Social Security Restructuring (Part II)the_lanceMarch 14 2005, 18:52:14 UTC
3. The Need for Separation: Social Security and a Pension plan should be separated because while a pension plan is almost self-sustaining, Social security shouldn't be. Social security should be a government assistance program for poor seniors and the disabled. A government backed pension plan at either the state or federal level should be a retirement option for seniors--with ownership, equity buildup and investment options to hedge risk (like the federal and state governments currently offer their own employees). They have two separate goals so separation needs to happen.
4. Funding: After the elimination of the mandatory payroll tax, Social security the government assistance program would be funded the same way we do already, through income taxes. The income tax is a more progressive form of taxation than the current payroll tax is anyway so it would be seen as a tax cut for most people (assuming that the cost stays the same, which it shouldn't in the long run). For the state pension fund, it would be funded through an optional payroll tax that would be put in the government pension fund of your choice. Any other expenses for the program can be rolled into that optional tax.
5. Transition: It is time for legislatures to pick a cutoff age for receiving traditional social security benefits. We know about how long it is going to last (anywhere from 30 to 50 years). Everybody else is going to have to pay both into payroll taxes and into a retirement program without getting anything from Social Security. The only way this can be done politically is to act quickly so they can make the cutoff age as low as possible. Everybody knows that the group under 30 years old have very limited political power and have the most time to reinvest and plan for the future. Though that would be ideal, dragging our feet could make it harder and harder for transition. This is the most time-sensitive issue at stake.
My preferred reform would keep social security in place as a safety net, start an optional government run pension and eventually eliminate payroll taxes as the baby boomers die off of traditional benefits. It's not a pretty transition but no transition is going to be pretty at this point.
Although I do concede that my preferred reform is aggressive, any legitimate and viable plan will have to be to prevent the collapse of Social Security. It involves sacrifice, but so do all of the other plans to reform or save Social Security. Past the transition period though, Social Security will stay a stable program for the next century. A safety net, not an entitlement.
Here goes nothing...skaloopMarch 14 2005, 23:41:16 UTC
Based upon the five points provided, it appears that "reform" calls for almost complete elimination of the Social Security system. A radical and admittedly aggressive change.
However I believe that the Social Security system that is in place need not be completely revamped; in fact, with minor changes, the system should be able to survive essentially as is. The only major change that would be required is that outlined in point 1: that SS should be a safety net, and that those who obtain adequate retirement funds through other sources need not receive it.
The primary concerns over SS, as I understand them, are that the aging Boomer population, combined with dropping birth rates, will result in the costs of SS outweighing the amount coming on. This forecast is not in question.
However, the solution to this need not be as complex as suggested. SS has proven to be a fairly stable, reliable system. Without actually knowing what the future holds in terms of economy and population, it cannot be said that SS destined for collapse if not completely overhauled. Minor changes should suffice.
So, I propose that SS payments be calculated based upon other sources of retirement income. Above a certain level, individuals are in good enough shape to forgo their SS payments. At the low end, SS will be paid to bring retirees up to an adequate level for comfortable survival. Between these two extremes, SS payouts will be pro-rated. This solution addresses all of the concerns raised regarding SS being a safety net only, and offering incentives to provide for one's own retirement.
Since currently only 20% of retirees rely on SS as their sole source of income, the burden will be greatly reduced, as only these 20% will be receiving full benefits.
Of course, a transition period would be required for this option as well. But the transition will be nowhere near as harsh or unfair to the young people making sacrifices for the transition. They would still have all the investment options available to them currently, while remaining secure in the fact that they have a safety net to fall back on if things go awry. In the long run, as the Boomers die off and the SS demand decreases, the amount withheld from workers for the SS fund can be reduced as well, freeing up more funds for personal investment. With more income from these personal investments, SS demands of the following generation will again reduce, bringing the SS system to a healthy and sustainable level.
Social Security needs a fix; it does not need total reform. Why throw things into disarray when a simple solution should suffice?
