Walton Sun April 10 2010
www.waltonsun.com
---------------------------------------------------------------------------
Americans just can?t handle the truth when it comes to Social Security
It is refreshing, unusual, and always a surprise when a politician speaks the truth ? especially if it concerns something unpopular.
Republican frontrunner and Tea Party heartthrob Marco Rubio must have figured his double-digit lead over Gov. Charlie Crist allowed him to boldly go when no man had gone. When pressed by Chris Wallace of Fox News regarding changes in Social Security cost-ofliving adjustments, Rubio responded, ?I think all of that has to be on the table, including the way we index increases in cost of living. All of these issues have to be on the table. They have to be options that I would be open to.?
Conservative pols like Rubio usually parrot private savings accounts as a cure for Social Security?s woes. Privatization is a red herring that the investment industry (the geniuses that gave us credit default swaps and derivatives) dreamed up during the Bush administration. For all but the highest-earning 20 percent of Americans, Social Security is the largest source of income for retirees. Turning that over to the scoundrels that led us to the worst economic decline since the Great Depression is lunacy.
Americans have been deceiving themselves about the fiscal reality of Social Security. It is time to face the facts and make some painful decisions. While Social Security is a fantastic program, it is facing a serious but not insurmountable funding dilemma. We have four options: A. Raise taxes. B. Reduce benefits. C. A combination of the two. D. Learn to turn lead into gold.
In ?Choosing the Nation?s Fiscal Future? (free pdf at www.nap.edu ), prepared by the National Research Council and the National Academy of Public Administrators, the authors spell out succinctly how fiscal balance for Social Security over the next 80 years can be achieved. Just to let you know, they don?t put a lot of stock in option D.
If raising Social Security taxes is off the board, then benefits have to be reduced. Elementary, my dear Watson. Democratic candidate Kendrick Meek?s supporters are likely salivating over Rubio?s remarks, but then they must believe 2+2=5 if they think solvency can be reached without taxes going up or benefits coming down. Raising Social Security taxes to achieve sustainability should be avoided at all costs. Social Security taxes are extremely regressive because they fall disproportionately on lower- to middle-income wage earners. Plus raising them would impose additional costs to businesses struggling to get through the worst fiscal crisis in more than 80 years.
?Choosing the Nation?s Fiscal Future? shows us a three-pronged approach that will work sans tax hikes. First, for future retirees (post 2010), the rate at which salary increases raises Social Security benefits would be scaled back.
This feature would be limited to the top 70 percent of wage-earners so workers with lower lifetime earnings would not be pinched severely. Second, for current retirees, cost-of-living adjustments would be based on a price index that grows more slowly than the CPI. Finally, the full retirement age would be raised to 67 by 2012 with gradual increases to 68 and four months by 2050. The appeal of this proposal is that everyone chips in a bit ? current and future beneficiaries.
Social Security has been demagogued to death by politicians more interested in getting elected than what is best for our nation. Any attempt to rein in costs is demonized as destroying Social Security. OK, you?re right and I?m wrong; then let?s raise taxes. Seriously, if you are a Tea Party supporter and are taxed enough already, then raising taxes on the grandkids is just a smidgen inconsistent.
?Choosing the Nation?s Fiscal Future? was a joint effort of concerned Americans ? liberal and conservative, with many serving in the Reagan, Clinton, Bush 1 and 2, and Obama administrations ? who are concerned about the financial stability of our nation. They are not paying lip service to the problem or rounding up the usual talking points.
When you hear a politician blather about ferreting out Social Security waste and abuse as some magical method to painlessly solve the problem, they are more interested in getting elected than doing what is right for the nation.
We can raise taxes or lower benefits. That?s the truth.
Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@Livingston Financial.net .
BUZ LIVINGSTON
Just Plain Talk
www.waltonsun.com
---------------------------------------------------------------------------
Americans just can?t handle the truth when it comes to Social Security
It is refreshing, unusual, and always a surprise when a politician speaks the truth ? especially if it concerns something unpopular.
Republican frontrunner and Tea Party heartthrob Marco Rubio must have figured his double-digit lead over Gov. Charlie Crist allowed him to boldly go when no man had gone. When pressed by Chris Wallace of Fox News regarding changes in Social Security cost-ofliving adjustments, Rubio responded, ?I think all of that has to be on the table, including the way we index increases in cost of living. All of these issues have to be on the table. They have to be options that I would be open to.?
Conservative pols like Rubio usually parrot private savings accounts as a cure for Social Security?s woes. Privatization is a red herring that the investment industry (the geniuses that gave us credit default swaps and derivatives) dreamed up during the Bush administration. For all but the highest-earning 20 percent of Americans, Social Security is the largest source of income for retirees. Turning that over to the scoundrels that led us to the worst economic decline since the Great Depression is lunacy.
Americans have been deceiving themselves about the fiscal reality of Social Security. It is time to face the facts and make some painful decisions. While Social Security is a fantastic program, it is facing a serious but not insurmountable funding dilemma. We have four options: A. Raise taxes. B. Reduce benefits. C. A combination of the two. D. Learn to turn lead into gold.
In ?Choosing the Nation?s Fiscal Future? (free pdf at www.nap.edu ), prepared by the National Research Council and the National Academy of Public Administrators, the authors spell out succinctly how fiscal balance for Social Security over the next 80 years can be achieved. Just to let you know, they don?t put a lot of stock in option D.
If raising Social Security taxes is off the board, then benefits have to be reduced. Elementary, my dear Watson. Democratic candidate Kendrick Meek?s supporters are likely salivating over Rubio?s remarks, but then they must believe 2+2=5 if they think solvency can be reached without taxes going up or benefits coming down. Raising Social Security taxes to achieve sustainability should be avoided at all costs. Social Security taxes are extremely regressive because they fall disproportionately on lower- to middle-income wage earners. Plus raising them would impose additional costs to businesses struggling to get through the worst fiscal crisis in more than 80 years.
?Choosing the Nation?s Fiscal Future? shows us a three-pronged approach that will work sans tax hikes. First, for future retirees (post 2010), the rate at which salary increases raises Social Security benefits would be scaled back.
This feature would be limited to the top 70 percent of wage-earners so workers with lower lifetime earnings would not be pinched severely. Second, for current retirees, cost-of-living adjustments would be based on a price index that grows more slowly than the CPI. Finally, the full retirement age would be raised to 67 by 2012 with gradual increases to 68 and four months by 2050. The appeal of this proposal is that everyone chips in a bit ? current and future beneficiaries.
Social Security has been demagogued to death by politicians more interested in getting elected than what is best for our nation. Any attempt to rein in costs is demonized as destroying Social Security. OK, you?re right and I?m wrong; then let?s raise taxes. Seriously, if you are a Tea Party supporter and are taxed enough already, then raising taxes on the grandkids is just a smidgen inconsistent.
?Choosing the Nation?s Fiscal Future? was a joint effort of concerned Americans ? liberal and conservative, with many serving in the Reagan, Clinton, Bush 1 and 2, and Obama administrations ? who are concerned about the financial stability of our nation. They are not paying lip service to the problem or rounding up the usual talking points.
When you hear a politician blather about ferreting out Social Security waste and abuse as some magical method to painlessly solve the problem, they are more interested in getting elected than doing what is right for the nation.
We can raise taxes or lower benefits. That?s the truth.
Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@Livingston Financial.net .
BUZ LIVINGSTON
Just Plain Talk
The system is supposed to pay out what you put in, plus a little interest. The problem with the system currently is that people are taking out far more than they put in because they live longer. Raising the retirement age gradually and indexing it with life expectancy seems like the best approach IMHO.
