Nine hard but necessary steps to fix our broken Social Security system.

American Thinker ^ | 05/26/24

[SeekAndFind]

Social Security is a giant Ponzi scheme and, like all Ponzi schemes, it will eventually fail when the cohort paying in becomes smaller and poorer than the cohort receiving the money. It’s going to take a sea change to remedy the problem, which means re-thinking the government’s role. Here’s what could be done:

(1) The Constitution has the federal government’s job description, so we must defund any federal spending that is not within that description, and the projects, whatever they are, need to be kicked down to the state level where they either belong or taxpayer money shouldn’t be spent on them at all. As an aside, this wouldn’t affect only Social Security.

It includes banning all earmarks, making congresspeople liable to the same laws everybody else obeys, and ending both so-called “monster bills” and continuing resolutions.

(2) The federal government must balance the budget and pay its debts, including the worthless Treasure Notes that Social Security holds.

The above two steps sound like the end of Social Security, but they’re not. There’s still a way out to protect Americans, especially those who have paid into the system (money that they could have invested for their own benefit) and are now dependent on its returns.

(3) Social Security needs to create the world’s biggest index fund which sees it investing only in the stocks and bonds of profitable companies. Its planned investments, of course, would have to closely kept secrets, with Social Security insider trading resulting in serious prison sentences (including for congresspeople).

(4) In terms of the fund itself, the the criterion for whether it’s profitable needs to be specific, e.g., “profitable over “X” years or “X” years within as specific time window...perhaps ten years.

[BobL]

“#1 - Kill all us old people.”

Speak for yourself, but I have enough money to buy my way out of that plan, so I’m good with the plan, as long as my money works for me...after all, it means less traffic on Texas highways.

[Wuli]

There are a number of practical problems with the proposal.

(A) At present there is now or very soon to be NO “excess” FICA revenue that could be diverted from paying current retires, because SS is now or pretty near the point of starting to NEED to cash in the IOUs the treasury gave it when “excess” FICA revenue was given over to general federal expenditures. There is no immediate remedy to that than some cobination of, (a) higher FICA taxes, (b) adjustments to SS retirement age(s), (c) adjustments to SS benefit cAlculations for newer retirees, (d) adjustments to calculation of taxable SS benefits with the taxes on SS going back into the SS fund instead of the treasury, and (f) specific new federal taxes legislatively/legally restricted to going only into the SS Fund.

Once we get past all that.

(B) There should be no federal SS “index” or investment fund of any kind. Instead the working persons FICA taxes would go into a priavte account with private investment outfits of their choice, and always be the property of the individual on behalf of whom the FICA taxes were collected. The private investment outifits would have to devise accounts that could not be collected from until the “SS retiremnent age”. The inifividual would be allowed to convert their account at retirement to an annuity, or a “money purchase” pension benefit invesment account where (a) the value in the account represents that value that could fund an income, (b) a mortality factor is determined for expected lifetime of the indivual, and (c) the type of pension account deasired (totally fixed - Bonds and treasuries, index funds, high dividend earning investments, or others suitable to the individual’c choise) and (d) from A with B and for C a monthly starting benefit amount can be determined, and may change over time as the valuation of their chosen underlying account changes.

But getting from A to B is not going to be painless, financially or politically, because the existing sums in IOUs owed to SS are just too huge.

[CodeToad]

Who cares? I mean, the illegal aliens get as much as Social Security ever spends so why are we even worried?

[BobL]

My ‘fix’ for Social Security is to END THE EARNINGS CAP and increase the percentage that is withheld (6.2% is too low, 10% is about right).

The fact that I currently collect SS has ABSOLUTELY NOTHING to do with it, I tell you NOTHING.

[Wuli]

“Focus social security on delivering maximum dollars to retirees, not wasting money on other tangents or excessive administration.”....Do not spend social security funds on non-social security endeavors, repay all non-social security spending.”

See my other post on this.

What you want is almost too late because (a) the treasury owes SS so much in IOUs and (b) is near to, or already having to ask the treasury to pay “cash” for those IOUs just to meet current befefit payouts, and from where will treasury get thsoe sums????. Some thing, or somethings are going to have to go throudh somepainful adjsutemnst for a generation or two, or three to square what is alredy owed to social security and what it is already requirded to pay out.

[aMorePerfectUnion]

There is only one fix.

Privatize accounts as Chile did.

Include investment options.

Can be passed on to family.

[Wuli]

“Raising taxes is not a solution because business pays half the tax as it stands now.”

That’s like say no raise of taxes or any kind in any way, no how.

That sounds nice but its not a solution to the SS funding probem, that problem is just too big. It cannot be squared with changes to SS or taxs, or both.

[Glad2bnuts]

What ever happened with the “Chile” system? You put in your money, employer puts in money, it is YOURS upon retirement. At a certain point you can gamble it, move it into stocks, or play odd or even on the roulette table.

