In the new issue of National Affairs I have a long article outlining a conservative agenda for retirement security, which both debunks some myths about retirement saving and proposes some ideas that could help those who need to save more for retirement to do so.
The truth is, increased Social Security benefits and other progressive reforms would actually aid the highest earners the most, fail to make the program solvent or pay for higher benefits, and prompt Americans to reduce their retirement savings. Another progressive approach, retirement plans run by state governments, risks lowering private saving and forcing Americans to rely on public officials with poor track records of delivering on the benefits they promise. The overall result would be future retirees receiving a substantially greater share of their total income from the government, which has shown itself to be a poor steward of citizens' money.
This is an unacceptable outcome for conservatives who care about America's tradition of limited government and personal responsibility. Too often in the past, however, conservatives have failed to articulate a compelling vision for Social Security reform that would gain political support. They have treated reform as merely an accounting exercise requiring tax-and-benefit adjustments, rather than as an opportunity to truly strengthen the program and America's private retirement-savings system.
You can check out the whole article here.
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“the Committee on Economic Security appointed by Franklin Roosevelt to draft his Social Security plan recommended that individuals earning above $3,000 — about $145,000 in terms of today's wage distribution.“
I find this really difficult to believe. There were far more workers who maxed out at $3,000 back then, than now.
“most households save for retirement beyond the amounts they expect to receive from Social Security, and many Americans will adjust their retirement saving downward if they expect to receive higher benefits from the government.”
“Reducing real saving by households, which can be used to finance research and investment, lowers future economic growth, and raising taxes to fund Social Security benefits lowers incentives to work.”
“On top of eliminating poverty in old age, the flat-benefit plan would address Social Security's $10 trillion-plus funding shortfall and restore the program to long-term solvency.”
“Under current law, by contrast, Social Security will be running annual $400 billion deficits (in today's dollars) by 2050, unless benefits are cut across the board by roughly 25%.” SS has a required balanced budget. It cannot spend any more than the dedicated tax revenue and the value of the trust fund. So running deficits past 2034 is pretty near impossible. Your 25% is way off. By 2050, the payable benefit is more like 63% or a 37% benefit cut.
“I have calculated that reducing or eliminating the payroll tax on older workers would significantly increase their labor supply, raising non-Social Security tax revenues — from federal and state income taxes and Medicare payroll taxes — to offset most of the Social Security payroll-tax losses.” Increased labor supply means lower wages. Why let those who supported a broken Ponzi scheme benefit at the expense of their children?
You identify the problems. Increasing taxes reduce savings - been saying that for 45 years. Most already save, but with a 12.4% payroll tax it reduces savings creating a larger problem.
Since 1973 I have seen Social Security imploding. I tried to educate people and did a fairly good job at it. However, politicians love all the misconceptions - they do not want voters to be educated on Social Security - they would be tared and feathered.
We passed the point of no return 20 years ago. In under 10 years the trust fund will be near zero. COLAS will be zero. Politicians have squandered a good 50 years when it was possible to do the right thing. To late. It is going to get ugly.
All you did was repackage a "turd."
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