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Tuesday, June 21, 2005
Reader mail: Social security
Some days I am flooded with things to blog. Other days, I get to address moldy reader mail. Here's one on Social Security:...The main issue of opponents to the "Tiger Woods" solution is that now Social Security benefits are tied to how much you put in yourself. OTOH, it's my understanding, that I won't get anything close to what I put in anyway. Since you seem to be good with da maff (Ali G reference, if you get it), I thought you might like the challenge of trying to overhaul Social Security.
BTW, it's my position that SS would be saved if the gov't would just stop using it as a general fund for tax relief. Right now, the gov't makes only vague distinctions between money set aside for SS and that in the general tax fund. They keep borrowing from SS to pay for other gov't projects.
Next topic -- what will you get out of Social Security? Not much, unless you get your hinder out of the jungle and start working for a living again. The median benefits for my emailer and his wife would amount to about $34,000 jointly. Probably more, because the key number is the replacement rate: how much of your pre-retirement income will be replaced by Social Security? Social Security currently promises to replace about 36% of your pre-retirement income.
Last topic -- using Social Security to balance accounts. You can leave Social Security out of the argument entirely. Running massive structural deficits to fund tax cuts for the rich is bad economics. Bush has created a huge revenue problem, which he has exacerbated with reckless spending. He uses Social Security to mask the enormity of the hole he is digging for our children. While politicians ought not engage in such deception, I don't view it as a Social Security problem.
You also asked about a solution. My solution is far from simple, but it doesn't involve Social Security. Step one is fixing health care, including Medicare and Medicaid, which are far greater fiscal threats than Social Security. We have to get health care spending under control or face real disaster. The economic benefits to addressing health care spending could potentially fill in the projected Social Security funding shortfall by boosting overall economic output.
