Thompson: Reduce future retiree benefits

WASHINGTON - Republican presidential hopeful Fred Thompson on Friday proposed reducing benefits promised to future retirees and establishing a system of voluntary personal retirement accounts under Social Security to help shore up the program's finances.

"If somebody's got a better idea let them put it on the table," said the former Tennessee senator in a challenge to fellow Republicans as well as Democrats vying for the White House in 2008.

President Bush proposed roughly similar changes three years ago, but they proved so controversial that they never came to a vote in either house of the Republican-controlled Congress.

Thompson's proposal steered clear of higher payroll taxes, which many Democrats favor. Nor did he suggest raising the retirement age, another possible way to prolong the life of Social Security.

He said that without a change the program is due to run out of money in 2041, and an automatic 23 percent cut in benefits would follow. "The status quo is not having a Social Security system as we know it" after that date, he said.

Under Thompson's plan, retirement benefits for workers who are currently 58 and older would not to affected.

But workers who are now younger than that would receive smaller monthly Social Security checks than they are now promised because their benefits would be calculated on the basis of the annual rise in prices rather than wages. Prices generally rise at a slower rate than wages.

Separately, Thompson called for creation of personal retirement accounts, to be funded with contributions by workers and matching funds from the Social Security trust fund.

Material provided by the campaign said individuals could contribute 2 percent of wages into their own account. The government would match the first $20 in monthly individual contributions with $50 from the existing Social Security Trust Funds. Additional contributions would be matched at the rate of fifty cents on the dollar.

As an example, the campaign said a worker earning $20,000 a year who established a personal account would end their first year with $1,080 — $400 from their own contributions and $680 in matching funds from the government.

"The money belongs to the worker. It could be withdrawn at the worker's discretion after age 62 and used for any purpose, or left in the account to continue growing," according to written material distributed by Thompson's campaign.

Thompson said the creation of personal accounts would stimulate economic growth, and result in higher tax revenue. As a result, he proposed that the Treasury make a payment each year back to the Social Security trust fund to help restore its reserves.

In unveiling his plan, Thompson criticized Democratic Sen. Hillary Rodham Clinton of New York and other rivals whom he said argue that Social Security's financial difficulties would be solved if the economy grows strongly enough, or else call for an independent commission to propose changes.

"If you can't tell the truth in a presidential campaign, when can you tell it. When should you tell it?" he said.

Three years ago, Bush proposed reducing the future Social Security benefits promised to higher-income workers along the same lines that Thompson suggested, but leaving those of lower-income individuals unchanged.

He also called for personal retirement accounts and would have permitted individuals to divert about two-thirds of their existing payroll taxes for that purpose. In contrast, Thompson said the individual accounts would be in addition to payroll taxes. Additionally, Bush did not propose having Social Security match individual donations.

Under current law, individuals pay a tax of 6.2 percent on their first $97,500 in income to help cover Social Security benefits. The money goes into the Social Security trust funds, out of which the government pays benefits each month.

Under official estimates, Social Security will begin spending more money than it takes in beginning in 2017 and its trust fund will be depleted in 2041.

:-}.

I'm 56, have no plans on ever retiring as my grandkids have become accustomed to a certain lifestyle occasionally provided by Grandpa and Grammy.

I owned my own small company for many years thus I was priveleged to pay 12% with my signature for many years. The money my wife and I paid to social security at a small return of 6% would be enough for most folks my age to retire right now. I have no desire to subject my children and grands to that treatment by the tax collectors.

Private accounts owned by the individual with mandatory contributions is something I'm OK with though personally I would prefer no governemnt at all involvement at all.

Yet, I also don't oppose helping those who can not, and I emphasise can not, help themselves. Call me a compassionate conservative. :-}

A simple, honest and extremely difficult idea: If when you retire, you don’t need a government handout, you shouldn’t get one, even if you paid for it.

Why is this so difficult to swallow?

There is no way to make it “fair”, because it is a lie to think of Social Security as a bank account or insurance, in which you put money in, and hope to get it back some day.

Social Security is, and always was, just a tax. Just another tax. No different from the income tax.

Do you expect to get money back from your income taxes? Why should you? You expect it to be used to pay for other things. And Social Security is exactly the same thing.

How do I know this? Because the money people put into Social Security was spent as soon as it went to Washington. Just like any other tax revenue. There was never any connection to the money paid in with the money paid out.

So let’s get rid of the LIE that is Social Security. This does not mean that we have to stop paying those who NEED Social Security. Just that those who don’t NEED Social Security shouldn’t be paid Social Security.

This is not just simple honesty, it also serves a very good purpose.

People cannot live on just a Social Security check every month, because it is just a small amount of money, because checks go to so many people. And yet, people were supposed to be able to retire with *just* that Social Security check to support them.

If we didn’t pay Social Security to people who *don’t* need it, the Social Security checks to people who *DO* need it could be five or more times larger. That was the promise of Social Security at its very start. That it would pay for the retirement of those who had no other means of retirement. It was supposed to be ONLY FOR THEM. And paid for ONLY BY THEM.

So stop paying people who don’t NEED Social Security, who have other means of retirement; and pay A LOT MORE money to those who have ONLY Social Security as their retirement.

This also means that relatively so FEW people will be paid Social Security for their retirement, that Social Security as a system can be returned to what it was originally supposed to be.

That is, if you have any other retirement system to which you belong, you should not pay FICA, nor should you be eligible for Social Security. It is not for you.

By doing so, we will have the biggest cut in federal taxes ever. That is, the VAST amount of Social Security taxes paid to the government every year will be slashed. To make up for it, they will have to DOUBLE the income tax. Which, of course, would mean that we pay the same amount in taxes that we do right now.

And starting from people just entering the work force, and up through the people who have been working for years, the Social Security tax will continue to drop until it is just paid for by those in non-retirement jobs, to the people who were in non-retirement jobs, and are now retired.

It will be a balanced system, and it will pay for itself, and the few people for whom it is their sole retirement will be able to live decent lives for their golden years.

And for everybody else, who paid into Social Security even though you shouldn’t have, and now expect to get a small check every month, even though you don’t need it to survive, well, you got screwed. Thank your government for promising too much to too many people, and write it off as high taxes that you didn’t know were just taxes.

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