Friday, April 29, 2005

Social Security Plans

The President's photo-op on all four Networks failed to cancel committed opposition to the Bush Social Security plan. The Opposition centers around the Benefits cuts entailed under the Bush plan. Almost All proposed Plans, and they number over a dozen, suffer from too much Gun. There are methods which create less jolt.

Liberal plans call for raising the 'Cap' on taxable Income. Setting this Cap at $150,000 would create a Tax of $9300 if the full increase was paid, an additional $3906 if the full increase was paid. $9300 per Year to build a annuity which will pay about twice the yearly amount of Payment from Retirement until Death does not seem an excessive price, especially when it includes a very favorable Medical insurance policy as part of the accessible benefits. Will it provide 100% solvency? Who knows, but it provides more revenue than the current Tax base.

Many Conservative plans call for Price-indexing of benefits, which will sharply curtail benefits over Time. The major problem with this avenue lies in dealing with Retirement benefits. Most of these Retirees lack exterior Income generation capacity. There is a real method to use Price-indexing without damage to Anyone: Use COLA increases yearly only on a Base benefit, with additional COLA for the rest of the benefits payable only once in every decade, without payment of backpay or degeneration in the interim period. Will this bring 100% solvency? Who knows precisely. The real Solution along these lines is to dictate a unitary benefit granted to All, no matter what level of Taxes have been paid in. This would assure Solvency!

The Unitary Benefit could even allow for some usage of Private Accounts, as long as taxation remained at a level to pay for 80% of the Unitary Benefit, and Private Accounts were required to pay the intervening taxation charged Others before Private Accounts funds were released to the Retiree. Private Accounts, though, are not a panacea. A probable half of all such Accounts would be unable even to pay the intervening taxation. No Lie!

The real problem is stopping the Government from spending the accrued Funds! The Author still proposes all FICA taxes should be turned over to the Fed, who would be charged with paying all SS liabilities, and loaning excess Funds to Banks at 4% Interest rate--said Banks allowed to count such funds as Reserves. lgl

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