You'll take note...the_lanceMarch 15 2005, 07:57:49 UTC
I believe the term I titled it by was restructuring which is essential what it is. I feel my reform would actually make Social Security stronger rather than eliminate the program because there certainly is a need. Let me restate a couple of my reasonings from above:
- Turning it into a safety net is exactly what I want to do. A safety net wouldn't require payroll taxes because it could be rolled into the income tax (a more progressive tax than the payroll tax that is currently capped at $90,000). It should be treated as a welfare system: requirement based, livable, a safety net, but not extremely comfortable. People should be encouraged to save and invest which brings me to my next point.
- Why separate out pensions from social security? It makes the most sense that's why! Pensions serve a different purpose than social security. A pension is an investment for your retirement. It's not a safety net but a way of continuing your lifestyle after your working days are reduced or eliminated due to retirement. Why should the government be in the pension business? Although I personally don't feel that it should be, I think that is the only politically workable solution to revamping Social security.
- Because SS isn't a "fairly stable, reliable system." In the 1970's, Social security was changed to decrease benefits and increase the payroll tax to keep its solvency intact. This change was to keep it solvent "well into the 21st century." However, forecasts were wrong and a decade later, Reagan had to deal with the same problem! Since then, payroll taxes have continued to go up, caps continue to go up and we are still dealing with the same issues. Solvency shouldn't be an issue with Social security. If it is a safety net used principally by the least fortunate, we should fully fund it like we do any other government benefit program--through the progressive income tax.
- Because even your plan involves quite a bit of sacrifice. While I do agree with pro-rated payments to a certain level, how is this more fair to any generation? People like my grandparent's friends who had planned their retirements based on the supplement of social security are now going to get a significant chunk of their income taken away. People who are close to retirement age might have to work several more years or work part time jobs to supplement their income because of savvy investing that also involved calculation of a guaranteed social security benefit. Not only that, the youngins are still ending up paying for a majority of the transition costs anyway with no payout! You're plan sounds like a lose-lose plan for everyone with more involved sacrifice. Plus, it just isn't politically viable! No old people are going to vote for reduction of benefits!
To have a politically viable solution, it has to provide for three things:
1. Make the transition a long one as people who were planning on a guaranteed benefit have adequate time to get their ducks in a row and invest so they can retire when they want with the lifestyle they desire.
2. It also has to transition away from an all inclusive entitlement program to a requirements based safety net.
3. Lastly, the government should provide a decent but voluntary pension plan that remains stable with market fluctuations to those who wish to invest safely or for those who do not have the option of investing in a pension plan or 401k (small business employees and owners, contractual based employees, etc...).
As my plan meets all of those requirements with some sacrifice from the younger generation but not incredibly more if we left the SS program as is and let it collapse in 2030, 2040 or 2050. Doing that gives a false hope to those of a younger generation, a far greater sacrifice than a few more dollars out of their paychecks to supplement the future.
Apologies for using 'reform' when you indeed had clearly stated restructuring. Nonetheless, I still consider the level of restructuring you call for overkill.
There seems to be two extremes posited. On the one hand, we keep SS the way it is, in which case it collapses in 50 years. On the other hand, my opponent calls for drastic restructuring.
- Turning it into a safety net is exactly what I want to do. A safety net wouldn't require payroll taxes because it could be rolled into the income tax (a more progressive tax than the payroll tax that is currently capped at $90,000). It should be treated as a welfare system: requirement based, livable, a safety net, but not extremely comfortable. People should be encouraged to save and invest
He calls for transition to a needs-based system of distribution, similar to welfare. Well, welfare is precisely what it will be. Despite clinging to the name Social Security, it will in fact be a welfare system. Such an all-or-none divide fails to recognize the contributions and sacrifices that the working class has made towards to development of the country. That is why a pro-rated system is advantageous.
While I do agree with pro-rated payments to a certain level, how is this more fair to any generation? People like my grandparent's friends who had planned their retirements based on the supplement of social security are now going to get a significant chunk of their income taken away.