I liked the system proposed in the article also. If you empower individuals they do better than being a dependent.

[Reno89519]

Shame on them for spending the money elsewhere. Now they need to pay up. Maybe cut out all of the social programs, the pork, aid to illegals, foreign aid, etc. Get us back to the basics, which includes social security for American citizens.

[Glad2bnuts]

Exactly, the Chile system seemed good to me. It wouldn’t be such a problem either if the government didn’t decide to spend 35 Trillion in debt. How much is it again in unfunded liabilities?

Basically the monetary system is built to fail, and crash in spectacular fashion. Money is nothing to the rich, it is everything to the poor.

[PeterPrinciple]

Privatize accounts as Chile did.

---

Which gets to the biggest drawback of private accounts for social security: They don’t, and indeed can’t, pool risk across the population.

https://www.cfr.org/article/chiles-failed-pensions-are-neoliberalisms-badge-shame

And what happens when the stock market crashes? You cannont eliminate risk.

[Dilbert San Diego]

We need to balance the budget of Social Security.

I know that’s easier said than done, but ultimately all the financial problems of Social Security are due to unfunded liabilities.

At one time Social Security was completely separate from the rest of the federal budget. I don’t know why or how it was changed, but now Social Security funds are commingled with all the other Federal tax receipts.

For many years social security would have been running a surplus if it were a completely separate entity. Now we’re getting to a point where Social Security will have a deficit even if it were treated as a separate business entity.

Fixing it will be politically very difficult. Fixing it based on using an Excel spreadsheet would be relatively easy. But enacting legislation to do what needs to be done is going to be damn difficult.

[Wuli]

“Now they need to pay up. Maybe cut out all of the social programs, the pork, aid to illegals, foreign aid, etc. Get us back to the basics, which includes social security for American citizens.”

I would go for that. I doubt we can get majorities in both the House and the Senate to agree, darn it.

I would also ease the pain of having to cover the IOUs already owed to SS by selling masive ton of Federal Land (only to U.S citizens and private U.S. companies) wtih 100% of the proceeds dedicated to paying off however much federal dedt that could be achievd from it.

[Thapsus_epiphany]

Remove ss numbers from deceased citizens so illegals can’t use the numbers for benefits.
There are millions of these numbers still active, and illegal.
Illegals can buy ‘still active’ ss numbers on the streets of major American cities for about 3 grand, and the democrats ALWAYS look the other way.
Getting rid of this fraud would go a long way to restoring solvency.
I’ve worked in several major cities where this type of fraud is easy and common knowledge.
Everybody who needs the numbers knows how to do it or where to go to get active numbers.
It’s not a big secret.

[aMorePerfectUnion]

Which gets to the biggest drawback of private accounts for social security: They don’t, and indeed can’t, pool risk across the population.

1. Insurance companies do this regularly with annuities.

2. The single largest risk to Social Security is government theft, which you can only de-risk by keeping their hand out of the cookie jar.

[monkeyshine]

Exactly correct. We have the individual retirement account program (IRA). We can augment that with call it a SIRA account - slightly different and stricter regulations on diversification and withdrawals but essentially the same thing. Just give everyone their money back, print it, and deposit it to the SIRA. It will be inflationary a bit, but mitigated by the limited use and diversification requirements. They will be held in trust accounts at the institution of the holders choice but subject to some more regulation to ensure it will actually not be squandered. Keep it faithful to the idea that the money is to sustain you as you age and cannot earn: so it has to be fairly rigid. The older you get the more you can unwind into cash or treasuries. Current retirees will get their continued benefits. Future retirees will take regular withdrawals from the SIRA. If you die, the SIRA can go back into the fund for current retirees. In 25 years or so it won’t be much of an issue and that money will be yours to live on or pass down with your estate and SS will be over.

There should be penalty of life in prison for defrauding anyone for their SIRA fund I don’t care if it’s a local money manger or JP Morgan don’t screw with the SIRA.

[Fireone]

A few more 100 billion gifts to Ukraine should help.

[monkeyshine]

The IRA program works just fine. You can’t eliminate risk but you can mitigate it by requiring additional diversification and allocation requirements.

[napscoordinator]

True. But they still would. I’m sure it’s going to 250K. That will save another ten years. They might add 70 as the new retirement age starting with 1980 or 1990 and beyond. It must be done. I was pissed Reagan raised my age to 67. But that’s life.

[LVS1]

My remedy;
1. Stop new members; People just starting work will be exempt from SS payments, they will receive no SS payments when they retire. Allow the citizen to decide their own investment choices, 401(k), precious metals etc,
2. Future oil/gas/coal leases will include royalty payments from producers, every gallon sold will return some of the profit to the SS coffers to pay those already retired.
3. As sufficient funds become available the government can offer younger workers (who have already contributed) to opt out of the program and get all their SS money back for their own investment choices.

I’ve no idea if any of this would work as I’m not sure what the dollar values of oil/gas/coal could be worth… just some rambling,