Posted on 03/07/2005 10:19:16 AM PST by crushkerry
We're not huge fans of Nebraska RINO, and 2008 Presidential Contender, Senator Chuck Hagel. However, he deserves credit for coming out with a proposal for Social Security reform that sounds, believe it or not, pretty conservative.
Surprisingly the proposal being offered by Hagel is fairly similar to the proposals outlined by President Bush. Hagel's plan recognizes the populace's longer life expectancy and would raise the retirement age to 68, and would raise the retirement age to 68, and reduce benefits for anyone retiring before that age.
More importantly, he is proposing that workers under 45 be permitted to divert up to 4% of their payroll taxes to personal accounts, but with the caveat that future benefits for those people would be reduced.
The only real difference with the President's proposals are that the age requirement for setting up personal accounts is lowered to 45, rather than 55. We don't know how the White House is going to respond to this, but it seems here that the GOP and conservatives have to "compromise" to get a bill, this would be the way to go, rather than to increase the income cap on payroll taxes, or silly "add-on" accounts. Again, this is just a first impression of the Hagel plan. I'm not an actuary who can tell you if lowering the age will do anything for the overall solvency of the system.
Politically this is smart because a good many people in the 45-55 age bracket are uncertain as to whether personal accounts would benefit them. In Hagel's plan those that are over 45 will have their fears allayed that social security won't "be there" for them. Yes, there are many in that age range who will be mad they can't get a personal account, but they may have to be sacrificed for getting personal accounts. Plus, the guess here is that there are more people in that age range leery of personal accounts than are in favor of them.
Hagel also does one better than the White House in making sure that people know his plan is "voluntary". The White House has the same idea in mind, but doesn't say it enough. Some people like the idea of personal accounts in general, but are, for a number of reasons, a bit leery of them because they think they have to open one up if reform becomes a reality. They need to be reassured that if they aren't comfortable with the idea, they can stick with the current system (bad as it is).
So let's give credit to Senator Hagel where it's due. Instead of a foolish compromise like an "add-on", or a tax increase like one floated by Lindsay Graham, Hagel seems to have actually staked out a reasonably conservative position on this issue, and deserves to be lauded for it.
"As much as it pains me to say this, I actually like Hagel's plan as outlined here"
I concur, Kevkrom. This might indeed be a good compromise, if we can get those personal accounts, and break the growing democratic stonewall on this issue. I believe that once people see actual equity in a SS account, that it will lead to more significant reforms later.
Isn't chucky a democrat? Either way why is there a rino as the senator for nebraska? we could easly run another tom coburn like in Oklahoma and win.
Raising the retirement age to 68 will be a cut of $43,200 because those paying in will forfeit 36 monthly payments. In fact, some will not collect at all because fewer payers will live to 68 than were living at 65. I hope Sen. Hagel will explain that to those who have been paying in since they were 16 or 18.
I believe the retirement age is already 67, not 65.
My goodness, that sounds like a typical liberal mantra - "I want mine, so take someone else's to make sure I get mine."
I guess that being born before 1960 makes me a little more sensitive; why should those who paid the longest, and planned their retirement out, have the rug yanked from under them when they have no chance to make other plans, while the younger ones have more time to try to do things for themselves? I woke up in my early 30s and started to plan ahead by doing some minor investing. It isn't much, but it was needed to supplement the little that Social Security will provide. It would seem that the younger generation has even more reason to start doing for themselves at an earlier age. Unless, of course, they have all fallen into the nanny-state trap and expect the government to keep doing more and more for them. The younger you are, the more you should want a total reform, but that needn't include robbing those that have already paid their dues.
Of course, you realize that if your plan were put into effect, there would be no reason to think that a few years down the road someone else might come up with the same idea, only with your age group as the target for the cuts. After all, unless something is done to fix things, later generations will be paying even more with less expectations of return.
Don't buy that nonsense. Raising the retirement age will not solve the SS problem. It only delays the inevitable train wreck. That same logic was used in 1983 when Congress raised the retirement age to 67, raised the FICA tax, and indexed the cap.
Changing the retirement age will not solve the problem, just delay it for a few years. At the inception of SS in the 1930s, there were 40 workers to support every SS recipient, in 1950 there were 16, today there is 3.3 and by 2030 there will be 2 workers. It is a matter of demographics.
Workers collecting payments today are getting out more than they put in. Workers under 30 will get less than they put in. They will get even less if you raise the retirement age. Someone could start working at 18 and contribute every year until 69, 51 years, drop dead and never collect a penny. It is no wonder that those under 30 support personal accounts by a 2 to 1 margin and just the opposite is the case for those above 55.
The last time the retirement age was raised was in 1983. You don't think it's about time, 22 years later, to do it again, given how much longer people are living?
