Two things are obvious about Social Security; tens of millions of Americans depend and the program is in desperate need of reform. Therefore the $1 trillion suggestion is “how do we fix Social Security?”
The question is an urgent one because 97% of elderly Americans receive Social Security according to the Center on Budget and Policy Priorities. It is also urgent because Social Security obviously works.
The Center estimated that 1.1 million children, 5.8 million adults between 18 and 64 and 14.448 million seniors were lifted out of poverty Social Security. That’s a total of 22.426 million people which makes Social Security the most successful antipoverty program in US history.
Suggestions for Fixing Social Security
Here are my suggestions for improving Social Security:
- Raise the Social Security retirement age to 70. Social Security is an antipoverty program not free income for able bodied 67 year olds that want to cruise around the country in a motorhome. Persons under 70 who cannot work can be covered by Social Security disability. Those who can should be working and paying taxes not living the good life at future generations’ expense.
- Let’s end the charade that Social Security is retirement savings, and the practice of basing benefits on the amount “paid in.” Instead offer a simple flat benefit of $2,000 a month to every American over 70. This would help people out of poverty, because it would guarantee an income of $24,000 a year. In June 2016, the average Social Security benefit was $1,350 a month which translated to an income of $16,000 a year slightly over the federal poverty line.
- The Social Security payment will be based on a person’s current taxable income not what he paid into the program in the past. This way it will match present needs and not past earnings.
- The benefit will be reduced by $10 for every $100 in taxable income over $20,000 a person has. For example a person that receives a $500 a month pension would receive $1,500 in Social Security.
- The benefit will be adjusted for inflation by an artificial intelligence every year to avoid political controversy.
- The Social Security Disability payment will operate in the same as Social Security retirement. This means every disabled American would receive a $2,000 Social Security Payment each month.
- The first $2,000 a month persons earn from employment, rental properties or business activities will not be regarded as taxable income for Social Security purposes. That would enable many seniors to work while collecting Social Security.
- It would be illegal to garnish Social Security to collect unpaid taxes or student loans.
- Eliminate the $118,000 income cap for the Social Security tax. Make the rich pay the Social Security tax on all of their income. Under the present system America’s richest man Bill Gates pays just $7,316 in Social Security taxes; even though his net worth is estimated at $86.5 billion by Forbes. Were Gates to pay Social Security tax at 6.2% Uncle Sam would get another $5.363 billion a year to fund Social Security. Gates is just one man; there are around 540 billionaires; and thousands of millionaires in the United States who would be paying far more under such a tax extension. The present Social Security tax system is illogical and unfair.
- If the contention that Social Security is running out of money is true, simply collecting the tax on all personal income would be a great way to cover funding short falls. Since the rich enjoy the stability created by Social Security they should be happy to pay. A 6.2% tax would be preferable to rioting, and looting or confiscation of their money. It would certainly be cheaper than building personal fortresses; and hiring private armies, to protect their properties from mobs of desperate poor people.
- If basic income were implemented the $1,000 a month basic income payment would be in addition to Social Security.
- Set up some sort of artificial intelligence based system for processing and approving Social Security applications. Goldman Sachs’ Marcus loan application solution might be a good model for this.
Social Security is Successful Let’s Keep it That way
Social Security is one of the most efficient and successful government programs in history. It has administrative costs of just .7% yet it lifted 22.4 million Americans out of poverty, so expanding it should be a priority.
Reform or expansion of Social Security is popular but it will be a difficult battle. Politicians and bureaucrats (including many Democrats) hate Social Security because it successfully serves tens of millions of people without excessive bureaucracy or government waste.
There are few ways politicians can make money off of Social Security, which is one reason why they rarely talk about it. Many Republicans fear Social Security because it disproves their mythologies of individual reliance and rugged individualism.
We will also have to avoid potentially destructive reforms such as means testing of Social Security beneficiaries. That’s really a make work program for bureaucrats not a money-saving strategy. Hiring an army of paper shufflers and giving them the power to disrupt average citizens’ lives will only waste more money and make lots of work for lawyers.
Fixing Social Security is a vital task for America’s future we need to start work on it now if we want to avoid an economic catastrophe in the near future.