by guest blogger Jeff Sullivan
The U.S. government is running a budget deficit. That should not be news to anyone reading this column, nor should it be news to anyone not living in a cave. Politicians in both major parties give speeches lamenting the problem, but with little hard evidence of what they intend to do to correct it. Some want to increase taxes, some want to reduce taxes. But one thing is certain. Government spending must decrease, both over the short and long term.
The question you may be asking, is how? Where do we cut and who will be hurt? The answer is in our entitlement programs, specifically, Social Security, Medicare and our yet to be implemented but already law, Obama-care.
To keep spending from spiraling out of control, these entitlement programs must be pared back or eliminated. The recent healthcare reform, commonly referred to as Obama-care, should be repealed before it can add to the current budget deficits. Assuming this occurs, the next steps must be to reform Social Security and Medicare.
Full Social Security benefits are currently available to retirees 66 or older, gradually increasing to 67 for individuals born on 1960 or afterwards. Medicare benefits are currently available to all individuals 65 or older. These arbitrary ages were set at a time when the average life span was much lower than it is today. As such, an increase in the age at which individuals can receive benefits appears to be reasonable and sound.
The age at which individuals can receive Medicare and Social Security benefits should be gradually increased, at a set rate of 4 months for every year beginning immediately. This would mean that in 2011, individuals would be eligible to receive Medicare benefits at 65 years and four months of age and eligible to receive Social Security benefits at 66 years and four months. Each year would add another four months to the age at which individuals could receive benefits. This would continue in perpetuity. The result would be a continual reduction in the population served by Medicare and Social Security, and a likewise reduction in payouts by the respective programs.
Making these changes would not reduce benefits for current recipients of Social Security or Medicare, but would ease the financial burden these two programs face. Those of us under the ages would have to work longer to be eligible for benefits, but the increase in ages would be gradual enough not to be an excessive burden closer to retirement age. For myself, at age 40, it would mean that I would be eligible to receive Medicare benefits at the age of 77 years and four months and Social Security benefits at 78 years and eight months. Given the projected life span of individuals like myself who were born in 1969, it is possible that I will never receive benefits from either program.
And that is how it should be. Even in America, we are granted by our Constitution only the rights to life, liberty and the pursuit of happiness. Nowhere is the promise of a monthly check or free medical care should I happen to need either. While well meaning, these two entitlement programs have enabled generations of Americans to buy into the fallacious idea that government can and should solve our problems. As a result, government spending has run amuck and Americans have abandoned the ideals upon which this country was founded.
Our God given talents and the decisions we make throughout their lifetime should decide each individual’s fate. Those of us that work hard, invest wisely and refrain from self-destructive choices should reap the benefits of our labors. Those of us that choose a different path should reap the benefits of their choices as well. This is precisely what the framers of our Constitution intended and it is to what each free-thinking individual should aspire.
Jeff Sullivan is an electrical engineer residing in Nashville. He is married with two young children and he is working to see the American experiment in Socialism reversed come November.
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A simple, fair, reasonable plan. I'm on SS and soon to be on Medicare, but I would go along with this.
ReplyDeletePersonally, I agree with you in principle - but I cannot agree with your implementation of continuing to dangle the carrot while moving it further and further out of reach. The principle is that we are not entitled... why not just stand up like a man and adhere to it?
ReplyDeleteRather than slowly moving the carrot out of reach over time, just implement an across the board default for all beneficiaries after a set date. As long as there is the possibility of future payment, many Americans will not readjust their retirement plans to accomodate this new and changing reality.
Perhaps, this seems cold and heartless... perhaps, it seems morally and ethically wrong... and perhaps, it seems unconscionable. However, two wrongs don't make a right. The Americans who have and continue to receive Social Security Benefits have and will receive far more than they have ever paid into the system. Those who won't receive it lose not just their own benefits, but the money that they are continually throwing into this ongoing disaster.
Thus, for all of their complaints that social security is factually too little, America's elderly are achieving their gains at the geometrically compounded expense of the generations which are honestly following them. The continuance of such a system is wholly immoral beyond measure.
Moreover, doing so would eliminate almost 70 Trillion Dollars in unfunded liabilities - which within the next two years will factually collapse our entire Economic System. By removing this bookmarked debt, America's creditors around the world will potentially re-evaluate our credit and allow some breathing room for the necessary implementation of infrastructural realignments.
