The Social Security Debacle

Social Security today

There is an amazing amount of misinformation floating around this election year about Social Security and it's future. I think I'm going to stray a bit from my usual policy of presenting only my own opinions to publish a few historical facts.

First off, let's discuss the SS Trust Fund. Social Security started in 1935 and was intended as an insurance system to protect senior citizens from poverty. This was during the height of the “great depression” and during the rise of centralization or people deserting the family farms for the cities. Prior to that time, most people lived on farms in multi generational family groupings and children grew up and took care of aging parents. That may be why we had much larger families back then.

Anyway there was no trust fund, the SSA simply collected taxes and paid it out in benefits. Things continued in this vein until 1983. In that year a commission was created headed by Alan Greenspan to look into the future of Social Security. The concept was that with people living longer eventually taxes at the rate current in 1983 wouldn't be able to pay out the benefits in existence in 1983. The result of this “dilemma” was the creation of the “Trust Fund”. The idea was to create a reserve to carry us through the time of the retirement bubble of baby boomers.

The result of this plan was that we now have $2,000,000,000,000 in this fund. That's $2 trillion, please check my zero count. Under current tax law that fund will continue to increase until 2016 at which time the payouts in benefits will start to catch up with the income in taxes. Then, around 2041 we will have exhausted the excess and be back to pay as you go financing like we were from 1935 to 1983. One note of opinion here, I don't see how that's a BIG problem. It worked for nearly 50 years.

Now, there are as many “solutions” to this “catastrophe” as there are politicians running for election. Here's two likely possibilities.

First, we now stop charging FICA tax at an annual income of $102,000. BTW, that tax is 6.25% for employees. If we remove the cutoff, we will never hit the deficit problem at all. That is NOT Mr. Obama's play. His plan calls for a “donut” solution where we stop charging FICA at $102k and start back at $250k. That plan does NOT recover enough money to fix the problem. It only covers about 38% of it and requires more band aid approaches to the problem.

Idea number 2 calls for raising FICA taxes from the current 12.5 % (6.25% to the employee) to 14.5% (7.25%) to the employee. That one also means we never hit the deficit thing at all. I'm not sure who backs this idea, if I did I'd vote for him.

How about Idea number 3? This one is mine. Why not return to the system in place from 1935 to 1983 where we adjusted taxes each year to pay for the benefits paid that year? The trust fund in place would mean we didn't need to change taxes at all for the next thirty odd years, and long before then we should be into the time when the smaller generations are retiring. The baby boomers will be mostly expired and no longer receiving benefits.

Last note, I am talking only about Social Security here. This is an entirely different situation from Medicare and Medicaid. Perhaps I'll research those subjects and discuss them in a future column. The Internet makes this a wonderful time to be retired with time on your hands.

I encourage those with differing or even similar ideas on this subject to comment. I'll publish anything that is fit to print whether you agree with me or not. All the ideas I express or my own, but they are subject to being changed with new information.

Management qualifications?

Many years ago (too many!) when I was in the navy, the most formidable weapon known to man was the aircraft carrier. This was a floating city with 5000 to 6000 people and 75 to 100 airplanes on board. The weapons I won't even hint at. One aircraft carrier would be more than a match for almost any country of the world! The navy had a policy that the man who had command of all that air power should be a pilot. To reach the rank of Captain in the navy, a man had to not only be the cream of the crop, but had to put in 22 years in the service. Those years were spent flying navy airplanes and fighting wars all over the planet as well as commanding groups ranging up to squadrons of aircraft.
If a man was selected to command one of the carriers (there were 7 back then I think) he was first sent to a deep draft support ship such as an oiler or Submarine tender. These were the biggest ships the navy owned other than aircraft carriers. Once he had completed a successful tour of duty commanding one of the giant ships, a man could take on the awesome responsibility of commanding an aircraft carrier. Imagine the power in the hands of one individual!
Now imagine the power in the hands of the President of the United States! We just placed a man in charge who had never commanded anything higher than his personal secretary. This is a man who had never been in charge of anything. How did this happen? Don't get me wrong now, the other guy wasn't much better qualified. How did it come down to these two? There is nothing wrong with our system of government, it's the party system that is broken. Does anyone think these two people really represented us? They represented what a group of professional politicians offered us. If you don't want this to continue, we must take charge of the political parties and force some common sense there. We need to elect people who have at least enough qualifications to hold a middle management job.
I don't think this two party system makes any sense, personally, but we have to work with it in order bring about change. Two years from now we will see what a Democrat controlled government has done for us and vote accordingly. It won't help at all to elect more politicians just like the ones we have now. We need to have candidates available who really are interested in the public good. We need candidates whose only skill is not how to get elected. We won't get them by sitting here and complaining. We only get real solutions by stepping up to the plate and being counted. I vow to offer myself for election to some office, and I promise to support any candidate who truly represents the public. How about you?