Sunday, June 02, 2013

Look Ma: I just fixed Social Security!

It was easy!

Here's what I chose to do:

 YOUR POLICY SELECTIONS                        % OF GAP CLOSED
Raise Age to 69 then index to Longevity                       39%
Index COLAs to "Chained CPI"                                   21%
Reduce Fraud and Overpayments                                   5%
Tighten DI Eligibility Requirements                               4%
Prohibit Applications above the Early Retirement Age   5%
Cover Newly-Hired State and Local Workers                9%
Apply the Payroll Tax to "Cafeteria Plans"                    9%
Diversify the Trust Fund to Increase Returns               20%

                                                                                   TOTAL 112%

Want to do it your way? You can use this cool app.

And, as always, you can tell me why I'm a dope in the comments.

Here's my heroic achievement in graphical form:

Trust Fund Projections 
Percent of Annual Benefits 

After Policy Changes


popdhobby said...

The big problem with Social Security is not financial. It is political and by that it helps disguise the true cost of government.
Here's my fix:
--Levy a 4 percent tax on all forms of income and reduce benefits by 4 percent until the $2.6 debt the general fund owes the trust fund is repaid. This will take about 10 years.
--Use this money to pay out current benefits. If any more money is needed to cover current benefits, then use a payroll tax to cover the shortfall.
--Eliminate the employer share of the payroll tax but require employers to raise wages to offset the doubling of the employee share.
--One debt is repaid, pay all Social Security benefits out of a payroll tax. Do not allow the rate to accumulate a surplus, which will have to be invested in the general fund.
It is my belief that the huge past surpluses allowed federal power to grow. It allowed local governments to provide all sorts of services without levying local taxes and weakened local citizen involvement.
When any politician says they want to save Social Security for 75 years, they are saying they want to build the size of government.
The special debt tax is justified because everyone benefited from those surpluses. We had the FDA, the FCC, wars, food stamps, highways, tax cuts and more. Every single one of us benefited from them and we should pay it back.
And never let Congress distribute specific benefits over generalized costs again.

James Oswald said...

"Reduce Fraud and Overpayments"

I would guess this would be a net money loser. I bet they just did a rough estimate about how much fraud there was and said if you waived a magic wand and totally eliminiated it, that would be 4%. But fraud prevention is costly, and you're not going to catch everyone.

Raising the retirement age is gimmicky, but if it plucks the feathers with a minimum of squawking, so be it.

Jim Oliver said...

I would just give everyone $700/month instead of basing it on how much they paid in FICA taxes.

LowCountryJoe said...

Diversify trust fund? Is that written tongue in cheek or something?

Samuel Paulson said...

No rearrangement of the cash flows between generations alters the internal rate of return on this thing over the life cycle. said...

It's nice that you linked the benefit formula site in this post. Those who want to fix their social security can easily access the application. Though it's really very convenient, I highly suggest that you have to seek for professional help in fixing your benefits. Some applications can be hacked, but when you apply for insurance with your lawyers, you can be assured that your application will be received and processed by the SSA.