While we're at it, Fix Social Security
Star Fleet Universe Discussion Board: Non-Game Discussions: Let's Fix Student Loans:
While we're at it, Fix Social Security
As John just found out, there is no money in the treasury for future Social Security payments since the government already spent it all. Money coming in pays for the money going out (almost). All of the "trust fund" consists of "special government bonds" that don't count as part of the national debt (but are bigger than the national debt).
This is not the "Let's fix Social Security" topic (there isn't one) but if you want to try...
1. Make me dictator for six years. I can fix Social Security in that time and since I don't have to worry about getting re-elected I can get it done. (I would of course face trial in the senate when my time is up, just like the Roman Republic.)
2. Pick an age. 30, 35, 40. Everyone over that age has the right to stick with Social Security as it is or the option to switch to the new system. Everyone under that age switches to the new system whether they like it or not.
NOTE: As most know, the Ponzi scheme that is Social Security was set up on day one to fool the taxpayers into thinking that your employer was paying half of the cost. That is bogus. Employers look at what employees cost including Social Security. All they really did was not charge income tax on that half of your social security payment. You never notice the money missing from your paycheck as it's not on your pay stub.
3. Everyone over the age who stays in Society Security just keeps paying (as does their employer) and someday you get a pitiful pension sort of payment. Fairly soon, the taxpayers are going to have to start making up the difference since there won't be enough coming in to pay the outgo. To mitigate that, we'll raise the age to collect social security another year, not pay people who have incomes over $400,000 a year or who have $2,000,000 in their non-Social Security IRAs or ROTHs or whatever. Since this won't exceed revenue until my senate trial is over and I'm dead of old age, it's a winner.
4. Everyone over the age who opts out and everyone who is under the age and gets kicked out receives a government bond equal to whatever they paid in, said bond to pay off in 20 annual installments starting at the official retirement age. If you die in the interim you lose the money. Since these payments won't matter until my senate trial is over and I'm dead of old age, it's a winner.
5. Everyone over the age who opts out and everyone who is under the age and gets kicked out now directs your half of the usual social security payment (the part "deducted from your paycheck") to a non-government (open market) stock market fund (or bonds or cash) of your choice (from among the 25 funds with the best combination of track record, years in business, and size). You will (according to those who do such math) get three or four times what Social Security would have paid you.
6. Everyone over the age who opts out and everyone who is under the age and gets kicked out watches the "employer half" of their social security payment go to the government to pay off those who chose to stay inside the system. As "those who stayed inside the system" age out and die, the money will catch up with the expenditure and sooner or later the last fool who stayed inside the system will die and all of those "employer contributions" just become government revenue, a sort of flat income tax that you won't notice since it's not on your pay stub.
SVC
Weirdly your describing what the UK went through from the 1970's to about 2015.
In the UK, we pay National Insurance (our equivalent of Social Security) and it's paid by both the Employee Employer.
Part of NI pays for the individuals State Pension (and yes it's also a Ponzi scheme).
Various governments have tried to reduce the Ponzi Scheme by allowing people to have some of their NI Contributions redirected to a private pension plan (so they should get market based returns) - and it was changed about 4 times during the 40 odd years it was running.
The problem 'was', the lower paid got a smaller contribution to their private plan and so various Means Tested Benefits can be applied by them (so the cost saving was less than expected).
Various tweaks was done - but the Government was never happy (and people complained that they may gave got more from the Government than the Private Scheme and a new complaint industry started up**) - net effect 'Contracting Out' stopped and we are back to the full Ponzi Scheme.
** - And hindsight is used to work out if 'appropriate advice' was given or not - which includes Government Changes which took more tax out of private pensions than was originally 'promised' - noting some individuals should probably not have been allowed to 'Opt out' (those on very low salary and the relatively low fixed fees might have been inappropriate) - but illustrations given out (or should have been!!) did compare the likely benefits versus the fixed benefits being given up.
But back to your point - and the most valid point (IMHO) is 'someone' needs to break the system (and your joke about being Dictator for 6 years and then being trialled by the Senate - alas probably is needed) - but politically, no Politician is willing to spend all their Political capital to resolve it.
"I want my next term".
