A Ponzi scheme that should be fixed

washingtonpost ^ | September 15, 2011 | Charles Krauthammer

[Anima Mundi]

No. No deficit is created. You are misunderstanding what I am sayng. The seniors would basically be declared economically “Dead” at 55 ot 60 years old. Meaning they would not be collecting ANY SS benefits. Zero, zilch, nada. Thus the IOU that currently would be going to them is ‘turned in” to the government and the government no longer owes it to them. The government gets to “keep” the obligation and the amount “owed” out is thus reduced. In exchange for giving up the promised benefit, the senior is allowed to be exempted from income taxes on all income that is earned any time AFTER the retirement age. This gives them an opportunity to pile up enough money in a short period of time to take care of themselves. The government is not out ANY money. If what you are saying is true it would be like saying that when people die then we have to raise the taxes on everybody else because the dead person is no longer paying any income tax.

[MontaniSemperLiberi]

“In exchange for giving up the promised benefit, the senior is allowed to be exempted from income taxes on all income that is earned any time AFTER the retirement age. This gives them an opportunity to pile up enough money in a short period of time to take care of themselves. The government is not out ANY money. If what you are saying is true it would be like saying that when people die then we have to raise the taxes on everybody else because the dead person is no longer paying any income tax.”

Yeah, basically we are hitting on the same argument.

To use the analogy of “when people die” If there are six people in the US and one has to defend the border, the five have to make enough grain and meat to feed six people. If one of the five die, then four people have to make enough grain and meat to feed five people. Someone has to pay the taxes.

I think everyone would like your deal, young or old. I’d love to be considered “dead” to the government.

[supercat]

means-test for richer recipients

The notion of anything resembling a conventional "means test" needs to be completely removed from consideration, and it must be made clear that such a thing will never be considered. Otherwise, if people expect that having an extra $10,000 in the bank will reduce the present cash value of their lifetime SS payouts by $5,000, they will recognize that taking a $10,000 vacation now will only cost them $5,000. The net effect will be that means testing will not reduce the number of people eligible for SS nearly as much as it will increase the number who "need" it.

The only way means testing can work will be if it is made abundantly clear that, starting with some particular generation, nobody will want to claim SS if they can possibly avoid it. People who really do have no income and no assets won't starve, but life will be sufficiently unpleasant that anyone who can set up any sort of nest egg for themselves will want to do so, and people whose funds are running low will want to support themselves as long as possible with their own money before going to the government for a handout.