Sunset The Social Security Program
Retire Social Security
There are people who believe that the system is unsavable. They have an argument that is worth hearing. There are some that want to end the system because they believe it is unconstitutional. Others believe that it is mathematically flawed. For whatever reason, people wish to end the system, and we give them space to outline how they propose to do it.
We tend to believe that we should fix the structural flaws in the system before we have such a discussion.
We believe that the costs to dismantle Social Security will be significant and should be shared across the entire population. If the distribution of costs are uneven, the inequity of the solution will manifest itself overtime at the ballot box. As demographics of inequity change, the system will face continual modification where one majority puts itself ahead of the minority. That will continue until a voting block emerges that simply says end it. When that happens, the end will be swift and unplanned. Our blog "Commentary on Plans Which End Social Security" lists aspects of plans that we look for.
The worst of these plans are the ones which preserve the system for current beneficiaries or those near retirement. Even if it is possible to cobble together voting blocks to support these plans, the voting block will be unsustainable. The voting block of those harmed by this approach will grow and the voting block of people who continue to get benefits will shrink. This solution can only end in significant inter-generational tension.
The Larsen Plan
This version of the phase-out is probably the best that we have seen, please see our disclosure. This plan will phase-out Social Security by reducing some benefits and increasing support from all tax payers. The plan ends payroll taxes. The Trust Fund would pay-out accumulated resources. Once the Trust Fund is depleted, Social Security would pay means tested benefits from the General Budget using General Revenues.
- This plan ends the FICA-portion of payroll taxes. Payroll taxes continue at a substantially lower rate.
- This plan would provide a fixed payment to every means-tested retiree. This payment would be higher than what many lower-income people have today.
- This plan would change the formula for increasing benefits. This plan would use the change in the Average Wage Growth instead of the cost of living adjustment used today. In this way, all needy are treated equal and the benefit stays current with the standard of living.
- The plan would increase the budgetary support to provide assistance to those in need. They are Food Stamps, Medicaid and Supplemental Security Income (SSI). These programs do not discriminate based on age. Any indigent American may apply for assistance under these programs. Everyone must do the best they can to ensure their own well being before asking others
- There will be an increase in general budget spending to support these programs. The tax base used to support these programs is already in place. No longer will one segment of America be required to support the elderly alone. If Social Security was meant to be an anti poverty program, then all Americans should contribute.
- In terms of taxes, Federal income taxes will rise but the elimination of Social Security Old Age Survivors Taxes will more than offset any increase.
Full Disclosure : Bill Larsen does not work with Fix Social Security Now, but he has given us a wealth of information. We don't agree with his conclusions, but the information he has provided is simply higher quality than any other source that we have found.
Ludwig Von Mises Institute
How To Eliminate Social Security(View Plan)
This plan will likely lead to an unstable end for Social Security. While it calls for the system to be retired over a long period of time, the costs of unwinding the system are disportionately fixed on younger workers. The system will last until these dispossessed workers become a majority. At which point, they will vote the system away over a much shorter period of time.
On the plus side, the system does incorporate some costs for those near retirement. It includes incentives to get people to work longer.
Candidate U.S. House of Representatives IA-1
Getting The Debate Started(View Plan)
Like our plan, it is a framework rather than a plan which is designed to start the conversation. It is based on the belief that "Social Security is a program with a very scary future. " And we do not doubt that he is right.
This plan distributes the pain of the dissolving the system much better than most. It reshapes the distribution and cost of the system so that beneficiaries today get less. Future generations will get even less. And distant generations will get nothing. While future generations are getting less, the cost to participate is dropping.
As observation, the country will not really save much if we transition people from Social Security to public assistance. While we do not like means-testing over a prolonged period, it is an option that we would consider as part of retiring the system. Separately, we would like to see some incentives created to work longer. The in-between generation has a serious problem. It has contributed more to the system than anyother generation. The cost to participate today is over $500,000 in lost savings for the average American. The retirement of this system should recognize those who have paid 12.4% for their entire lives.