Monday, April 28, 2008

A Common Man's Fix For Social Security (maybe Common Sense fix?)

We are going the way of Europe as our country ages (time as a nation, not average population age although that would apply as well). What I mean is more and more overhead thus higher taxes. This is ironic as one of the primary reasons our founding fathers incited a revolution was to escape the heavy and unfair tax burden that is the legacy of European governments.

When the takers outnumber the makers you are upside down. Don't blame the baby boomers though. It is not their fault that our government took what was originally supposed to be a temporary plan, and what was clearly a Ponzi scheme, and made it a permanent plan. All pyramid schemes fail in the long term. The first in win, everyone else loses. Can anyone honestly say social security is anything but what I described?

The only way out is to correct a bad system. And, there are non-dramatic ways to do so. My plan is similiar to what many companies are doing with pension plans.

1. Set a hard date for no new Social Security beneficiaries. Example: Anyone born after Dec 31, 2008 will not recieve Social Security and must plan their own retirement. You now have finite system. Any finite system can be managed.

2. Everyone working, regardless of birthdate, continues to pay Social Security until there is no remaining beneficaries (the last person born Dec 31, 2008). Those born after the cutoff date won't be upset as they will be conditioned from their first job on that this is just another government tax on their paycheck, just as we were. Notice that everyone will see the Social Security deduction decrease as the finite number of beneficiaries declines, eventually becoming zero.

3. Readjust annually the Social Security payroll deduction to match immediate demand and near term forecasts. Also pass a law that social security payments cannot be used for any other purposes--ever! If the politicians want to keep the social security rate higher and start using the inevitable surplus later, the law should prevent them from doing so. Force lawmakers to do this openly by passing a new tax rather than to piggyback on an existing one. Reference the war of 1812 communication tax. It was a tax on telegraph communications, became the telecom tax after the war ended and just recently was done away with after class action lawsuits.

4. Do away with stupid standardized testing such as "no child left behind" and mandate a curriculm taught every year in 5th thru 12th grade as part of social studies or math class on basic personal accounting and personal financial management. Give those born after the cutoff date every chance to be smart about their future. The key is education.

5. Mandate that anyone working must contribute a minimum of 5% of their annual gross to a qualified retirement plan and continue to allow that contribution to directly lower your taxable gross. Mandate that the government does not administrate any of these plans. It must be the individual's money, and the government has no hold on it other than what age it can be withdrawn, which is already the case.

This plan is simple, effective, and without additional taxation. We can solve our problems in this country without doom and gloom if we are willing to be honest about them and put in solid, long-term focused solutions. But if we continue to ignore our problems or react short-sightly with quick fixes, we will face very tough times.


jettybetty said...

Can I vote for you?

There are several things that could be done for SS--but no one seems to be committed enough to make something happen.

Tony Arnold said...

I would not want the job. I think that is one reason why our candidate pool has been so poor. Those truly qualified have no interest and are happy doing whatever they are doing.

JMG said...

Even I can understand that plan. That's why the government will never implement it. It's too transparent. They would never be able to abuse it without our knowledge.

Tony Arnold said...

Yes JMG, simple is the kiss of death for any option under government consideration.

Matthew said...

I appreciate your thought on this, also Medical care is another big concern of mind.

Tony Arnold said...

I don't have any good thoughts on Medical issues. It is very tough, complex problem this country faces.

The big question is if U.S. citizens are willing to pay the rising costs to maintain the level of care we have become accustomed to in the last two decades.

Thanks for posting I like having new readers.

JMG said...

Off topic:

So what got you interested in reading about Andrew Jackson?

Tony Arnold said...

Being a native Nashvillian I have always had interest, but on vacation last week we visited one of the original forts in America in St. Mark's Florida and it was used by Andrew Jackson during his Indian campaigns, it repeaked my interest.

I like history. The book is great. I am learning so much I had forgotten or never learned about the formation of this country, US government formation, the formation of the southern states and government, etc. Great stuff.

Many don't realize it but in the 1700's the West in the US was the territories between North Carolina and Georgia and the Mississippi river and south of Kentucky and above Florida. This territory became Tennessee, Mississippi, and Alabama.

It is fascinating putting lives with the common names of buildings and counties we are so familiar with in Tennessee: Robertson, Davidson, Sevier, Jackson, Blount, etc.

JMG said...

Wasn't Jackson against the federal bank, fearing it would put too much power in the hands of the elite?

Tony Arnold said...

Jackson was a hardcore Republican (along with Thomas Jefferson, James Monroe too I think) and aggressively campaigned against the Federalists (Alexander Hamilton, John Adams,etc).

For anonymous readers, don't be confused. In the early years of the nation Republicans were those supporting a Republic, a group of states with the weight of control at the state level as much as possible. Federalists were those that believed in a central government control.

Interestingly enough JMG, it is funny to hear so much rhetoric today about the sanctity of the Constitution and our founding fathers' belief in democracy. They believed in and formed a Republic--a government of the people and for the people, not at all a Democracy which is a government by the people. Shortly after our Independence, our founding fathers polarized into two camps: Republicans who supported state level automony and the Federalists who began moving toward a more heavy handed central government. One of the big fears the Federalists had was that the Republican movement would eventually lead to a complete Democracy in which the common mand would want and demand a say in governmental affairs rather than being satisfied with representation.

However, initially, they all felt that the common person could not most effectively govern himself.

The Constitution was anything but sacred. It was hotly debated for several generations, constantly re-interpreted, and eventually was changed to suite political needs of those with power at the time. Jefferson worked very hard to modify the original constitution and drove the first major amendments that had profound changes over the original document.

JMG said...

Hmmm. I think the Federalists would like the look of things today.