Is Some Serious Entitlement Reform on the Way?
Some preliminary recommendations from the White House Debt Commission were released. (See NYT article, “Panel Seeks Social Security Cuts and Higher Taxes“). While these recommendations are yet to be negotiated among commission members for release in a final
report, they at least represent a willingness of members to consider the elephant in the living room: Social Security.
First, kudos to the Commission for considering gradually raising the retirement age to 69 by 2075. This reflects the fact that people are living longer but it also serves as a healthy dose of reality to young workers: Government can no longer plan your retirement. The responsibility is yours, enjoy it or not. If it means skipping the daily latte and putting the money saved into a reti
rement account, so be it.
However, the Social Security program is designed to loosely tie labor earnings to the amount of benefits received at retirement. But one recommendation may further deteriorate this relationship. Currently, Social Security taxes are paid only on the first $106,000 of annual earned income. Maximum monthly Social Security benefits are also capped. The Commission is considering reducing the monthy benefits (with the exception of a minimum monthly benefit for low-earning workers) but lifting the cap on labor earnings that are subject to the Social Security tax. This is the point at which Social Security resembles a welfare program.
A final report from the Commission is due out by December 1, but it is my hope that the final product will be entitlement reforms that promote personal retirement planning and saving while emphasizing a lesser (and less costly) role of government.
One word, no. For so long as many of us feel that we are owed something, even though most of us never knew, and don’t know now, how it works, we’ll have this problem. Restoring Social Security to its original parameters would instantly solve the problem. But let’s see life expectancy in the 1930s when SS was enacted was shorter than age 65. Life expectancy today is nearly a decade and a half beyond that. But we cling to the institution, all the while gouging our children and grandchildren.
Everyone agrees government spending needs to be brought under control. However, the public has a hard time agreeing on which actions need to be taken. Cutting entitlement spending will be difficult — especially entitlements everyone has come to expect to receive in old age. I’m afraid politicians will put off the hard decisions until reform is painful and cannot be avoided any longer.
As a 20-something, I’m not expecting anything from Social Security by the time retirement rolls around for me. Thank goodness for 401(k)s!
As a 20-something, I’m not expecting my country to be around by the time retirement rolls around for me.
I do understand the very substantial problems that society as a whole faces regarding Social Security finance and its payments. All the information above is certainly true. And I like to think I am a responsible citizen.
There is a however. I am now 71 years old, still working full time, and am about to be retired (not of my own volition). I am disabled but will not take disability retirement. I am trapped into the current system. I need my social security payments on retirement to help to meet my mortgage.
Unless I can find another job. Of course I am looking.
I believe we can reform not only Social Security but taxes and education and health.
Try establishing Health, Education, and Retirement savings accounts. Pretax dollars, never taxable, Can only be used for those three things. We will start with teenagers who contribute little in the way of revenue anyway. They will not have Social Security taken out of their pay. This answers the long term problem. As a nation we can deal with short term issues, but will sacrifice for the long haul.
To make this more effective we reduce the taxes on those teenagers to a flat 15%. We don’t deduct any other taxes from them. They will not have deductions, no loopholes for those who get rich. No deductions for having babies. Welfare will not go away but their tax returns stay with the government if they get Medicaid and food stamps. Investors will pay the same 15% in Capitol gains taxes with no deductions for losses. If they want to gamble then they pay when they lose.
We will reduce the size of the IRS substantially but through attrition. Teens will never know the pain of filing taxes and will have money of their own to save. They also don’t vote giving politicians political cover.
We may have to borrow to cover the deficit on Medicare and Social Security but we will be breaking a cycle. We will be showing the world we are leaders and will fix our internal mess and that they can have confidence in us again.
From all of the liternature I read and receive in the mail, Social Security is not the problem. Government likes to pick on SS recipients because, as I heard on the news, they think seniors are the richest people in the nation. I really believe they know better and that many seniors are not rich, but it gives one something to think about. Anyway, as I have read through many years, our government is the problem in the way they like to spend (pork) and I have seen much money wasted on congressional personal wants. There are many ways our government can save money. They just do not want to do it and have made a simple item into a complicated one so they can get on with their own entitlement spending. I have also seen a lot of funds (in my mind) wasted by sending large sums to other countries. Not all, but they know as well as I do that many of the funds they send to foreign nations are not used as promised and end up in the hands of that country’s elite. These are just opinions based on what I have read, seen on the news, and literature received on government spending.