Editor: Since President Bush has welcomed ideas on Social Security reform, here is one to ponder. First and foremost – stop raiding the fund! And pay back what has been borrowed from the fund. This alone would push the insolvency date well back.
Next, an increase in the maximum taxable income is a no-brainer. Currently the maximum level is $87,900. The magic number floating around as the new higher level is $200K. A reasonable compromise is a doubling of the level to $175K, or thereabout.
Finally, with regard to privatization, there is room for compromise here as well. Instead of handing over monies to taxpayers prior to their eligibility, lend a portion of it to them – at the same rate the government is borrowing it. Let’s say a taxpayer can borrow up to 40% of what has been paid in, but it must be paid back within three years with interest. Any profits kept or losses incurred can be reported as capital gains/losses, or could even be declared tax-exempt, although I wouldn’t bet on it. Once the loan has been repaid, up to another 40% of the current paid level may be borrowed for investment for up to another three years.
This way, we don’t float this huge NSF check doling out funds to taxpayers before they are eligible to receive them – crippling the program, and possibly the entire U.S. economy.
Furthermore, with this approach, the government does not have to regulate the investment opportunities – the market would take care of that. Pure capitalism, don’t ya think?
Daniel Wells, Tracy