Tuesday, September 6, 2011
Milton Friedman: "The Social Security Myth": Why we need Pension Reform
If you look at it, Social Security in some senses is a myth and perhaps has the wrong title and I'm not saying this as someone who's against Social Security. I do believe that we as a country should have some floor of Standard of Living that people can count on. When they are no longer able to work as Senior Citizens. Or aren't able to work enough to support themselves in their work years, the disabled to use as an example. But Social Security itself is only as secure as the Federal Government allows it to be by how they managed it. Which is a big problem right there, we have to rely on them not to waste the taxes that we pay into it. On other Government Spending, as well as reforming it before it goes bankrupt. There's no such thing as a "Social Security Lock Box", that sure as hell is a myth. Which is a term that came about during the Bush-Gore Presidential Election of 2000. Perhaps what we should call Social Security instead, is Basic Living or Pension Insurance because thats basically what it is. Its not a Pension Program but a Pension Insurance Program, money that people can collect to go along with whatever pension they may have. Because a lot of people don't have a big enough pension to support themselves as Senior Citizens. Which is a big problem, we don't save enough as people and lot of us don't make enough money to save, which is another problem in our economy. The success of Social Security is that its lift millions of Senior Citizens out of poverty, people who otherwise would've had to live with their kids. Or would've been at the mercy of Private Charity and provided these people with some basic Standard of Living that they could count on. If the Federal Government doesn't screw it up in their Senior Years.
What I would like to do with Social Security and our broader Pension System after we fix the financing of it. Is to give more americans Freedom of Choice in how they fiance their own Retirement Income. Something that former Senate Democratic Leader Tom Daschle calls Social Security Plus that would be and add on to their Social Security. Where workers along with their employers would put money away in a Personal Retirement Account that would be Tax Free. As long as they are putting money in the account. This would literally mean increasing Payroll Taxes at around 50% to be able to fiance it in a way to make it worth doing. So we would need to cut taxes somewhere else in order to avoid a huge Middle Class Tax Hike. But I would be for that as well and then set up a system for Low Income workers as well, where they could get their money that they put in their PRA. Back in a Tax Credit so they could afford to put money away for their retirement as well. But I would go farther with Social Security as I mentioned in previous blogs and take Social Security off of the backs of the Federal Government. And get the Administration's and Congress's hands off of it and out of it, to finance their own Pet Projects. And turn it into a Semi Private Non Profit Pension Insurance Service with its own Management and Board of Directors.
Social Security is a myth in the sense that its not completely secure, only intended to be and only as secure as the Federal Government allows it to be. Which is a problem in itself, when they take money out of it thats suppose to be their for people when they retire. To finance their other Pet Projects.