Articulated Social Security Plan

This Author has just finished reading a transcript:
THE BROOKINGS INSTITUTION
Brookings Briefing
REFORMING SOCIAL SECURITY
Thursday, January 13, 2005

The general Consensus of the Panel was only two Solutions offered real elimination of the Problem: raising FICA taxes or cutting Benefits. The was also concensus to the fact that altering Baby-Boomer benefits would shortly become politically impossible. This Author will concentrate on what issues were not debated.

There was no discussion of the viability of increasing FICA taxation upon Labor; a consideration of some importance, as loose projections by this Author suggests that every additional FICA dollar collected from Labor will mean $1.70 decrease in Consumer Spending, as well as dropping another 7% of Households into the Working Poor. There was no talk of the cost to the U.S. Dollar of funding Private Accounts, or worse, the General Revenue Budget liability to the SS Fund by Debt financing; another loose projection by this Author suggests the devaluation of the Dollar due to the Debt financing would cause another 13% of working Households to drop into the Working Poor. Cutting Benefits to make up the Shortfall projected would drop 27% of Senior Households not already in the ranks of the Poor into those ranks; while switch to Price-Indexing Benefits would drop an even greater number of Senior Households in the Poor after a period of 34 years. None of the propounded Solutions were really a Solution, if the Goal was adequately providing for Our Elderly over the next 75 years.

Here is where the Author articulates his own Social Security Plan (Don't start laughing at this Point, it gets better later)

Two points must be paid prior to the articulation. The first states there must be a cessation to unfunded liability collected by the Government, so Medicare and Medicaid must be intregal to a Solution to the SS problem. The second issue states the problem remains to integrate retirement and medical benefits of the Elderly into the greater Economy.

Conditions of the Plan:
1) The FICA tax on Labor income will remain at the same level, but the Cap on Labor income will be removed. This will equate to a long delay before the 2018 projected SS Fund deficit, and replace the scheduled downfall of the Alternate Minimum Tax.
2) Business will be required to provide $1.80 for every $1 contributed by Labor as FICA tax. This throws the projected FICA deficit back until about 2060. It additionally allows little additional Cost to Business, who can expense such contributions as Labor Cost. A loose projection says this is the perfect time for implementation, as Labor employment finds only about 0.04% loss of total Labor hours worked for the average 5% increase in Wage costs, eliminated by improvement in Production.
3) The Social Security Fund should purchase the Federal Reserve Banks in exchange for the special Treasuries held by the Fund. This will decrease General Revenue Budget debt substantially. The rationale: The Monetary policy of Zero interest as late advocated by the Fed has proved to be of dubious value as economic stimulus, and the purchase would bring Interest revenues into SS Fund coffers. Federal Reserve management would be left relatively unchanged, but Seniors would regain participation inside the Economy as well as a prime source of funding.
4) Medicare and Medicaid benefits for Enrollees would be capped at $30,000 per year, or $90,000 over the three total years of two prior and current year per Individual. This would include all benefits--including the Drug benefit; but not disbersements from a Special Case Fund set up for High-Chance Restoration cases.
5) FICA taxes will be declared actual taxation. A set monthly amount (One for All) will be made to all Recipients of SS benefits including Disability Benefits, and because of medical costs, no FICA Taxpayer will be attributed to have built a personal account; no matter what amounts of FICA they have paid, they will be ascribed no further benefits.
6) This Set Benefit will be Wage-indexed to preserve Consumption ratios, and to eliminate elderly diress.
7) All Current Beneficaries will be grandfathered into the new system, simply not drawing COLAs until they are inline with the new program. The new system of Benefit allocation could, of itself, put off the projected 2018 Fund deficit off until 2026 by a sketch projection by the Author.

The SS Fund deficits can be put off for a period longer than Baby-Boomers will draw benefits, if the life expectancy of those Baby-Boomers does not increase. Real increases of Life Expectancy will not come easily, as all the Easy and Quick gains have been realized. Projected SS Fund deficits can be covered far more readily by slight revenue-generating increases in the Fed lending rates than anywhere else. This is a realistic pay-as-you-go system. lgl