Who said significant? Only the very wealthy would face significant cuts, and even so such cuts would be relatively meaningless compared to the investment portfolios they would likely already have in place. Additionally, this is not going to be an instantaneous change. It would be slowly incorporated into the retirement arena. People with ten years until retirement would still receive SS payments near what they expect, perhaps reduced only slightly based on possible personal investment income they can earn in those ten years. Their contributions to SS funds will be reduced accordingly. Younger people will still be contributing to the SS fund as well, but in even lower amounts. This will maintain the fund so that those near retirement who expect full SS payments can be accommodated, while at the same time freeing up money for personal investment.
Re: Part 1 of 2the_lanceMarch 16 2005, 22:55:33 UTC
That is why a pro-rated system is advantageous.
What brings the assumption that a pro-rated pay wouldn't be part of the plan? I said welfare-like based on certain minimum requirements based on collection. Certainly a pro-rated plan would have that and would be the most logical (considering an all or nothing approach would leave those inbetweeners by the wayside, it makes absolute sense). As far as it is concerned, it isn't as glaring of omission as my opponent's "mystery plan" involves!
Who said significant?
You did. If you pro-rate people's retirements when they planned on having that supplement, you are taking away a certain amount of income that they had planned on. So if a person saved enough to live off of $1,000 a month plus a $800 Social security supplement, you would be taking away $800 based on the assumptions of a pro-rated system. Nowhere in your rebuttal did you specify what the transition procedure or the pro-rated system would entail. If you had specified it, maybe assumptions about the first insane plan you concocted wouldn't have been taken to the point.
People with ten years until retirement would still receive SS payments near what they expect, perhaps reduced only slightly based on possible personal investment income they can earn in those ten years. Their contributions to SS funds will be reduced accordingly. Younger people will still be contributing to the SS fund as well, but in even lower amounts. This will maintain the fund so that those near retirement who expect full SS payments can be accommodated, while at the same time freeing up money for personal investment.
How do you plan to reduce the amount of money principle earners are contributing to SS? Certainly you must mean sometime after that proposed ten year transition period! In the meantime, we are expecting monumental jumps in the number of people on Social Security. Payroll taxes will have to be increased and benefits will likely dwindle. Nobody is paying LESS anytime soon, but my plan makes it so more people will be paying less in a 20, 30 and 40 years because they won't be maintaining a poorly designed system.
You're plan sounds like a lose-lose plan for everyone with more involved sacrifice.
How is it lose-lose? - Current retirees get full payments as they expected based on their lifetime of contributions.
- Soon-to-be retirees will get nearly full payments while their current contributions are reduced to allow for personal investment.
- Young workers will be paid based on need, but their current contributions will be significantly reduced to allow for significant personal investments in the hopes that they will not need SS.
Once the transition has ended, what will things look like? A handful (20% based on current numbers) of retirees requiring and receiving full SS payments because they were unable to secure personal retirement funds. A percentage of full SS payments for those who were lucky enough to provide for their retirement. Overall, a significant reduction in SS payments and a system that encourages and promotes personal investment by lessening the burden of SS contributions.
My proposal is simple: change one aspect of SS, namely transition to need-based payments pro-rated for personal savings. This is a far less major restructuring than proposed by my opponent, who suggests that SS become welfare, and that 80% of retirees be excluded from receiving its benefits. This means that someone who, for reasons of family or honour or generosity, is able to provide more than basic retirement savings is excluded. Such ideals, that financial potential trumps personal values, are crass. Should a man who is generous with donations, who raises a large family, who sacrifices his time in the rat race to raise them well; should this man be denied access to Social Security payments? Would it be a greater benefit to society if he was an ungenerous man with nary an hour to spend with his family, just so he could retire more comfortably? I think it's clear the answer to both questions is no. Which is why a yes or no system of Social Security cannot adequately address all the concerns of retirement.
To have a politically viable solution, it has to provide for three things
Mine does.
- Long transition? Check. - Move to needs-based? Check. - Voluntary pension? Sure, why not. Check.
Our ideas may be extremely similar. You might even say that I am arguing for SS reform myself. But the big picture is that he is proposing the complete elimination of the SS program and the implementation of a strictly welfare system for retirees. I am proposing merely that gradual changes be implemented that can stabilize the SS fund to the point that imminent collapse is averted, while at the same time maintaining the basic institution that it is.
