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02/11/2005 Archived Entry: "A modest Social Security proposal"
I had the misfortune to walk by a TV set the other day when Generalissimo El Busho was pontificating that he would "listen to anyone who has a good idea to offer" in place of his vague Social Security notions. (It's hardly a "plan" at this stage.)
I have no staff of advisers, nor a degree in economics....but at the risk of being branded a gradualist, let me offer this modest proposal:
1. Immediately require that all Social Security benefits be paid entirely from FICA "contributions," and that should there be a shortfall, either benefits must decrease or the FICA tax must be raised. 2. Allow anyone at any time to immediately opt out of the Social Security plan, at which time that person will no longer be required to pay FICA tax, will forfeit all past "contributions," and will forfeit all claim to future Social Security benefits.
Those who are nearing retirement may find it advisable to stay in the system and hope that enough true believers will continue kicking in FICA contributions to pay their golfing fees. Much of Generation X, Y, and certainly Z, who refuse to be suckered, will opt out. Social Security will be "solvent" immediately, and the feds will be out of the retirement business in a generation.
That last bit is what "privatization" means, George.
For this to work, point 1 is crucial. It does no good to let someone "opt out" of Social Security just to tax them through the back door to keep paying SS benefits to others. This requires recognizing explicitly that the "trust fund" is a sham, and that SS always was and always will be a pay-as-you-go system.
It'll never happen, of course. As soon as the AARPies see their monthly checks get reduced, they'll scream bloody murder for the shortfall to be made up from the general budget. They'll claim their "trust fund" has been raided. (Never mind that their contributions haven't been invested, and that many of them have reaped far more than their contributions, even with compound interest.) And the invertebrates in D.C. will use tax dollars to buy a few more votes.