We need a Politican willing to fall on their Sword when the job is done.
(Jean, fingers crossed thats 'not directionally political' and neutral).
Might add some other comments if I have time...
I dunno about the part about you'd do better with a IRA.
SS has a decent return on investment and it's guaranteed by the government. Besides, you KNOW that lots of people will choose crappy mutual funds/ stocks/ whatever and then scream/ vote their displeasure down the road.
MY solution is to remove the cap on payments by the wealthy. So you pay more the more you make. https://www.google.com/search?q=what+is+the+maximum+amount+social+security+can+deduct+from+your+paycheck&oq=what+is+the+maximum+amount+social+security+can+deduct+from+your+paycheck&aqs=chrome..69i57.17408j0j7&sourceid=chrome&ie=UTF-8
The problem with IRAs and and 401ks is that they're tied to Wall Street and the sociopaths who run it. You can't bank on the money being there when it's time for you to take it.
The cap should be removed on the wealthy, on that I can agree
Fixing Student loans: The only way to do that is to get the government out of the game, or mostly out of the game. Colleges view this as an infinite cash cow.
Well, when I have a young student I’m training to be a professional driver, I tell them about ROTH IRAs for reasons similar to your complaints about IRAs and 401k’s. A ROTH allows one to dip into the amount paid in (but not the gains) in an emergency, making it a better vehicle for emergency savings as a ROTH has a rate of return where most savings accounts don’t (interest being below inflation).
Like a lot of things, the student loans issue was made far worse my making things too easy. The incentive to stay in school longer and longer, only makes the ultimate payback harder.
And therein lies the rub. It’s hard to resist partying on someone else’s money, and too my student loan recipients can’t see ahead hard enough to understand that late night pizza tonight might become a month’s worth of rent after all the deferrals allow the interest to really stack up. Hyperbole, but only because I didn’t do the math to get a more accurate example.
Maybe one thing that could actually be acceptable to the banks, is require students to pay maintenance level payments while in school, just enough to offset the accruing interest of their loans, and make those payments a requirement for good standing with the school (don't pay and the school drops you). This would have two effects, first it would tend to wean out the worst cases by ‘flunking’ them out before they rack up the most debt with under-value degrees, and second it would incentivize working both while in school, and after graduating.
>> You can't bank on the money being there when it's time for you to take it
If one wanted to "privatise" SS one would not want to delegate the tactical investment selection all the way down to the participant account level. Then there could be great variations in returns based upon market performance, and when a specific person may have gotten in or out (perhaps unexpectedly).
The better idea would be to effectively create a SS Mutual Fund, and then farm out tranches of the assets to multiple investment firms, who then invest. The composition of the asset tranches would be based upon the demographics of the age of the participants, as well as the projections of month-to-month payment obligations. Given how much money there is, how many people participate, and how very long the time horizon is, it would be quite easy to beat what effectively amounts to T-bill returns.
If there was an underperforming period and a shortfall in the ability to make month-to-month payments, then SS could just temporarily issue T-bills to cover the delta. It would be no different from today's situation.
And those who specifically want sign up for more risk could detach themselves from all benefits voluntarily and then invest their SS on their own.
Over time, the higher returns of the SS Mutual Fund would effectively create an expanding pool of assets that could be used to meaningfully expand benefits and/or reduce SS taxes. So seniors who have nothing else except SS could expect to live better lives, and receive better medical care than straight Medicaid. Bear in mind that many seniors today on straight SS live close to or below the poverty line.
--Mike
Maybe we need a "Let's fix Social Security" thread.
Ginger, along that path, madness waits…..
Only way to fix anything financial these days,
would be to limit Congress to only spending on "Specific" items....
Does anyone believe that is even possible....
A few comments...
Ginger, be careful what you ask for.
John: The actual amount of money that people (who aren't currently getting checks) paid into the system isn't something I can find. The government says it has $13 trillion more than it has paid out in accumulated cash but that is all in "special treasury bonds" not actual cash. Those beasts don't count as national debt. The actual unfunded liability for people in the system is $66 trillion but that is just an accounting number since millions of people are paying into the system every day.