Re: Part 2 of 2the_lanceMarch 16 2005, 23:34:33 UTC
- Current retirees get full payments as they expected based on their lifetime of contributions.
- Soon-to-be retirees will get nearly full payments while their current contributions are reduced to allow for personal investment.
- Young workers will be paid based on need, but their current contributions will be significantly reduced to allow for significant personal investments in the hopes that they will not need SS.
You're either jumping horses midstream or you're just making stuff up as you go along. How the hell am I supposed to interpret this jumble to the more concise points I am looking at right above? Meanwhile, your plan looks almost exactly the same as mine except for I am not assuming that contributions by younger will go down anytime soon. We are still dealing with the largest and longest living group of retired people in the history of our country! I expect payroll taxes to EVENTUALLY decline (to elimination), but not before we have ended the transition and the federal government actually starts saving money. In the meantime, I expect payroll taxes to go up. Where as my plan is realistic in its sacrifice from younger workers, you are billing your plan like a pretty 1967 Corvette with the engine of a lawnmower. Sugar-coating it won't make it any better of a car.
Meanwhile, you offered no investment opportunity for those who would actually like a government based, market shielded retirement account unless you count the terrible attempt at the end to account for it.
I submit to the judges that my opponent is confused. SS was created as a market-safe retirement and disability benefit for all and is now going to be cut to a Welfare-like program that takes into account how much money you have, not how much money you have contributed to the system. This is in no way "maintaining the basic institution" of Social Security, it is in fact changing it completely with no regards to those who still want the market-safe retirement benefit, even if they don't qualify for social security under my opponent's plan. My opponent has proposed one bedrock ideal, pro-rated payments, which I acknowledged in my first reply that I agreed with "to a certain level" because he did not explain himself fully. This one ideal doesn't excuse the rest of this poorly thought out program that my opponent has proposed.
In conclusion, I submit this recent news story that has respected Federal Reserve Chairman Greenspan submiting to congress the quandry we are in: "By [2008], the population 65 years and older will be more than one-fourth of the adult U.S. population, Greenspan said, referring to forecasts by the Social Security trustees. That would be up from 17 percent currently." That is a fifty percent increase of retirees from today's levels! He goes on to say "These numbers suggest that either very large tax increases will be required to meet the shortfalls or benefits will have to be pared back." We need to transition away from the entitlement and toward a more finacially medicated way of dealing with the elderly and disabled. Eliminating the payroll tax and taking it out of our income tax so that it is more progressive and helps the burden on the poor and middle class to help pay for needed government assistance. As I have said, short term solutions aren't going to be easy but if we are to make the difficult decision today, let it be that we will not have to deal with this in the future. Let it be for sustainability, a system that provides for our aging population and disabled through genuine government assistance and financial freedom for those who do not need the helping hand of the government. America has responded to times of sacrifice before and now it is time to call on them again. Let's be honest, let's not sugarcoat it and let's protect the current seniors from the follies of government mismanagement while giving opportunity for a brighter tomorrow!
You're either jumping horses midstream or you're just making stuff up as you go along.
The latter.
Here's the deal. I'm wholly ignorant of the current situation with Social Security in the States. Upon investigation in preparation for this debate, what I discovered made it fairly clear to me that SS reform was required. So there I was, stuck in a position I didn't agree with, with minimal information on which to base my argument.
What I understood from your initial argument was that you essentially proposed doing away completely with SS and turning it into a welfare program for retirees. To me, that's not the same. Part of what you said was:
"That means that you have to qualify for it just like any other government assistance program. That means if you have a consistent flow of money coming in from a pension, retirement or investments, and it meets the minimum requirements, then you don't need social security."
I took that to mean that you either get full SS/welfare payments 'cause that's all you have, or you get none at all because you have other sources of income. Likely, I misinterpretted. But it did offer me one angle with which I thought I might be able to make a half-coherent argument.
Meanwhile, you offered no investment opportunity for those who would actually like a government based, market shielded retirement account unless you count the terrible attempt at the end to account for it.
