Raise the amount of return through investment.

Most of the benefits paid by this program go to workers who
pay their own contributions and reach retirement age, or to
the survivors of these workers. The chance of an average worker
living to retirement are pretty high.

Given that most workers do reach retirement and do work for a
significant amount of time, does the current system provide
the best benefits for this type of receipient? The answer is
no.

The best way to structure a retirement benefit is by pre-funding.
The current system doesn't do this. It puts all the money into
what is essentially a very expensive insurance policy. The cost
of this insurance is more than what could be provided if the
average worker simply put the money into an FDIC insured bank
account.

The benefits of the disabled worker and the retired worker are
link by one system which funds them both. If the part of the
system that funds the retirement benefits were reformed to
a system that better fits the needs for this component, there
would be more money available to fund the other components
of the system, including disability.

Michael