It was wrong then and it is wrong now. Congress is afraid to make the hard decisions so they take the easy way out. Adding another year to the retirement age won't fix the system. It just kicks the can down the road until our kids must deal with it. Any system that can be changed and manipulated by Congress is a joke. We need to solve the SS problem now. Meidcare will go broke sooner and its unfunded liabilities are two to three times SS and growing with the new drug prescription program.
My take on this is that raising the retirement age is not intended as a long-term fix, but rather to offset some of the short-term transition costs in moving to a personal accounts system.
I haven't heard that rationale. It would have to be phased in over ten years or so. I hate to see the term "transition" costs used because they are not costs. They are a prepaid investment that will acutally save us money because it will reduce the long term unfunded liability.
I do agree with Hagel that personal accounts should be combined with reduced benefits from the defined benefits portion of SS, i.e., the remaining benefits after the 4% is taken out for personal accounts.
And nobody can tell when you're too senile to work. You don't sound any crazier when senile than when you weren't (say, for instance, Ted Kennedy).
I'm afraid that what may end up happening (in time) is the upper limit for taxing income via Social Security will be raised, in effect more evidence that Social Security will have become a wealth redistribution program - more than anything else.
I've never depended on Social Security being around when I retIre (I'm 43) and have invested as such.
The longer someone has been paying in, the lower their overall taxation has been. SS taxes have only been going up, so for those that enter the workforce today the tax rate is 12.4%, the first people to pay in only paid 2%. Big difference. The wage cap has also been going up, so younger workers get a really raw deal compared to older workers.
But wait, it gets worse: when the SS "Trust Fund" starts to redeem the IOUs it holds to pay the older workers, the Federal government will have to pay those back (with interest!) out of the general fund; in other words younger workers will have 12.4% taken from them in the form of the SS tax, plus will be redeeming the IOUs with their income taxes.
To say that the younger worker has "more time to try to do things for themselves" is disingenuous. We have to do it for ourselves, and clean up the mess our elders made. Why shouldn't the over 55 crowd feel some pain? They're the ones who voted for the pols who got us into this mess.
By the time I retire, we will have paid much more than you, both in real dollars, and in constant dollars. My point is that our retirement age has already been raised. This article wants to raise it even more. Gen X's taxes have been hiked and hiked again. Beginning to see a pattern? We have many more years of tax and age hikes before we can "get mine". That is, if there is any left. BTW, we are already planning for our own retirement. My age group not only has to deal with the probable loss of our ss retirement, but, after paying for your retirement, we are also having to fund our own via 401Ks instead of defined benefit plans. And this is with what little we have left after SS takes out a huge chunk.
The cap has been raised ever year. Eventually, almost everyone's earned income will be taxed. History of the OASDI contribution and benefit base If you examine how benefits are determined you will see that SS is already a wealth redistribution program.
I agree wholeheartedly with you that simply raising the retirement age will not solve the problem. However, if raising the retirement age is combined with personal accounts, reduction in benefits for future generations, and changing the index used to determine COLA's, then it's got a chance. Surely just raising the age is not going to solve anything.
2 things, how are 36 payments being avoided, he's only raising the age 1 year. I think you may be under the impression you get full benefits at 65.
And as to the comment that "some will not collect at all". Of course not. But that's how the system works now. If you're unfortunate enough to die before 67 you get nothing anyway. That's why personal accoutns are good - you can pass them onto heirs if you die at the age of 66 years, 364 days.
And yes, raising the retirement age does mena more people might die before they collect. That's part of the idea. Plus people are living longer.
Sport, I take it that like me, you are relatively young (I'm in my 30's), and object to the raising of the retirement age because we won't "get ours".
I think that's the wrong way to look at it. If they let us invest part of our money, and dont' raise the tax rate, then that's OK. We will have "gotten ours" plus more.
And I don't like the idea of "getting mine". I'm not owed anything. The whole idea of reform is to get rid of that mindset.
In 2008, the SS surplus starts declining and in 2018 we will be paying out more in benefits than we are collecting in revenue. We will need to start borrowing to make up the shortfall.
How will Congress replace the lost revenue? Borrowing more money through Treasury Bonds. The additional borrowing will increase the national debt, which means that we will have to pay more to service the debt annually.
Approximately 17 cents out of every dollar of total tax revenue collected is immediately used merely to pay the burgeoning interest on the Federal debt. This is now surpassing the costs for our entire defense establishment, and it is exceeded only by the revenues needed to fund the total Medicare and Medicaid programs.
Currently, 80% of all American wage earners pay more in FICA than in income taxes. 40% of all tax revenue comes from FICA and Medicare. If we don't do something about entitlement programs, the entire budget will be consumed by entitlement programs and debt servicing. Defense is a discretionary expense.
Agree w/ you on entitlement reform.
The stat about 80% paying more in SS taxes than in income taxes is explained by the fact that 50% of taxpayers pay no income tax.
The 'get mine' comes from treb. I really don't care to 'get mine'. I would gladly forfeit all my taxes paid up to this point if I could just opt out from here on out. I could probably retire sooner with much more money.
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