Skip to comments.Give Low Income Americans Exit Option From Social Security
Posted on 07/28/2014 6:09:25 AM PDT by Kaslin
America is supposed to be the land of the free and the home of the brave.
But as we become bogged down in our many problems, I see, unfortunately, a mentality in which we are becoming increasingly a nation of the unfree the victim and the timid, in how were approaching these challenges.
Ohio Republican Senator Rob Portman wrote a column this week drawing attention to the latest dire projections from the Congressional Budget Office.
CBO projects the nation sinking deeper and deeper into an ocean of red ink.
Under a business-as-usual scenario, the Senator notes, well pile on another $10 trillion of debt over the next decade and another $100 trillion in the following two decades.
On the spending side, after averaging 20 percent of the economy over the past 50 years, spending is projected to jump to 23 percent, 29 percent, and then 34 percent of the economy over the next three decades
At the center of the problem, the Senator continues, driving this out-of-control spending and borrowing fiscal Titanic are entitlements Social Security, health entitlements, and the resulting interest costs on the swelling national debt.
This is a time for action. But we are not getting action, and the proposals we are hearing typify more the land of the unfree and the home of the timid.
When Social Security was enacted in the 1930s it seemed like a good idea. Everyone working would pay a small tax and those revenues could be used to pay a retirement stipend to retirees.
But then there were 45 Americans working for every retiree. Because of longer life spans and shrinking families, this ratio is down to three to one today.
This makes it impossible for this system to work. CBO projects that in 20 years there will be no funds to pay one third of the benefits of retirees.
Among Senator Portmans proposals are to raise the retirement age and to means test meaning to reduce benefits of higher income earners.
But why, in the land of the free, should government tell us when we can retire? And if the wealthier pay taxes but dont collect benefits, Social Security becomes just another big national welfare program.
I have been a long time supporter of changing the whole system, turning Social Security into a retirement savings program. Instead of paying a tax and getting a government benefit in the future, just let everyone invest those funds in their own personal retirement account.
My organization, CURE, is now floating an idea that would help transition into this type of reform. Were calling it the 30/30 plan.
Give every working American 30 years old or younger, earning $30,000/year or less, the option to stop paying payroll taxes and use all those funds to invest in a personal retirement account.
Not only would this begin to unwind a hopelessly broken Social Security system, but also it would start building an ownership society in the parts of our country where the welfare state has done and is doing the most damage among low income Americans.
The stock market is surging today, but little benefit accrues to low-income earners. According to a Pew Research survey, 80 percent of households earning $75,000/year or more own stocks, but in households earning $30,000 or less, only 15 percent do.
Average savings in retirement accounts in white households is $115,990. In black households, it is $17,620.
The 30/30 plan starts to solve our Social Security crisis and also starts building ownership and wealth in low-income households.
This is a time to return to the first principles of our free society, to re-embrace those principles, and move forward with courage and faith.
The 30/30 plan is an approach worthy of the land of the free and the home of the brave.
This is a not-so-veiled attempt to get rid of what workers call “Payroll Taxes”. IOW, more bennies for the people that likely don’t pay any Federal income taxes, either.
You know, the 6.2% that gets taken out of their wages for the Federal Insurance Contributions Act (FICA) for Old Age, Survivors and Disability Insurance (OASDI) INSURANCE payments?
The end result will be not having to pay that 6.2% but still getting the disability and survivor options.
Why do we have so enemies on our side?
Only white people should be required to pay taxes.
You joke, but that’s pretty much it in a nutshell.
Why not give everyone the option of saving on his own?
Why stop at age 30?
But, something does have to be done.
> When Social Security was enacted in the 1930s it seemed like a good idea. Everyone working would pay a small tax and those revenues could be used to pay a retirement stipend to retirees.
1) It was NEVER a good Idea.
2) Not everyone had to pay. Until some time in the 70s it was voluntary enrollment. If you joined you were guaranteed your share, but it was not mandatory to join. If you didn’t join you could not receive either. It was your choice. If you did join you could not withdraw at a later date.
This number is meaningless unless normalized for income.
But I can tell you, the numbers are not much less lopsided when you do. I've seen the studies.
This points to a matter of spending priorities.