Frankly, I don't see how that opportunity is relevent. Such a system could be put in place regardless of how much or how little SS is changed. But since you pointed out that it was one of the three criteria for a successful SS system, I was merely confirming that such investment opportunities would be easily accommodated under my so-called "proposal."
The bottom line is that I see your proposal as a drastic overhaul (and essentially, elimination) of the system, which I think is overkill. In 50 years, there would be no SS at all. Nobody would be paying into a specific government retirement fund. The vast majority of retirees would be getting no government funds.
My system is less drastic. In 50 years, there will still be a specific SS fund. Workers will still be paying into it, albeit at a lower rate. All retirees will receive payouts of some sort that will supplement their personal funds.
Frankly, I probably should have conceded this debate. But I'm not one to do so. Although I have probably said everything I can think of to say.
4. Funding: After the elimination of the mandatory payroll tax, Social security the government assistance program would be funded the same way we do already, through income taxes. The income tax is a more progressive form of taxation than the current payroll tax is anyway so it would be seen as a tax cut for most people (assuming that the cost stays the same, which it shouldn't in the long run). For the state pension fund, it would be funded through an optional payroll tax that would be put in the government pension fund of your choice. Any other expenses for the program can be rolled into that optional tax.
5. Transition: It is time for legislatures to pick a cutoff age for receiving traditional social security benefits. We know about how long it is going to last (anywhere from 30 to 50 years). Everybody else is going to have to pay both into payroll taxes and into a retirement program without getting anything from Social Security. The only way this can be done politically is to act quickly so they can make the cutoff age as low as possible. Everybody knows that the group under 30 years old have very limited political power and have the most time to reinvest and plan for the future. Though that would be ideal, dragging our feet could make it harder and harder for transition. This is the most time-sensitive issue at stake.
My preferred reform would keep social security in place as a safety net, start an optional government run pension and eventually eliminate payroll taxes as the baby boomers die off of traditional benefits. It's not a pretty transition but no transition is going to be pretty at this point.
Although I do concede that my preferred reform is aggressive, any legitimate and viable plan will have to be to prevent the collapse of Social Security. It involves sacrifice, but so do all of the other plans to reform or save Social Security. Past the transition period though, Social Security will stay a stable program for the next century. A safety net, not an entitlement.
Reply
However I believe that the Social Security system that is in place need not be completely revamped; in fact, with minor changes, the system should be able to survive essentially as is. The only major change that would be required is that outlined in point 1: that SS should be a safety net, and that those who obtain adequate retirement funds through other sources need not receive it.
The primary concerns over SS, as I understand them, are that the aging Boomer population, combined with dropping birth rates, will result in the costs of SS outweighing the amount coming on. This forecast is not in question.
However, the solution to this need not be as complex as suggested. SS has proven to be a fairly stable, reliable system. Without actually knowing what the future holds in terms of economy and population, it cannot be said that SS destined for collapse if not completely overhauled. Minor changes should suffice.
So, I propose that SS payments be calculated based upon other sources of retirement income. Above a certain level, individuals are in good enough shape to forgo their SS payments. At the low end, SS will be paid to bring retirees up to an adequate level for comfortable survival. Between these two extremes, SS payouts will be pro-rated. This solution addresses all of the concerns raised regarding SS being a safety net only, and offering incentives to provide for one's own retirement.
Since currently only 20% of retirees rely on SS as their sole source of income, the burden will be greatly reduced, as only these 20% will be receiving full benefits.
Of course, a transition period would be required for this option as well. But the transition will be nowhere near as harsh or unfair to the young people making sacrifices for the transition. They would still have all the investment options available to them currently, while remaining secure in the fact that they have a safety net to fall back on if things go awry. In the long run, as the Boomers die off and the SS demand decreases, the amount withheld from workers for the SS fund can be reduced as well, freeing up more funds for personal investment. With more income from these personal investments, SS demands of the following generation will again reduce, bringing the SS system to a healthy and sustainable level.
Social Security needs a fix; it does not need total reform. Why throw things into disarray when a simple solution should suffice?
