Creative thinking to make Social Security better … would liberals ever allow it?

Nobody (of consequence) is proposing eliminating Social Security or proposing cutting benefits for current recipients. But the fact is we must do something to make Social Security not only actuarially solvent for another seventy-five years, but permanently sustainable. 

It is also a fact, like it or not, that Americans are addicted to Social Security and no matter what, the vast majority of Americans will never save enough (many will not be able to) or take sufficient responsibility in planning for their retirement income. So, Social Security is here to stay, period. Having acknowledged that let’s move on to designing a program that works fairly for everyone. 

This does not automatically mean raising taxes (although that is a simple solution) or raising them on only a select group of Americans. And it should not preclude investing some of the trust in the equity markets. Investing a portion of the trust in stocks and bonds can raise the interest earned by the trust and no matter what, the benefits are still guaranteed by the full faith and credit of the federal government. Ironically, many seniors believe Congress stole the Social Security trust money so what have we to lose? 😁

Below is a new approach to consider. Convert the benefit (for future beneficiaries) to a fixed amount designed to meet an above poverty level goal. Conceivably this would allow a lowering of payroll taxes thus freeing up money for current pay and savings. It would also send a clear signal that a known income level will be available, but there is more you have to do. By the way, the 2016 maximum Social Security benefit is $31,668.

And we can make Social Security work better at combating poverty in old age. Simply consider this: About 9.5% of Americans aged 65+ have incomes below the official poverty threshold, which is $11,367 for a single person over age 65. The average Social Security retirement benefit in 2015 was $16,104, about 42% above the poverty threshold. In other words, Social Security could pay every retiree a poverty-level benefit, taking the over-65 poverty rate from nearly 10% to nearly 0%, and still have money left over.

Given my druthers, that’s pretty much what I’d do: shift Social Security toward the approach used in New Zealand – and to lesser degrees the UK, Australia and Canada – and have the program pay a flat dollar benefit designed to lift nearly every senior year out of poverty. On top of that, people would need to save for retirement on their own – and we’d give them the tools to do that by expanding access to retirement plans and automatically enrolling every worker in his employer’s 401(k). I’d also eliminate the Social Security payroll tax at age 62, a step that would encourage delayed retirement.

Source: How Much Does Social Security Really Reduce Poverty?


27 replies »

  1. The essenence of this piece is that we will give old voters old-age insurance, and give new voters a welfare program. Politicians hope that if we keep the same name, no one will know the difference.

    This is a terrible idea. We are going to reward those who put in the least at the expense of those who put in the most. Somehow I don’t think that is the best idea.


  2. So Paul Ryan is not a person “of consequence’?? Is the 31,668 maximum per person?
    Paul Ryan is also targeting Medicaid and Medicare to be eliminated (or nearly so)


    • The $31,688 maximum is for a person who is married, where she paid in the maximum for 35 years, and where she and her spouse waited until normal retirement age to commence benefits.

      There is no recent proposal out there, that I know of, from Paul Ryan that would effect a cut in benefits, unless you believe an adjustment in future cola provisions to be a “cut”.


    • So, you are predicting Paul Ryan is going to propose and support a cut in the nominal dollar amount of social security benefits currently in a payout status? I’ll take that bet anyday.


      • I greatly respect your knowledge and intelligence, Mr. Quinn, but you said the same thing about the repeal of the ACA and you said “Hillary By Default”. The only thing you seemed to ignore was SCOTUS ending the Voting Rights Act and the resulting wide-spread Teapublikkkan voter suppression that gave us Trump.


      • Your right about Hillary by default. However, on November I posted on Facebook that Trump would win and why. I at least partially redeemed myself. And the ACA will not be repealed they may tweak it, but they can’t stand the heat of creating turmoil for millions of Americans and if they are they are that stupid, Republican control will be short lived. This was not a vote for Trump it was a vote of frustration and to some extent against Clinton.