Mike, I know for a fact that I'd would have four or five times the income if all of my social security payments over six decades went into Fidelity than if they went into the Social Security Trust Fund. As for "guaranteed by the government" yeah, I believe that like I believe the North Koreans landed on Mars last year.
Andy: Money in the marketplace is "at risk" but so is "money the government is holding for you". Certainly, I had a lot more money when the market was 37,000 than I do now, but over the last 100 years the average trend is up 12% a year. The way to manage that is to keep a chunk in cash that you can pull out no matter what the market is doing and restock the cash part from the stock market fund when the fund is high.
Mike: my original proposal (which I still back) is to take the 25 best stock funds and let people pick one of those. They'll do fine, and the current IRA rules work well to controls ins and outs. I did forget to mention that I would not allow early/hardship withdrawals from the "social security IRA" funds I set up.
Those who did not save for retirement but have reached that point are just screwed. Sorry, but you made your bed and you cannot expect the taxpayer to cover your bad decisions.
I also support removing the cap on wealthy people paying social security, and I'd also make a more basic change, stating that capital gains over one million in a year be taxed as ordinary income and be subject to Social Security.
Yes:
Capital gains being taxed as ordinary income
Get rid of the carried interest loophole
Limit deductions to no more than 25% of your income.
Non-medical deductions, okay, but I have seen people with hospital bills that exceeded 100% of their income.
Capital gains OVER A MILLION as ordinary income, not all capital gains.
>> I have seen people with hospital bills that exceeded 100% of their income.
Been there, done that. Our top family medical expenses were more than 200% of income one year. A very tough year -- and very glad to at least have the tax code be understanding of our situation. It was one of the few things that went right that year!
--Mike
Heard that, for each dollar collected for Social Security, seventy seven cents goes to administration.
Also remember hearing statistics. When first implemented, there were something like seventeen people paying in to Social Security for each recipient. Now, it's down to less than four people paying in for each recipient and may be down to less than three.
If these things I've heard are factual (and I'll be the first one to say that's one heckuva BIIIG "If"), it's worrisome.
How to fix it? If I were to present the things I've heard about the obstacles to doing so, I would (MOST rightly) be fed to Alligators. 
I can't see how administration could possibly be that high, SS is a big big expense even on the scale of the federal government, and it doesn't really employ that many people.
On the other hand, the in vs. out ratio is a real problem. 65 was picked as the retirement age because it was roughly the median age of death (i.e. half the people never collected a dime in retirement benefits on account of dying prior to reaching retirement). Median age of death is now something like 80, and lots of people retire at 62.
I am 71, have been collecting social security checks for five years, expect to do so at least 9 more years. Social Security is less than my ADB check which most people would consider shockingly pitiful, but my retirement account is a few times the combination of the two.
The trouble with student loans, social security, and everything else in the federal government is not the specific issue in question. Its the massive administrative weight behind it. No one system can be switched off, because the weight of the whole system pushes back.
A top down solution simply isn't possible. Nor should it be. All meaningful change should start from the ground up. And it begins with pulling the tigers teeth. Defund small superfluous programs. Start eradicating bills and laws instead of writing 1,000's of pages of new ones every year. Government is like Charmin TP: Less is More.
Only by supporting candidates and causes of this nature will we ever have a chance of tamming the beast that is the Federal Gov.
Two things
The 'administration' behind SS is probably similar to the UK and it' Civil Service.
Some people are crucial and are needed to do the work.
Some people just seem to have a job to move paper around.... and the need to keep them employed by Unions/The powers that be means the rules will never be changed.
Question - Do SS contributions (into the 'pot') ever cease?
Our equivalent in the UK, national insurance ceases at state pension age (which is now 65/66 ish) - and so people over the age who still work (as NI isn't charged on investment or pension income) just pay Tax and there is no Employee NI (although Employers still pay Employer NI) - and some people have suggested that everyone should pay if they exceed the fairly low earned income threshold.
In effect if NI and income tax was merged, it would probably save alot of money in admin AND raise more money.... but who would vote for that?
Having watched every episode of Yes Minister (and its specials and sequels) I know that the civil service of both nations is primarily concerned about the health of the civil service, not the health of the taxpayers.
Start eradicating bills and laws instead of writing 1,000's of pages of new ones every year.
