Here's a chuckle for you:
Social Security has come to be known as the "third rail" of politics. In other words, a politician's career will die a horrible death if (s)he so much as touches this most sacrosanct of government programs. Fortunately for me (and perhaps for the nation in general), I am not a politician and never plan to run for ANY office, so I can say whatever I want without fear of being booted from office.
Way back in the 1930's, the Roosevelt administration pushed through a whole boatload of legislation to set up a "safety net" for American citizens, especially those that were hit the hardest by the Great Depression. One of the biggest parts of this was the Social Security Act in 1935. Originally, it called for a small percentage of everyone's income to be taxed, and their employers had to contribute a matching amount.
When a person reached the retirement age of 65, they could then draw a monthly stipend to augment whatever savings and other income they might have, allowing for a better standard of living for at-risk senior citizens. It was not meant to be a sole, or even primary, source of income. There were provisions for widows and minor children, but there was no such thing as "Disability Income", "Medicare", and the like. These were all added later.
In 2013, Social Security, Medicare, and related expenditures by the Federal Government totaled a whopping 38% of the Federal Budget. As the "baby boomer" generation continues to age and retire, that number will only grow larger.
One of the major drawbacks to this program is the disincentive it provided to saving for retirement, especially among lower-income workers. Why scrimp and save and do without, when the government will pay for your retirement? Savings, even among those with robust incomes, has decreased dramatically over the years.
In my opinion, it is time to do away with this whole system. It is obscenely bloated, horribly corrupt, and a huge drain on society. Young people today are paying over 15% of their income, half directly in the form of a tax, and half paid by their employer from money that could and should otherwise be paid directly to the worker. Yet, by the time these workers reach "retirement age", there will be little available for them to draw on themselves.
Here is my proposal:
- Incentivise direct retirement savings by expanding the IRA and 401k programs, allowing for full tax deductions for any amount placed into some sort of retirement account, removing restrictions and limits.
- Immediately eliminate the FICA tax withholding from paychecks. STRONGLY encourage employers to take the share that they had been paying to FICA and pay it directly to the employee. Create incentives for employers to do this rather than to pocket the savings for themselves, and perhaps create penalties for employers that do not. (I am not so sure about that last part; I have never been a fan of forcing businesses to spend or not spend in any way.)
- Stop issuing Social Security Numbers. They will no longer be needed, and their role in identity theft will soon disappear.
- Since doing away with this huge program will throw a LOT of federally employed accountants and bookkeepers out of work, create temporary jobs for some of them to handle the following calculations and disbursements.
- Senior citizens already retired and receiving benefits will continue to receive them as usual. They worked their whole lives for them, and it would be a gross injustice to yank it away from them.
- Immediately stop all other "benefit payments", such as SSDI, Supplemental Security Income, and the like.
- For each non-retired worker that has paid into the system but not received any benefits, treat what (s)he has paid in (including employer matching funds) as a series of savings account deposits. A total amount should be calculated, including accrued interest at an equitable rate. That total amount should be paid directly to that employee as a one-time disbursement. Tax free, of course, as it simply a refund of a tax already paid. Older workers, especially, that have paid in a substantial amount over the years, should be encouraged to stash this money in a retirement fund of some sort.
There are obviously holes in this plan. For instance, funding the continuing payments mentioned in section 5. Better brains than mine could fine-tune this plan.
Something similar needs to be done with Medicare, but I wouldn't know where to even begin.
The biggest obstacle, of course, will be finding some brave politician that is willing to risk political suicide by working this up and presenting it as proposed legislation. Something tells me that will never happen.
Oh well, it was fun to think about it, anyway.