      • The facts are as follows: for nearly 6 years Republican congressional obstructionism created huge dissatisfaction with Washington. The congressional Republicans created a big mess and then ran against the mess that they themselves had created. A clever strategy because most voters don’t know that the Washington paralysis was created by Republicans. Yes, it was a frustrated vote for change and when the Trump supporters figure out that Trump cannot “bring back their jobs” from robotics, their support will dissolve because they have been scammed like the students at Trump University. Trump gets credit for realizing that millions of voters are misinformed suckers for a carnival barker’s snake oil sales pitch. So sad.


      • Mr Wilson, please confirm again who is obstructionist, for example, why we haven’t had a budget since 2010? I think you will find that it is the D’s who won’t compromise, and the #1 culprit is Harry Reid. Let’s see in 2017 whether you get the same result with trump instead of obama and schumer instead of Reid.


      • Jack, did you miss that statement from Mitch McConnell shortly after the inauguration in 2009 that he was dedicating the next four years to making Obama a one term president? I guess you’d like to forget that?


      • No, but amazingly, it was no worse than President Obama’s comments that dismissed any Republican input – recovery, health reform, Dodd frank, etc. So, at least McConnell was honest and forthright. Your suggestion that republicans were the only obstructionists is a bad joke – as McConnell only had leadership starting in 2015 – just in time for President Obama to ignore congress and deploy his “phone and his pen” – ignoring constitutional limits on presidential authority.

        Again, let’s see how it goes with the 2017 changes.


      • You are obviously a far right ideologue ignoring the facts of history. The Republican dominated congress refused to take action on any issue – war or peace. Obama used his executive authority to get things done in the absence of that obstructionism. Nothing that Obama did was unconstitutional – tell me the number of executive orders issued by Obama compared to the number issued by George (the dumb one) Bush.
        Warped minds like yours resulted in “president” Trump. This nation is about to be ruled by white trailer trash, neo Nazis, racists, bigots, white supremacists and tattooed bikers. I don’t know which group you represent?


      • Well, the courts have started to rule on his executive orders – and, starting with immigration, he’s losing in court. In fact, it is because President Obama more than pushed the limits on executive power that D’s (and R’s) are concerned Trump will follow his example. It is why many don’t believe Congress can check his stupidity.

        And, if you think trump is a nazi, racist, white supremacist, etc., just don’t forget he was a democrat all his adult life until maybe 24 months ago. He supported Hillary in her 2008 campaign for president. Robert Byrd and other Democrats must have taught him well. By the way, I didn’t vote for Trump, not in the primary and not in the general election. The only way he got elected is because the D’s ran a joke of a candidate – so, look in the mirror – don’t blame me.


      • Right wing courts rule against Obama – what a surprise!? – Prepare for a return to the 1950’s after Trump stacks the SCOTUS – only wealthy women can get abortions and therefore welfare roles increase – Republicans will then slash food stamps and starve the bastard children – minorities are not allowed to vote – recipients of Social Security are Paul Ryan’s “takers” – in the Mutt Robme world, if you are not wealthy, you are lazy and you are a Paul Ryan “taker” – Republican domination of our government will lead to the elimination of Medicaid, desecration of Medicare and privatization of Social Security. The Republican mantra of “only the wealthy should survive” will be rampant and the law of the land. Your views are totally shameful.


      • My views are shameful? Which ones? When I confirmed that Trump was stupid, or when I reconfirmed he was a Democrat? When I confirmed that I would never vote for Trump, and never did, or when I confirmed that Clinton appointees rule against Obama executive orders?

        Or perhaps when I confirmed democrats are the historical party of racists, like former Democrat senator Byrd. Again, look in the mirror if you want to see who is to blame for Trump.

        I always find it humorous to see you who scream for tolerance give up all perspective when an election, or a court decision doesn’t go your way. Again, look in the mirror if you want to see intolerance.