Sure. Start with the tax code and work out.
By the way, every law/ code/ regulation starts for a reason. Though some reasons are bad ones.
For example, lots of OSHA rules (and ACGIH standards) start with someone dying. So no running with scissors, wear a hard hat all the time on the job, etc.
I was thinking more on the line of starting with, for example, a local law proposal that would expand and codify licenses for hairdressers.
And maybe reducing federal subsidies of state colleges.
I leave the big stuff to wiser men than me.
Having spent a couple years as a construction electrician, I have a little first-hand knowledge of the world of OSHA regulations.
One foreman told me that, in his opinion, the only thing we could do that wouldn't violate SOME regulation would be to be in a safety meeting when an OSHA inspector came by.
Of course, that may well have been because he had to work with a rather scatterbrained guy on the Autism spectrum (me*). Still, it always felt like there were regulations on regulations about how to interpret regulations.
(*It is kinda embarassing, but yeah, I did screw up a lot; things nerotypical people wouldn't have based on common sense... )
Jeff, as someone that worked for YEARS as a "safety inspector" even that wouldn't do it if I was in a bad mood.
That said, I've had jobs where OSHA came in, had their opening conference, wandered a bit and left.
They look at the "Special Emphasis" big 4 first. Falls from elevations, caught between, electrocution and struck by. If you're sandblasting; Silica. If you are on the river/ ocean: drowning & water rescue.
true story, years ago I was recruited by Federal OSHA (DC division) to come work there as a "jump out" inspector. I refused because I wanted more money. So I told them I wanted 5% of everything I fined. I was SURE I could fine any job over $100k a day I spent poking around.
For example, do temporary electrical panels have all the blanks in place? What torque is on the connectors? Welding cables have the last 6 feet in perfect condition? Wire guard rails not sag too much when I lean on them? Steps at all changes of elevations? EVERY breaker in your temporary panel is labelled?
Seriously, being perfect is neigh impossible. But if they don't see serious issues right away they will leave.
Second true story. I was safety at a project renovating the IN USE munitions docks at Charleston Naval Weapons Station. So OSHA wanders up with a CIH (a big deal). So I ask for an opening conference with my subcontractors representatives present (of course the subs WORKERS are improving their stuff whilst we are chatting). The FIRST thing they ask is are you sandblasting? Yes. Can we see the medical records? Sure. Here is the pile with fit testing and such in neat folders (you wouldn't believe how much the subs whined about that before). 5 minutes while OSHA paws through the 10" pile of medical records. So NOW they move in for the kill. What media are you using? Black Beauty slag. How did you decide on that? Oh, I read the OSHA and NIOSH research and decided based on that. Let me get you the printouts. I whip out a 3" pile of NIOHS and OSHA printouts and plunk it in front of them.
OSHA gets up, shakes everyone's hands, gets back in their car, and leaves. Because we had shown that we cared and did the work. Could they have hammered us if they wanted to? Sure.
Had one foreman who spent almost all of his free time going to extremist left-wing websites, looking for "Proof" of his various left-wing theories (which he'd then expound on at jobsites to no end with EVERYONE he could).
Anyhow, he did that with one soil inspector (yes, a real regulations enforcement job) who was as far right-wing as this foreman was left-wing.
Yeah.
Three guesses how THAT went and where things went from there...
Anyhow, long story short (too late), my foreman gave up with the inspector and every inspection after that had me deal with the guy.
Only once did anything remotely political come up; when a car drove by with the stereo blasting rap super loud, I casually told the inspector, "You know, as much as that annoys me, my respect for the First Amendment tells me that he has the right to express himself with that garbage. I just wish he had enough respect for the First Amendment as to not make me have to listen to it."
Between that and asking the inspector for his expertice on what would be the best way to compact the trench backfill I had to do (and FOLLOWING his recommendations to the letter), he signed off on my trench backfills without testing them. Sped up my employers work there immeasurably.
(As a side note, I heard later that there was improper sealing of the ground before a parking lot was paved there and when the first rains hit the lot, the soil absorbed so much of it that it buckled the whole thing. The entire lot had to be completely redone. Regraded, repaved, the whole nine yards...)