Nor, am I saying that these individuals should suffer the only hit across the spectrum of our society. I would eliminate all forms of social entitlement - from the corporate boardrooms down to the inner city free housing.
In all honesty, the Babyboomers are the very last generation to simultaneously enjoy: Retirment Payments, Social Security, and Self Funded Retirement. Most companies stopped offering retirement over twenty years ago - along with any other benefits. They have slowly decimated our paychecks through no longer offering raises to counter inflation. And Social Security is broken.
Consequently, any pain felt by this boomer generation will be mild compared to those who follow - and likely may never retire! Will this happen? Probably not. After all, most boomers drive cars with bumper stickers saying: "Spend it all before you die!"
And they wonder why their own children honestly hate them?
Francis,
ReplyDeleteI appreciate your comments, except for the one where you state I need to stand up like a man :-)
I feel these changes must be graduated in nature, to wean the populace off of the programs and to give them time to make individual arrangements to self fund their retirement and medical costs in retirement.
You are correct that the entitlement programs are not sustainable in their current form; however, an immediate end to the programs is not realistic and would never be passed into law.
Also, FWIW, I don't hate my parents; I love my mother and have many fond memories of my father, who died almost 30 years ago.
A few thoughts:
ReplyDeleteYou said, "Even in America, we are granted by our Constitution only the rights to life, liberty and the pursuit of happiness."
This is not a true statement. The Constitution does not grant these rights, they are in essence inalienable, we are born with them, described in the Declaration of Independence. Think of them as the fundamental "human rights" if you will.
Second, as a democracy (or to be pedantic, a democratic republic with some overt democratic systems at the state and local level), *we* decide what further rights we wish to gaurantee in our democracy. The Bill of Rights outlines the additional rights that are protected (under certain conditions) from Governmental encroachment. If *we* decided, as a majority, that we no longer had the right to drink alcohol in the country, we could simply(!) vote to restrict that right. Although, I think we readers would all agree goes against the fundamental principle of the Constitution to set the powers and restrictions of the government, not of the *people*. So while we would not, on principle, support the amendment of the Consitution to abridge our freedom, we have done so in the past and might do so in the future.
As for your principled stand against social security:
Do you take a principled stand against the use of tax money for other select purposes, such as corporate welfare, franking, and museums, to name a few. Some of these are huge payouts, formal and informal, and others are miniscule, in relative comparison (but a lot of money to me personally, of course)...
If we decide that we want a system that helps persons to stay solvent when they age, then in a democratic republic, we can do so. It's not a right per se, but a grant of privileges. But that's our right to grant those, just as we have for all "social" programs. Without it, it would be impossible for our capitalist system to support such a diverse economic diversity of income...we would have to design the system and culture to encourage and *allow* persons to increase their income as they age, to such a degree that they can afford to live on savings when their ability to earn in a "free market" are hindered by age and the subsequent effects of age. This mean an economic system set up vastly different from our own, and one that would take decades of focused adjustments to do so. The culture would not shift so easily on its own to only have low-paying jobs held by the young, and as you age, you take own enough skills, experience, drive, and ability to earn more and more to remove you from those jobs. Not everyone in an economy can be "rich"...it's all relative, so in a "free market" based economy, there will always be poor people and rich people, relatively speaking. And your preference, it seems, is a system that somehow allows that to happen.
Without that system in place, and without some form of social security for those less "secure" (for whatever reason, choice, circumstances, or both), those who "fail" to prepare will be a burden on our modern state in some way. I don't think it will all form on NGO's.
Just a few developing thoughts.
If we decide that we want a system that helps persons to stay solvent when they age, then in a democratic republic, we can do so. It's not a right per se, but a grant of privileges. But that's our right to grant those, just as we have for all "social" programs. Without it, it would be impossible for our capitalist system to support such a diverse economic diversity of income...we would have to design the system and culture to encourage and *allow* persons to increase their income as they age, to such a degree that they can afford to live on savings when their ability to earn in a "free market" are hindered by age and the subsequent effects of age. This mean an economic system set up vastly different from our own, and one that would take decades of focused adjustments to do so. The culture would not shift so easily on its own to only have low-paying jobs held by the young, and as you age, you take own enough skills, experience, drive, and ability to earn more and more to remove you from those jobs. Not everyone in an economy can be "rich"...it's all relative, so in a "free market" based economy, there will always be poor people and rich people, relatively speaking. And your preference, it seems, is a system that somehow allows that to happen.
