This entry was originally submitted as a homework assignment:
Lesson 6 discusses the Bush administration proposal to privatize Social Security. One aspect of that plan was to allow individuals to invest most, if not all, of their own money into investments, rather than into the Social Security System.
Was this proposal a good idea or not? Why?
Do some additional research on this topic (how Social Security can be changed or if it should remain as is) and include it in your discussion.
Include citations or URLs for your work to receive full credit, and provide substantive replies to the posts of at least two of your classmates.
Social Security being likened to a “third rail” is quite apropos; never have I heard a discussion of any part of the system without a heated debate among the participants. For that very reason I tend to stray away from conversations involving any part of Social Security and other government aid or assistance programs. Unfortunately, this task proves difficult at times as I am a part of and live amongst the communities which take advantage of these benefits.
A few months ago I had been stopped by a neighbor of mine who had wanted to ask whether I had heard any of the news surrounding the current discussions of Social Security reform, and whether I had an opinion. I told her that I had not even known that there was another debate going on, and I had even admitted that my ignorance was rather stupid as I should be aware. Later, I discovered that she had actually gotten some of her wires crossed and was actually referring to the news of a reform in the Commonwealth’s Medi-care/caid programs—something I should have been more abreast of, as these programs relate closer to the health and well-being of my children.
The neighbor, though, had every right to be concerned as she is legitimately—to my knowledge—taking advantage of disability benefits which are paid via the Social Security Administration. This woman, who is of the same graduating high school class as I, lives in fear of changes to any portion of the welfare system.
I, too, fear changes to welfare. For the short-term, my fears surround my children—the ability to receive medical care and afford food and housing; the long-term fears of my wife and I being able to care for ourselves when we are older I rarely think about—though thought has been given.
Having been told for well over fifteen years now of the possibilities of working well beyond our retirement ages should we choose to attempt to rely upon Social Security, my wife and I have become believers in paying into private retirement funds. Another reason for our personal desires to pay privately come from our lackluster work histories—our benefits from Social Security as it currently stands are well below what we foresee as being necessary due to our having not paid much into the system. Finally, we believe that it would be nice for us to not rely upon the government when we are elderly as we have had to rely so heavily upon the system during our youth.
In a sense, we are following Bush’s ideas by paying into a private system to have a better shot at retirement than if we relied solely upon the government.
Realistically, we are screwed either way.
Having stated that we have and continue to rely upon the government one could easily assume that we are a low-income family. We most certainly are. Unsurprisingly, we have had to withdraw monies from our private retirement funds to aid in covering current bills—I now have no retirement benefits and my wife has less than $200 saved. My wife’s retirement is building back extremely slowly as we cannot afford to save much more than 3% of her wages. I cannot see there being any retirement being built for me as I have yet to find a job that will work around my school schedule, my wife’s work schedule, or the children’s schooling and activities.
Ideally, the thoughts of having private retirement are excellent—relieving an (foreseeably) overburdened system of the excess weight by asking the public to save a portion of their own makes sense. The actual application of it, however…
Along with my personal example of how saving privately can fail—through the early withdrawal of funds—there remain questions surrounding other forms of failure—as was noted in this week’s material. If a private fund were handled through the investment into stocks or bonds that can fail, what then? What of investing into a private fund which is held by some institution which goes bankrupt? Who is going to come to the aid of someone who has had these misfortunes? Would someone burned by these failures be able to then rely upon Social Security? (Unit 6, 2010)
Shapiro noted that Bush’s generic plan did not give detail into these circumstances (Unit 6, 2010). We could assume that since the Social Security Administration was to keep operating as it had—though possibly paying out lesser amounts—that it would be made available to those who had the aforementioned misfortunes. My question then, if we make that assumption, is how much more of a burden would be placed on the system with the unknown number of cases requesting aid due to having private funds depleted or negated in some fashion?
Ultimately, there does need to be some sort of change made to the entire system. The only solution that I can fathom would be that of requesting that the public pay into a private fund of their choice (if the individual elects to) as well as a flat percentage of gross salary/wages per pay period into the SSA funds. I would also suggest changes be made to the Social Security Wage Base (SSWB)—the cap placed on the amount of monies that can be paid to the SSA. Two possible changes to the SSWB would be either the raising or elimination of this figure—ideas which have risen before (Miller, 2008). Another option that I might suggest would be setting the SSWB at a certain limit and then increasing the tax rate incrementally on a slope for individuals with an income above the SSWB—one caveat being that there would be a cap set for the amount paid back.
From what I have gathered, my thoughts on changing Social Security have even better potential to benefit than those thoughts proposed by Bush. Bush’s plan called more for a redirection of an individual’s funds into a fully private account rather than the more general SSA funds (White, 2011). Bush’s redirection would possibly cause more harm to the SSA as there would be less monies being deposited with a continued and possibly growing number of funds being withdrawn to pay for the benefits to widowers, children, and those receiving other SSI or medi-care/caid benefits. Bush’s plan also left the cap in place, whereas I propose raising the cap for funds to be paid in. My idea also gives the potential for allowing someone who may end up with less from a private fund to still draw from the SSA, while Bush never really covered that.
[…no, I don’t see my plan going anywhere as it calls for higher taxation of the wealthy.]
References
Miller, J. "Go Ahead and Lift the Cap." 2008. Web. Retrieved 10 Oct 2011, from: http://www.dollarsandsense.org/archives/2008/0308miller.html
Unknown. "Unit 6: The Bureaucracy." 2010. Web/PDF Document. Retrieved 10 Oct 2011, from: https://edge.apus.edu/access/content/group/155085/Unit%206:%20The%20Bureaucracy/Unit6_TheBureaucracy.pdf
Weisman, J. "Skepticism of Bush's Social Security Plan Is Growing." 2005. Web. Retrieved 10 Oct 2
011, from: http://www.washingtonpost.com/ac2/wp-dyn/A35231-2005Mar14?language=printer
White, D. "Common Sense Says No to Privatization." 2011. Web. Retrieved 10 Oct 2011, from: http://usliberals.about.com/od/socialsecurity/a/SocSecReform.htm
…and on a different note, I kept trying to think of some way of referencing Tom and Dick Smothers… I couldn't… click here to see the joke I was desperately trying to work in.
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