And I won't be the only one that doesn't want to be the "ant" to these people's "grasshopper".
Take it up to age 45. They can be ‘reimbursed’ with a $20k Health savings account. Problem solved and ended in 30-40 years.
To let them out of Social Security is illogical. They are poor now because they do not work correctly. They will be even poorer still after retirement when they do not work at all.. The “poor” need to motivate!
There’s always a bit of truth in humor!c
I bet if you looked at the percentages, we’re pretty much there.
I want to put the "Ant and the Grasshopper" parable up to the test, and when they blow their savings on blunt wrappers, skittles, and watermelon iced tea, I want to see them all freeze to death come wintertime.
How stupid is this?
does she really think these workers will put that approx. 7.2% ( unless she is also calling for the employer to give the worker the approx. 7.2% too)into a savings account?
Hardly so like others have pointed out they won’t pay into FICA but will still get the benefits.
The Earned Income Tax Credit does this, right now, already.
That’s not going to work. The unstated impetus behind the rush to amnesty so many illegals is that since the US has aborted over 50 million otherwise taxpayers, we need new young blood paying the tab for tomorrow’s retirees. If the SS income stream dries up during the lifetimes of today’s politicians, they will be in for a whale of a bad time, and they know it. It’s all kicking the can down the road to the next generation, for problems to explode on somebody else’s watch. It’s much too easy to want to be loved today by those whose support you purchase with property stolen from others.
In the sense that you can redistribute now, or you can redistribute later. More money now with reduction of the payroll deduction (and bigger operating deficits for Social Security, the IOU lockbox notwithstanding), and more welfare later.
Social Security was supposed to be a safety net to keep poor seniors from dying in the street. If that's all it was, nobody would get more $15,000 a year, but tax free.
It would force people to be responsible and not have debts when they retire. Social Security should only cover this one thing. Medicare should go back to what it was supposed to be, if anything at all. That would just be Part A. Part B and the Pharmaceutical program should be totally private choices.
Portman's dumb idea would create more problems than it solved. All those other things would still exist, and seniors who didn't have enough savings would end up getting a welfare check, food stamps, obamaphones,.....
Actually, just the opposite should be the case. Dismantle Social Security in an orderly manner, ending up with a non-government system that provides retirement exclusively to minimum-wage workers with no other means of retirement.
The way this begins is with workers just entering the workforce for the first time. If they work a minimum wage job, then they get a deal similar to what is given today, with about half their wages going into a *private* Social Security and Medicare type fund for their old age.
If they aren’t working in a minimum wage job, or they advance into a better paying job that offers retirement and medical, then the money they have paid into the system is put into their private account, “floating” with them no matter where they work.
But if they retire from the workforce getting other retirement and health care, they are not part of the system for minimum wage employees.
The next part of the dismantling is for those already in the system. If they are not minimum wage, then they get their FICA taxes paid returned to them as tax deductions. So they not only no longer pay FICA, they get their income taxes slashed as well.
The final part is for those currently getting Social Security and Medicare. If they still get taxable income, they can choose to take their SS check and Medicare health care; but if they refuse their SS check, they can get a larger tax deduction then their SS check is worth. They would have lost their SS money in taxes, anyway, so this is a good deal to them.
And if they can get a better health care deal than Medicare, so they don’t use their Medicare, they get a cash deduction reimbursement better than the Medicare money.
Can any freeper point me to a web link that favors the worker and future SS beneficiary in regard to how to map out the best return for your working years. i.e. how many years to contribute, what thresholds matter, etc. We have self employment and employee contribution mixed over the decades.
The wife and I are 59 now and we dont trus’t govt sites to tell them truth.
Thanks in advance.
“2) Not everyone had to pay. Until some time in the 70s it was voluntary enrollment.”
This is news to me.
I’ve been in the workforce since 1972 and never had any option whatsoever regarding FICA withholding.
I joined the workforce in 1962 and opted to not be part of social security. When my daughter was born in 1972 I was required to her a SSAN, because I could not claim her as a dependent on my income tax without it. I was also told that I could no longer even claim myself until I got a social security number. I assume that 1972 was the year they made it mandatory.
Interesting...thanks for sharing.