Reply
- Turning it into a safety net is exactly what I want to do. A safety net wouldn't require payroll taxes because it could be rolled into the income tax (a more progressive tax than the payroll tax that is currently capped at $90,000). It should be treated as a welfare system: requirement based, livable, a safety net, but not extremely comfortable. People should be encouraged to save and invest which brings me to my next point.
- Why separate out pensions from social security? It makes the most sense that's why! Pensions serve a different purpose than social security. A pension is an investment for your retirement. It's not a safety net but a way of continuing your lifestyle after your working days are reduced or eliminated due to retirement. Why should the government be in the pension business? Although I personally don't feel that it should be, I think that is the only politically workable solution to revamping Social security.
- Because SS isn't a "fairly stable, reliable system." In the 1970's, Social security was changed to decrease benefits and increase the payroll tax to keep its solvency intact. This change was to keep it solvent "well into the 21st century." However, forecasts were wrong and a decade later, Reagan had to deal with the same problem! Since then, payroll taxes have continued to go up, caps continue to go up and we are still dealing with the same issues. Solvency shouldn't be an issue with Social security. If it is a safety net used principally by the least fortunate, we should fully fund it like we do any other government benefit program--through the progressive income tax.
- Because even your plan involves quite a bit of sacrifice. While I do agree with pro-rated payments to a certain level, how is this more fair to any generation? People like my grandparent's friends who had planned their retirements based on the supplement of social security are now going to get a significant chunk of their income taken away. People who are close to retirement age might have to work several more years or work part time jobs to supplement their income because of savvy investing that also involved calculation of a guaranteed social security benefit. Not only that, the youngins are still ending up paying for a majority of the transition costs anyway with no payout! You're plan sounds like a lose-lose plan for everyone with more involved sacrifice. Plus, it just isn't politically viable! No old people are going to vote for reduction of benefits!
To have a politically viable solution, it has to provide for three things:
1. Make the transition a long one as people who were planning on a guaranteed benefit have adequate time to get their ducks in a row and invest so they can retire when they want with the lifestyle they desire.
2. It also has to transition away from an all inclusive entitlement program to a requirements based safety net.
3. Lastly, the government should provide a decent but voluntary pension plan that remains stable with market fluctuations to those who wish to invest safely or for those who do not have the option of investing in a pension plan or 401k (small business employees and owners, contractual based employees, etc...).
As my plan meets all of those requirements with some sacrifice from the younger generation but not incredibly more if we left the SS program as is and let it collapse in 2030, 2040 or 2050. Doing that gives a false hope to those of a younger generation, a far greater sacrifice than a few more dollars out of their paychecks to supplement the future.
Reply
There seems to be two extremes posited. On the one hand, we keep SS the way it is, in which case it collapses in 50 years. On the other hand, my opponent calls for drastic restructuring.
- Turning it into a safety net is exactly what I want to do. A safety net wouldn't require payroll taxes because it could be rolled into the income tax (a more progressive tax than the payroll tax that is currently capped at $90,000). It should be treated as a welfare system: requirement based, livable, a safety net, but not extremely comfortable. People should be encouraged to save and invest
He calls for transition to a needs-based system of distribution, similar to welfare. Well, welfare is precisely what it will be. Despite clinging to the name Social Security, it will in fact be a welfare system. Such an all-or-none divide fails to recognize the contributions and sacrifices that the working class has made towards to development of the country. That is why a pro-rated system is advantageous.
While I do agree with pro-rated payments to a certain level, how is this more fair to any generation? People like my grandparent's friends who had planned their retirements based on the supplement of social security are now going to get a significant chunk of their income taken away.
Who said significant? Only the very wealthy would face significant cuts, and even so such cuts would be relatively meaningless compared to the investment portfolios they would likely already have in place. Additionally, this is not going to be an instantaneous change. It would be slowly incorporated into the retirement arena. People with ten years until retirement would still receive SS payments near what they expect, perhaps reduced only slightly based on possible personal investment income they can earn in those ten years. Their contributions to SS funds will be reduced accordingly. Younger people will still be contributing to the SS fund as well, but in even lower amounts. This will maintain the fund so that those near retirement who expect full SS payments can be accommodated, while at the same time freeing up money for personal investment.