    • Nobody is proposing cutting benefits for current beneficiaries or anyone near retirement for that matter. The fact is these programs are heading for insolvency and are not sustainable. The Trustees have been warning of the coming problems and urging action sooner rather than later for decades. Those warnings have been ignored by successive Congresses and now correcting the problems is more difficult.

      The Obama administration had the perfect opportunity the first two years and did nothing and has barely talked about it for the last six. Social Security was hardly mentioned during the recent election.

      You cannot make SS solvent and sustainable and expand it merely by raising the taxable wage cap, that doesn’t even cover the 75 year shortfall.


    • Actually, Trump got fewer voters than Romney, but Hillary got even less, about 5 million less than Obama in 2012. trump got a slightly higher percentage of white voters, substantially more black and Hispanic voters compared to Romney in 2012. Hillary killed it in cosmopolitan locations but trump outdid her in the suburbs, the exurbs and rural areas. Her decision not to do a lot of campaigning in MI and WI were fateful. Many former two time Obama voters went for trump – that’s how badly she stunk it up. Had most any other republican in the race captured the nomination, someone sane like kasich, and it would have been a landslide loss for D’s in terms of presidential race.

      I feel confident in saying that Trump suppressed mainstream republican voters as much as Hillary suppressed democrat voters, maybe even more.


    • Paul Ryan hasn’t proposed anything about Social Security in 6 years. He withdrew the personal accounts concept from his Road Map for America legislation, and his interest hasn’t risen since. It is an urban myth that is a mainstay of liberal fundraisers, and little more.


  3. Ok by me – starting with those who enter the workforce tomorrow. Else it is just another change designed to erode benefits for those who paid taxes all their working lives – a la 1983 changes, income based part b surcharges, 1993 removal of cap on hi taxes, etc.

    The only reasonable solution is to keep the current allocations of burden the same and raise taxation – so taxes are raised on everyone – including beneficiaries – leaving everyone in the same relative position. Anything else will trigger calls to favor this group or that group. Foe example, Krugman and Warren have suggested increased taxes based on rates and job classification, because whites and white collar workers have longer life expectancies – but of course, they would never recommend that for women. Then, if you like, give people a choice so a person could elect to lower his benefit to 76% of the promised amount to forego the tax increase.


    • Social Security is a welfare program, period. I will have everything that I paid in taxes back in 4 years and my sister who made thousands more in income and is getting more than double what I get, will have everything paid in taxes back in 8 years. My mother who is 86 has collected $165,100 in 23 years, she got everything back that was paid in taxes in 5 years. So, when people say it is my money, I paid and my employer paid taxes for years, it is not totally correct We need to raise the tax rate .2% each year on everyone. In 19 years it will be at 10% for employee and employer, problem solved no cuts in 2034. It is a simple math problem and it can be solved. Our government has failed us by not raising the SS tax rate since 1990.


      • No. Need to raise taxes on beneficiaries as well AND act to preclude Congress from changing benefits, then give people opportunity to opt out of higher taxes in exchange for reduced benefits (down to 76% of promised benefit).


    • I have no problem paying taxes on my SS benefit, it would be $2,100 per year. But if DT gets his tax plan passed and the Standard deduction goes to $30,000 for married couples and there is still a personal exemption of $4,000 it would be zero federal tax on my $34,000 total income. If the personal exemption goes away under the Trump plan it would only be $600 per year. I think the rich would opt for the 76% and skip the additional tax


  4. We have already seen plenty of news stories about people not saving enough for retirement. So, lowering the tax is the wrong fix and many will not save the additional income. I think the best fix is raise the tax ,2% each year until both employee and employer pay 10%, We need to face the fact that SS is a welfare program because low income workers making less than $25,000 per year get a much bigger benefit for the taxes paid. And even if they saved 10% it would not amount to much when you factor in inflation. I only had employment for 35 years and if I had saved 10%, the total amount would have been $32,000. 51% of workers make less than $30,000, so the best way to fund Social Security is increase the tax on everyone to 10%. If not a VAT is coming to the US within 18 years.


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