How to fix social security and what won't fix it.

I read in about 20 years or so if congress and our president do nothing to fix social security, everyone will face an immediate 21% cut to their social security benefits. This does not sound like a good plan.

There are several proposals to fix it that will not. Link below.


www.marketwatch.com...

Things that won't fix it are:

1. Eliminating fraud. Even if we could get rid of the fraud, it would only fix 3% of the solvency gap.

2. Taxing investment income. That is merely a shell game that reduces government tax revenue in other areas as you raise it for one thing, it drops for everything else.

3. Grow the economy. Doubling expectations of growth rates is not realistic and even if the growth rate increased by 75%, according to the urban institute as quoted in the link provided above, the solvency gap would only close by about a third.

4. Make the rich pay the same as everyone. Eliminating the taxable max would fix 2/3 of the solvency gap but that still would leave a 30% solvency gap.

5. Do nothing. In 2034 the trust fund is out of money and everyone faces a 21% immediate cut in benefits. For today's 50 years olds and younger, that represents a cut of $100,000 or more in lifetime benefits paid out to you. Figures from the link provided above. Doing nothing is the worst choice for almost everyone.

What can we do?

My solution using information obtained from here. crfb.org...




Eliminate the income max gap.
Increase the payroll tax by 1 % total spread out by .1% increase over ten years.
Index the full retirement age for longevity which reaches 67 in 2027. Basically the retirement age I believe goes up by a month every two years.

Reduce fraud and overpayments. 5% fix.
Cover newly hired state and local workers and bring them into the system so that they are paying as well.
9% fix if assumptions are correct.

Increase long term revenue by investing funds in the stock market. A 21% fix over 75 years.
This fixed social security per this web site.
crfb.org...

Now this article linked here provides a sensible plan to fix social security.

www.marketwatch.com...

It covers many of the same things I already mentioned. It also says that neither presidential candidates plan fixes social security.

It proposes raising the maximum taxable income gap up to 195,000 if I remember correctly which will solve a majority of the issue but not all of it. The article proposes raising payroll tax up by 1.3% on employees and 1.3% on employers and spreading out the proposed increase over 10 years to minimize the effect.
Index the retirement age for longevity like I already mentioned.
The article suggests using a more accurate measure of inflation for benefit increases like chained CPI.

I came up with a fix here which I already provided a link.

crfb.org...

How would you fix it?

The solution to the US economy woes: rebuild our dollar. The things required to do so would also rebuild other aspects of our economy.

The deal is, we have this deal where we have inflation built in to the system. Meaning, the economy is controlled by the cash, instead of the cash being controlled by the economy. So when you want to grow your economy, you increase cash (in this instance, its all fiat, debt based financial voodoo via altering interest rates).

It should work the other way around, where economy controls availability of cash with a finite value on the cash. I guess to do this, the cash has to be under the control of the government and not a private institution like a Reserve Bank.

But that inflation....that is skim. The rotting value of your currency is recovered on the other end through the printing of more cash. It doesn't really rot. Its more like its taxed by the issuing authority via "inflation", or rather....devaluation.

Did you mention, stop using money in the SS fund to fight pointless wars to benefit the war contractors.

Simply leave the money taken from our paychecks to pay for SS...in the social security fund and leave it the **** alone.

www.forbes.com...

a reply to: olaru12

That is the easiest fix, stop stealing from it and give back the money that has already been stolen, if those 2 things were done social security would be solvent for several hundred years.

originally posted by: Tardacus
a reply to: olaru12

That is the easiest fix, stop stealing from it and give back the money that has already been stolen, if those 2 things were done social security would be solvent for several hundred years.

You will never hear a politician mention the IOU's sitting in that empty box from them using it as a slush fund!