Reply
What brings the assumption that a pro-rated pay wouldn't be part of the plan? I said welfare-like based on certain minimum requirements based on collection. Certainly a pro-rated plan would have that and would be the most logical (considering an all or nothing approach would leave those inbetweeners by the wayside, it makes absolute sense). As far as it is concerned, it isn't as glaring of omission as my opponent's "mystery plan" involves!
Who said significant?
You did. If you pro-rate people's retirements when they planned on having that supplement, you are taking away a certain amount of income that they had planned on. So if a person saved enough to live off of $1,000 a month plus a $800 Social security supplement, you would be taking away $800 based on the assumptions of a pro-rated system. Nowhere in your rebuttal did you specify what the transition procedure or the pro-rated system would entail. If you had specified it, maybe assumptions about the first insane plan you concocted wouldn't have been taken to the point.
People with ten years until retirement would still receive SS payments near what they expect, perhaps reduced only slightly based on possible personal investment income they can earn in those ten years. Their contributions to SS funds will be reduced accordingly. Younger people will still be contributing to the SS fund as well, but in even lower amounts. This will maintain the fund so that those near retirement who expect full SS payments can be accommodated, while at the same time freeing up money for personal investment.
How do you plan to reduce the amount of money principle earners are contributing to SS? Certainly you must mean sometime after that proposed ten year transition period! In the meantime, we are expecting monumental jumps in the number of people on Social Security. Payroll taxes will have to be increased and benefits will likely dwindle. Nobody is paying LESS anytime soon, but my plan makes it so more people will be paying less in a 20, 30 and 40 years because they won't be maintaining a poorly designed system.
Reply
How is it lose-lose?
- Current retirees get full payments as they expected based on their lifetime of contributions.
- Soon-to-be retirees will get nearly full payments while their current contributions are reduced to allow for personal investment.
- Young workers will be paid based on need, but their current contributions will be significantly reduced to allow for significant personal investments in the hopes that they will not need SS.
Once the transition has ended, what will things look like? A handful (20% based on current numbers) of retirees requiring and receiving full SS payments because they were unable to secure personal retirement funds. A percentage of full SS payments for those who were lucky enough to provide for their retirement. Overall, a significant reduction in SS payments and a system that encourages and promotes personal investment by lessening the burden of SS contributions.
My proposal is simple: change one aspect of SS, namely transition to need-based payments pro-rated for personal savings. This is a far less major restructuring than proposed by my opponent, who suggests that SS become welfare, and that 80% of retirees be excluded from receiving its benefits. This means that someone who, for reasons of family or honour or generosity, is able to provide more than basic retirement savings is excluded. Such ideals, that financial potential trumps personal values, are crass. Should a man who is generous with donations, who raises a large family, who sacrifices his time in the rat race to raise them well; should this man be denied access to Social Security payments? Would it be a greater benefit to society if he was an ungenerous man with nary an hour to spend with his family, just so he could retire more comfortably? I think it's clear the answer to both questions is no. Which is why a yes or no system of Social Security cannot adequately address all the concerns of retirement.
To have a politically viable solution, it has to provide for three things
Mine does.
- Long transition? Check.
- Move to needs-based? Check.
- Voluntary pension? Sure, why not. Check.
Our ideas may be extremely similar. You might even say that I am arguing for SS reform myself. But the big picture is that he is proposing the complete elimination of the SS program and the implementation of a strictly welfare system for retirees. I am proposing merely that gradual changes be implemented that can stabilize the SS fund to the point that imminent collapse is averted, while at the same time maintaining the basic institution that it is.
Reply
- Soon-to-be retirees will get nearly full payments while their current contributions are reduced to allow for personal investment.
- Young workers will be paid based on need, but their current contributions will be significantly reduced to allow for significant personal investments in the hopes that they will not need SS.
