2010 November 12
Last edit: 2010 Dec 12. Click on History for changes and updates.
The continuation of post contains the Co-Chairs' Proposal with comments added. With their proposal, the Co-Chairs have provided a significant service toward the challenges of reducing the deficits and national debt. Objections to any aspect of the proposal should include recommendations for a better way. This post provides both.
The initial set of comments are now complete. Please review my proposal Permanent Solvency for Social Security for the smallest change in Social Security OASI to make it permanently solvent. Please check later for additional comments on the Co-Chairs' Proposal. The date of any further edits will be noted and the latest edit will be shown in the second line. Thanks.
The Co-Chairs' proposal addresses the solvency which ensures there will be no abrupt change in benefits for future beneficiaries. The proposal makes no adjustment in benefits for current retirees and those nearing retirement.
The proposal also adds a number of safety-net and welfare provisions for poor retirees. Such are beyond Social Security Old Age and Survivors Insurance (OASI) as we know it today.
The solvency and new safety-net and welfare provisions are paid for primarily by (1) increasing the retirement age for full benefits — in effect a reduction in benefits, (2) increasing the maximum taxable earnings subject to Social Security tax, and (3) greatly increasing progressivity of OASI benefits.
The result is that the burden is disportionately placed on younger participants — particularly those with higher incomes who will pay more and get less. This is inconsistent with the statements by many in Congress that Congress must stop imposing the unfunded liabilities and other costs on our children and grandchilden. The problem of under-funding of OASI applies to all participants and requires a shared sacrifice. If applied to all, the individual sacrifice will be small. However, on the long term the average reduction in benefits will have to be on the order of 25% to ensure solvency.
As a nation, we should be sensitive to the safety-net and welfare considerations, but other ways to ensure appropriate safety nets are available and should be used.
The major changes are inconsistent with OASI as we know it today and described by The Nine Guiding Principles of Social Security.
The appendices provide additional discussion and specific comments on the Co-Chairs' proposal.
Read the continuation of this post for a broader discussion of the Co-Chairs' proposal followed by four appendices that provide additional information and more comprehensive comments. Please add your comments.
Don Nordeen
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- Key Words: entitlement, Co-chairs, CoChairs, Debt Commission, National Commission on Fiscal Responsibility and Reform, OASI, public policy, entitlement, national debt, private accounts , Social Security Administration, Social Security, trust fund
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