ReplyDeleteWithout that system in place, and without some form of social security for those less "secure" (for whatever reason, choice, circumstances, or both), those who "fail" to prepare will be a burden on our modern state in some way. I don't think it will all form on NGO's.
Just a few developing thoughts.
So while we would not, on principle, support the amendment of the Consitution to abridge our freedom, we have done so in the past and might do so in the future.
ReplyDeleteAs for your principled stand against social security:
Do you take a principled stand against the use of tax money for other select purposes, such as corporate welfare, franking, and museums, to name a few. Some of these are huge payouts, formal and informal, and others are miniscule, in relative comparison (but a lot of money to me personally, of course)...
A few thoughts:
ReplyDeleteYou said, "Even in America, we are granted by our Constitution only the rights to life, liberty and the pursuit of happiness."
This is not a true statement. The Constitution does not grant these rights, they are in essence inalienable, we are born with them, described in the Declaration of Independence. Think of them as the fundamental "human rights" if you will.
Second, as a democracy (or to be pedantic, a democratic republic with some overt democratic systems at the state and local level), *we* decide what further rights we wish to guarantee in our democracy. The Bill of Rights outlines the additional rights that are protected (under certain conditions) from Governmental encroachment. If *we* decided, as a majority, that we no longer had the right to drink alcohol in the country, we could simply(!) vote to restrict that right. Although, I think we readers would all agree goes against the fundamental principle of the Constitution to set the powers and restrictions of the government, not of the *people*.
Robert,
ReplyDeleteI am not for corporate welfare either, nor am I for many of the things that our government currently funds. However, at some point, an article can become so long that no one will read it. I limited my article to the entitlement programs that make up a tremendous amount of our government spending, and a solution which I felt was fair to those currently receiving benefits and those that would soon receive them.
Jeff,
ReplyDeleteThen perhaps I misunderstand the essence of how SS works...isn't it supposed to be self-funding? While the government is using the funds to pay for other programs and the wars, it isn't supposed to be.
The people paying in now pay for the people collecting now..right? How is that *government* spending? It's not technically, unless you count the administrative part. Or is any allocating resources to help those in need by the government...ahem, "socialistic" for your taste?
Perhaps you don't like the fact that we subsidize lower-income persons who don't contribute as much as they actually collect?
Or perhaps you don't like that the SS tax is regressive in its setup, where some people pay a percentage of their entire income, but others only pay it on a portion? Or you don't like the employer-side of the equation, where the employer pays half (and the self-employed pay all)?
I can understand the need for focus in your post, but perhaps you can consider the topics I raised (some of which you said you agree with) in follow-up posts? I would be interested in your thoughts.
Oh, and did you want to address your factual error in the life, liberty, etc. citation? Or do you stand behind that still?
As for my proposal if we wanted to dissolve SS, just set a moratorium in law on future collections :
ReplyDeleteAnyone born 2 years from now will never collect SS, but a line-item tax will be set up to collect the funds needed to payout to those born/paying in until they all die off.
As the "paying in" population grows, and the "collecting" population dies off, the tax is set lower and lower until it is gone. Each year/2 years or so, the fund is re-evaluated and the tax burden is recalculated.
The government can somehow encourage the investment industries to create retirement programs and incentives, as well as education programs for those born 2 years from now about financial responsibilities and rights (contract law, accounting laws, due diligence, etc.).
Just a thought. You shouldn't spring a shifting finish line on people who have been informed for some time on how the system is going to work for them.
Robert,
ReplyDeleteYou are correct in that I made a mistake referencing the Constitution when the Declaration of Independence is really where the statement came from.
As for your other statements regarding SS, the SS tax would be need to be reduced as the needs for those funds were reduced by a declining population served by the entitlement program. Whether it is a line-item tax or a tax on income is less important to me than the fact that the program would eventually be eliminated, therby eliminating the need for the tax.
I don't think the entitlement programs should be continued; however, I recognize the need to continue some means of support for those that have based their savings rate on the programs existing. For that reason, I proposed the gradual increase in entitlement ages so that the younger the person, the more time they would have to make the necessary decisions to save for their own retirement and future medical costs.
I hope this answered some of your questions and concerns.