You're either jumping horses midstream or you're just making stuff up as you go along. How the hell am I supposed to interpret this jumble to the more concise points I am looking at right above? Meanwhile, your plan looks almost exactly the same as mine except for I am not assuming that contributions by younger will go down anytime soon. We are still dealing with the largest and longest living group of retired people in the history of our country! I expect payroll taxes to EVENTUALLY decline (to elimination), but not before we have ended the transition and the federal government actually starts saving money. In the meantime, I expect payroll taxes to go up. Where as my plan is realistic in its sacrifice from younger workers, you are billing your plan like a pretty 1967 Corvette with the engine of a lawnmower. Sugar-coating it won't make it any better of a car.
Meanwhile, you offered no investment opportunity for those who would actually like a government based, market shielded retirement account unless you count the terrible attempt at the end to account for it.
I submit to the judges that my opponent is confused. SS was created as a market-safe retirement and disability benefit for all and is now going to be cut to a Welfare-like program that takes into account how much money you have, not how much money you have contributed to the system. This is in no way "maintaining the basic institution" of Social Security, it is in fact changing it completely with no regards to those who still want the market-safe retirement benefit, even if they don't qualify for social security under my opponent's plan. My opponent has proposed one bedrock ideal, pro-rated payments, which I acknowledged in my first reply that I agreed with "to a certain level" because he did not explain himself fully. This one ideal doesn't excuse the rest of this poorly thought out program that my opponent has proposed.
In conclusion, I submit this recent news story that has respected Federal Reserve Chairman Greenspan submiting to congress the quandry we are in: "By [2008], the population 65 years and older will be more than one-fourth of the adult U.S. population, Greenspan said, referring to forecasts by the Social Security trustees. That would be up from 17 percent currently." That is a fifty percent increase of retirees from today's levels! He goes on to say "These numbers suggest that either very large tax increases will be required to meet the shortfalls or benefits will have to be pared back." We need to transition away from the entitlement and toward a more finacially medicated way of dealing with the elderly and disabled. Eliminating the payroll tax and taking it out of our income tax so that it is more progressive and helps the burden on the poor and middle class to help pay for needed government assistance. As I have said, short term solutions aren't going to be easy but if we are to make the difficult decision today, let it be that we will not have to deal with this in the future. Let it be for sustainability, a system that provides for our aging population and disabled through genuine government assistance and financial freedom for those who do not need the helping hand of the government. America has responded to times of sacrifice before and now it is time to call on them again. Let's be honest, let's not sugarcoat it and let's protect the current seniors from the follies of government mismanagement while giving opportunity for a brighter tomorrow!
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The latter.
Here's the deal. I'm wholly ignorant of the current situation with Social Security in the States. Upon investigation in preparation for this debate, what I discovered made it fairly clear to me that SS reform was required. So there I was, stuck in a position I didn't agree with, with minimal information on which to base my argument.
What I understood from your initial argument was that you essentially proposed doing away completely with SS and turning it into a welfare program for retirees. To me, that's not the same. Part of what you said was:
"That means that you have to qualify for it just like any other government assistance program. That means if you have a consistent flow of money coming in from a pension, retirement or investments, and it meets the minimum requirements, then you don't need social security."
I took that to mean that you either get full SS/welfare payments 'cause that's all you have, or you get none at all because you have other sources of income. Likely, I misinterpretted. But it did offer me one angle with which I thought I might be able to make a half-coherent argument.
Meanwhile, you offered no investment opportunity for those who would actually like a government based, market shielded retirement account unless you count the terrible attempt at the end to account for it.
Frankly, I don't see how that opportunity is relevent. Such a system could be put in place regardless of how much or how little SS is changed. But since you pointed out that it was one of the three criteria for a successful SS system, I was merely confirming that such investment opportunities would be easily accommodated under my so-called "proposal."
The bottom line is that I see your proposal as a drastic overhaul (and essentially, elimination) of the system, which I think is overkill. In 50 years, there would be no SS at all. Nobody would be paying into a specific government retirement fund. The vast majority of retirees would be getting no government funds.
My system is less drastic. In 50 years, there will still be a specific SS fund. Workers will still be paying into it, albeit at a lower rate. All retirees will receive payouts of some sort that will supplement their personal funds.
Frankly, I probably should have conceded this debate. But I'm not one to do so. Although I have probably said everything I can think of to say.
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