What SS should look like
It's easy to crtiticize. It's much harder to outline what you would like to see in a policy. What would I like to see in a Social Security program?
In an anarcho-capitalist world, the question doesn't make sense. The obvious problem with leaving retirement pensions to each person on their own is that poor people wouldn't have anything. Or would they? In a minarchist world, same problem.
In a minarchist world with safety nets, you would have flat or progressive taxes that provided means-tested support. Or perhaps a national sales tax that naturally favored savings over spending. The sales tax would be regressive, so maybe you exempt food and medicine, but that begins to take us down the road away from simplicity and into social engineering.
In the existing world, it seems misleading to have two separate taxes, federal income and FICA, on the same wages, especially since the "excess" part of the FICA ends up getting mixed in with the income taxes to be spent on whatever the president and congress want. So I would begin with combining the two and eliminating the bogus "employer match". From there, I would implement the same tax I have written about before: generous personal exemptions of $12000 per adult and $6000 per child, 25% flat marginal rates on everything above that, no credits for mortgages, massive simplification of the rest of the code, no corporate taxes, no or at least very low capital gains taxes, etc.
I would also not have separate welfare programs for older and younger people. Instead, I would have one program that provides a means-tested basic income for everyone under 18 or over some older age (say, 65, but gradually moving upwards) or non means-tested for those with certain mental or physical limitations (like MD or schizophrenia). For people without those limitations (healthy, between 18 and 65), there would have to be some sort of quid pro quo, like work, short-term or lifetime caps, or requirements to seek and accept employment.
That doesn't sound much different than what we have now? To the contrary, the existing system is run out of dozens of offices (food stamps from the Dept. of Ag., public housing from "HUD", retirement income from the SSA, Medicare from one office, Medicaid from another, etc.). SS is very regressive, whereas I would make it progressive (poorer people would not pay in as much as wealthier people, and wealthier people would never receive any benefits). I abandon the deceitful notion that it is forced savings for yourself in favor of a system in which it is clear that current workers are paying for retired workers. I also abandon the taxation of SS "benefits". I would also begin to gradually sunset the whole hodgepodge in favor of a modern successor to the mutual aid societies.
Notice that I haven't recommended "privatizing" (except as the final phase), nor have I mentioned "ownership" or "personal accounts". The system of "forced savings" in the current scheme is a joke, and I am not comfortable with forcing people to do things that are for their own good. For one thing, it is arguable whether it is in fact for one's own good to force him to spend 14% of his current income on future consumption when he might in fact need it more at present for something that might provide much more future income. An 18 year old working minimum wage is probably better off spending it on college than putting it in the stock market. At 25, you might be better off spending it on a down payment for a house. At 30, you might be better off putting away money for your kids.
That said, I am in favor of choking off the supply to the federal government, and if we can divert 4% out of the 14% you send in the form of FICA, well, at least it's a start. Now if Bush and the Republicans can stop the madness (here, here, and here, showing that it is madness of their own making), maybe we can see an economy that has a little higher average growth than we've seen over the past 50 years.
In an anarcho-capitalist world, the question doesn't make sense. The obvious problem with leaving retirement pensions to each person on their own is that poor people wouldn't have anything. Or would they? In a minarchist world, same problem.
In a minarchist world with safety nets, you would have flat or progressive taxes that provided means-tested support. Or perhaps a national sales tax that naturally favored savings over spending. The sales tax would be regressive, so maybe you exempt food and medicine, but that begins to take us down the road away from simplicity and into social engineering.
In the existing world, it seems misleading to have two separate taxes, federal income and FICA, on the same wages, especially since the "excess" part of the FICA ends up getting mixed in with the income taxes to be spent on whatever the president and congress want. So I would begin with combining the two and eliminating the bogus "employer match". From there, I would implement the same tax I have written about before: generous personal exemptions of $12000 per adult and $6000 per child, 25% flat marginal rates on everything above that, no credits for mortgages, massive simplification of the rest of the code, no corporate taxes, no or at least very low capital gains taxes, etc.
I would also not have separate welfare programs for older and younger people. Instead, I would have one program that provides a means-tested basic income for everyone under 18 or over some older age (say, 65, but gradually moving upwards) or non means-tested for those with certain mental or physical limitations (like MD or schizophrenia). For people without those limitations (healthy, between 18 and 65), there would have to be some sort of quid pro quo, like work, short-term or lifetime caps, or requirements to seek and accept employment.
That doesn't sound much different than what we have now? To the contrary, the existing system is run out of dozens of offices (food stamps from the Dept. of Ag., public housing from "HUD", retirement income from the SSA, Medicare from one office, Medicaid from another, etc.). SS is very regressive, whereas I would make it progressive (poorer people would not pay in as much as wealthier people, and wealthier people would never receive any benefits). I abandon the deceitful notion that it is forced savings for yourself in favor of a system in which it is clear that current workers are paying for retired workers. I also abandon the taxation of SS "benefits". I would also begin to gradually sunset the whole hodgepodge in favor of a modern successor to the mutual aid societies.
Notice that I haven't recommended "privatizing" (except as the final phase), nor have I mentioned "ownership" or "personal accounts". The system of "forced savings" in the current scheme is a joke, and I am not comfortable with forcing people to do things that are for their own good. For one thing, it is arguable whether it is in fact for one's own good to force him to spend 14% of his current income on future consumption when he might in fact need it more at present for something that might provide much more future income. An 18 year old working minimum wage is probably better off spending it on college than putting it in the stock market. At 25, you might be better off spending it on a down payment for a house. At 30, you might be better off putting away money for your kids.
That said, I am in favor of choking off the supply to the federal government, and if we can divert 4% out of the 14% you send in the form of FICA, well, at least it's a start. Now if Bush and the Republicans can stop the madness (here, here, and here, showing that it is madness of their own making), maybe we can see an economy that has a little higher average growth than we've seen over the past 50 years.
Labels: politics
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