http://pajamasmedia.com/2007/11/daddy_nobucks.php [rquoter]A Man With A Plan By INVESTOR'S BUSINESS DAILY | Posted Tuesday, November 13, 2007 4:20 PM PT Entitlements: Presidential candidates hate telling voters what they plan to do for fear of scaring them off. Kudos, then, to Fred Thompson for being the first to unveil a plan to solve our looming Social Security crisis. It's a gutsy move. Especially when you consider that President Bush, who courageously brought the topic up, got exactly nowhere with it — even with a Republican Congress. There's very little gain in this for Thompson politically. He will now take potshots from the AARP and other special interest groups, not to mention those on the left who will falsely accuse him of trying to "dismantle" Social Security. That said, hats off to Thompson for his plan. It would trade off future benefits of those now working — people over 57 wouldn't have their benefits touched — in exchange for letting them create 401(k)-style accounts. He would have government match the private savings that workers put in. And it's entirely voluntary. Workers could put aside as much as 2% of their Social Security money in a private investment fund. Upon retirement, they'd have a nest egg to pass on to their children. They'd also have the higher returns markets have always provided in modern history. Democrats have pushed for a tax hike to "fix" Social Security. It won't work. The program already takes 12.4% of the average worker's pay. Raising the tax would hurt the economy by making it more costly for businesses to hire workers and to give out pay raises. We're not especially keen on the matching part of the plan, which looks a lot like income redistribution to us. Still, Thompson's proposal will solve what is without question the biggest fiscal problem this nation faces over the next century: paying for the surge of baby boomers who start drawing Social Security next year. The crisis is right around the corner. By 2017, according to Social Security Trustees estimates, the program's costs will exceed its income; by 2035, costs will be 17% of all wages — requiring a nearly 50% tax hike or massive benefit cuts. By 2041, it will be bankrupt. Economist Jagadish Gokhale, writing in IBD earlier this year, said Social Security will ring up more than $14.4 trillion in deficits by 2050 or so. To pay for it all, according to some estimates, will take as much as 40% of our total GDP. Americans won't accept that. Unless something is done, we face a financial Armageddon of epic proportions. Fred Thompson's plan might not be the final answer, nor the best, but it's at least responsible and gets the debate started. We'd like to hear what other candidates have to say. Anyone?[/rquoter]
Am I missing something here? Lets take a person making $40,000 a year. At about a 12% tax, he pays in $4800 in SS taxes (half paid by the employer). 2% of that gets to go to an IRA-type account? That comes out to $96. That's matched by the government, meaning you have $192 in your retirement account each year. That's supposed to fix the SS problem? What?
I guess we should go with "anytime we need some more money, let's just create a new tax on the higher income people" Edwards/Obama approach.
Why are politicians so reticent to champion raising the SS age? People live longer and work longer, it's only natural to raise the age by 5 or 10 years, which would do a lot more to help solving the crisis than simply taxing more.
I am not saying everything has to do with raising tax. However, his idea doesn't solve the problem at all. 2% of SS tax? Is that a joke?
older people vote. actually my dad who's social security age was telling me they raised it a couple of years not long ago. but what is the age, 66? my father is 71 and is staring down another 20 easily. its a difficult proposition, people do live a lot longer which is the chief, major problem, but that doesn't mean that some 80 year old who may live another 20 should be working. even if you raise the age to 70 its still the key problem.
I wouldn't jump it up too quickly, but we can do it for people not retiring for another 5-15 years. There's already a limited system in place: http://www.socialsecurity.gov/retire2/agereduction.htm But that only goes to being born in 1960 - why not extend that for people born later and keep having that age rise? It doesn't have to rise nearly as much as life expectancy, which has gone by up about 15 years since SS was enacted. But the entire structure of SS was built around two things: 1. An estimated life expectancy 2. An estimated # of workers per retiree Both of those numbers have changed, and to "fix" the problem, you have to account for that. And you have to create a system that continues to adjust for that down the road so you're not running into this problem again 10 or 20 or 40 years from now. Any other solution and you're just going to constantly be putting in patches (kind of like the non-inflation adjusted AMT).
They should leave SS alone. Perhaps bump up the years when you can collect it by a couple, but you have to understand that millions have planned their retirement based on receiving that income. They payed into it and promises were given in return. With a lot of folks, it certainly won't be the only income for retirement, but rather part of their income stream, which collectively enables them to have a comfortable life, which they worked for. And for those saying, "Oh, they're going to live another 20 years, 30 years... it ain't right!" Consider this... you are pulling it out of your hat. I know people who started collecting it, started enjoying a long planned for retirement, which they worked their ass off for, and 2 years later dropped dead from a heart attack or stroke, or were forced to go into a facility to deal with their disabilities resulting from that, if they survived. Of course, all of you who want to trash it can step up, I'm sure, and replace that income yourself out of a sense of patriotic duty and a feeling of obligation towards your parents, who spent a life and a fortune bringing you up and seeing that you got an education. You'll all step up to the plate with your bread, right? D&D. Attempt Civility! Impeach Bush for Promoting Torture and Gross Incompetence.
