Spaldam’s 3 point Plan to fix Social Security

First, you cannot fix a problem you do not understand, so here’s the basics:

Basically, as I see it, instead of securing funds paid into Social Security for the last 70+ years to make sure excesses remain available for when the baby boomers start to collect on it, the money was instead used to help balance the budget, which wasn’t really being balanced too well anyway. Sure technically this was a loan, but the way it was loaned, is like putting a bunch of IOU’s into your 401K instead of actual money.

So, how do you fix this problem with baby boomers now being promised more than is being paid into the Social Security Fund, with no reserve to pay for these entitlements? Some say the unfunded liability of this could be upwards of 15 trillion dollars and growing. The other questionable part of Social Security, is one of Constitutionality. The 10th Amendment says we must leave such things up to the States to provide for, but Social Security is done at the federal level, and as such ends up being to easily lumped in with other Federal income taxes (Medicare, Payroll tax, etc), resulting in a conflict of interest that inevitably gets abused and misuse by our own government.  Still it is fixable, and here’s how I would do it:

1. The first step in this process is to make it solidly Constitutionally legal, and in doing so set hard set rules to insure the money gets used for what it’s intended (not loaned out). This means passing and ratifying a Constitutional Amendment that authorizes the Federal Government to collect Social Security based on personal income, but it also means requiring that any excesses be saved and wisely invested in low risk investment funds (I would suggest Mutual funds with good long track records and Money Market Accounts with no Conflicts of Interest with the Federal Governments budget). This helps insure that not only the original monies are around decades latter, but also gives the added leverage of interest gained to be paid back out to those who are eligible. It could also define basic eligibility requirements so it only gets paid to those who really need it, or that could use a little extra retirement funds; based on a multiple of the set poverty level.  It should also restrict the payout from exceeding the available funds, and only allow for reasonable administrative fees to be paid from the funds.  In other words, SS would become a self sustaining branch of the U.S. treasury.

I would also allow for an op-out option, so that those who want to do their own investing, can.  I’m sure there are plenty who would want to see the op-out limited to a certain amount of income, but that could also be based on making so much over and above an amount based on a multiple of the current poverty level, so congress can’t continually mess around with it without passing another amendment, or changing the poverty level.

2. Step one doesn’t help with today problem as it’s already to late to start saving since it’s already “in the red“. What is really needed is more people paying into it; which means more people working to pay Social Security taxes on their income. Certainly lowering unemployment rates would help greatly, but even that would only be a temporary fix. However, we supposedly have anywhere between 10 – 20 million illegal immigrants in the U.S. Immigration reform, and amnesty, are very touch subjects these days, but having millions of people ejected from the country over night isn’t only impossible and a costly endeavor, it’s more likely to create a vacuum full of more problems then it would potentially solve. Certainly the problems need to be fixed, and hopefully we could do it in such a way that would benefit everyone; like requiring fees be paid that would further help fund Social Security, and putting more people on legal payrolls that contribute to Social Security.

I believe the immigration problem is caused for 2 reasons: a) a lack of security along U.S. boarders partly due to bureaucracies that seem to encourage the insurgency, and b) partly due to immigration policies that are too restrictive; making the cost of coming here legally so high that it’s worth the risk of coming here illegally. Regardless of the problems, if we could find an affective and fair way to legalize (not naturalize) all those here already, and get them paying into Social Security (and other taxes), we could potentially see a very significant increase in the funding Social Security has coming in. This reform could be as simple as a guest worker program that requires employees to into Social Security based on their incomes with no future liabilities towards the guest workers.  Any fines or application fees for guest worker visas could be put directly into the SS fund.  If we have 15 million illegals, and 15 trillion of unfunded liabilities, it would require that each of them pay a $1000 fee into the SS fund to get it “in the black”.

3. To truly fix this problem, requires insuring we continue to have more new workers entering the work force then those entering retirement; or at least those who truly need the help of a regular Social Security check. This can be accomplished in a number of way like: means based testing; raising the retirement age to be more in-line with life expectancy; encouraging larger families; and immigration, as mentioned before. The vast majority of us can find an ancestor (if not ourselves or parents) who came to the U.S.A. looking for opportunity, and they worked hard to get it. Today this is no different, despite a long history of changes in immigration over the decades. One thing is clear today, a lot more people want to come here then the legal channels are currently able to accommodate; likely for a wide variety of reasons.

I would give short term work (guest worker) visas to anyone who can reach a designated entry point to our soil and pass and a background check (meaning they aren’t on any watch lists or wanted for anything), easing up on and simplifying the requirements to gain naturalization, and increasing the quotas for other types of visas as long as unemployment rates are low. Of course none of this works if it cannot be enforced, which includes improving boarder security and the consequences of entering the country illegally (i.e. actually treating them as criminals or even unlawful combatants, depending on the situation and what they are carrying across the boarder with them).

This plan, if fully implemented could also be a patter to lessen the strain illegal immigration puts on the Health Care system and lessen the amount of fraud it creates. It could also improve issues with Medicare; though I would suggest Medicare and Medicaid be replaced with: a) States setting up or re-enforcing their own system of county hospitals and clinics for those who can’t afford the costs; b) less government regulations and more tax breaks for individuals (or businesses) buying insurance; c) expand on health care savings accounts (reducing restrictions) with catastrophic only insurance options, to allow for more competition on a consumer basis; d) encourage states to put restrictions on insurance companies ability to sell financial products or insurance products that create conflicts of interest; e) and stop price gouging of by doctors and hospitals to keep prices more realistic by outlawing the practice of over charging to make up for insurance companies requiring large price cuts, and/or limit the ability of insurance companies to require large price cuts.

There is, however, one other major issue to consider in all this: Corruption and Greed; and I’m not necessarily referring corporate greed, which I do not in any way equate to capitalize. As long as there are people out there who want to cheat the system, get something for nothing, or get rich off the backs of the tax payers, we will continue to have many problems with Socialized government programs wasting billions on fraud every year. Fraud that I believe would be much less likely if we would just follow the U.S. constitution and leave these types of programs up to the states and the people, because this would give everyone more visibility and more local accountability into what these things truly cost our communities and ourselves. Looking for someone else to foot the bill will only put us into the problems we are now seeing with an out of control Federal Government Spending Deficit.