How about cutting 50% off the military/industrial/spying agencies and hey presto you'll have enough money with BILLIONS to spare.

a reply to: orionthehunter

This wont help much but it will make me feel better. All the politicians that were around sticking there hands in the SS fund box need to have all their money and property taken from them and put back in the box. They don't get any retirement funds either. It's a start. P.S. don't give me they have family crap either. They weren't thinking of peoples families when they were robbing the SS box blind.

Y'all might find this interesting where it went

a reply to: orionthehunter

We are about to run out of money for social security-but can afford to flood the country with illegals and pay billions for rapefugees to come over.

Shouldn't obama's last name be merkel?

a reply to: orionthehunter

"Increase long term revenue by investing funds in the stock market. A 21% fix over 75 years. "

Actually this fixes nothing. The solution simply changes the discount rate. It says that if we had $9 trillion in trust fund the system would be solvent rather than 11.4 trillion in government securities. We don't have the cash, and there is no reason to believe that we could invest it rapidly enough to solve the problem.

a reply to: orionthehunter

"Eliminate the income max gap." Did you mean cap?

Increase the payroll tax by 1 % total spread out by .1% increase over ten years.



Index the full retirement age for longevity which reaches 67 in 2027. Basically the retirement age I believe goes up by a month every two years.

As for the later, is your solution basically that our kids will pay the taxes that we didn't and accept the benefit reductions that we wouldn't even discuss? You are talking about raising the retirement age of people who already face the full increase from the 1983 reform. I think we have gone to that well once already.

a reply to: olaru12

"Well, either Obama and Geithner are lying to us now, or they and all defenders of the Social Security status quo have been lying to us for decades. It must be one or the other."

Actually they can be lying both times. The writer's understanding of the mechanics of the system are wrong. He believes that benefits are paid out of the Trust Fund, when in fact they are paid by payroll taxes, with the Trust Fund as a backdrop. The rest of the story is based on Obama is telling us the truth that the checks might not go out. Might is a flexible word. The fact is that the government was able to refinance the debt held by the Trust Fund because refinancing doesn't change the level of debt, only the owner of it.

Thanks for all the comments. After reading these I remember now how our government has raided social security funds in the past and one of the first solutions is to separate social security from the rest of the budget so it isn't touched anymore and pass laws requiring it to be paid back to taxpayers or it really is just another tax.

Doing nothing is the worst choice in my opinion.

Unfortunately congress and the president really need to fix the whole budget and spending problem they have.

As far as these tax increases and benefit cuts, I am young enough to be affected as well but I prefer a small reduction over a 21% drop.

If the numbers I put forth don't add up, the web site I referenced isn't correct because it listed things as fixed with the numbers I mentioned. Obviously I'm not 100% sure what agenda the web site owners may have.

As far as a trust fund, I know there is no actual stash of cash somewhere. Our government spent it all. I think restricting funding to only be used for social security is something that needs to be done to stop the raiding. That is if there is ever a surplus showing up again.

a reply to: olaru12

I was just thinking the same thing.

All they have to do is put back all the funds they "borrowed" and walla!... no more SS deficit.

I think public executions of politicians for corruption would get it inline rather quickly.

a reply to: orionthehunter

Something to keep in mind. SSA says that it is in the low-20s. CBO projects that the drop will exceed 40%.

CRFB has a standard version of the wonk-want-be. Their data comes from SSA. SSA has since reversed its projections on the investment in marketable securities.

originally posted by: orionthehunter
Thanks for all the comments. After reading these I remember now how our government has raided social security funds in the past and one of the first solutions is to separate social security from the rest of the budget so it isn't touched anymore and pass laws requiring it to be paid back to taxpayers or it really is just another tax.

Social Security has been legally off-budget since 1990.

The Social Security Trust Fund is valued around 2.8 trillion. Of that 1.7 trillion is interest that the system has earned on the investments. So the government is actually putting money into the system.

Of the 1.1 trillion that is left about 500 billion is excess contribution. The rest is general fund subsidies. So that every penny that the government has 'raided' has been spent on one program : Social Security in the form of subsidies To the program.