Agreements among people are basic elements in a civilized society. One should be able to expect that an agreement--which is essentially a trade between people --will be honored. Such a notion requires honesty, responsibility and duty--all important social qualities. Except...except... when government is involved. Somehow governments can create all sorts of agreements with all sorts of expectations and responsibilities and, somehow, renege without contempt.
Take Social Security, a tax purporting to be a savings plan for all.
In their 2012 annual report, the Social Security trustees--the trustees-- predict that assets in the federal Old-Age and Survivors Insurance and federal Disability Insurance trust funds will begin to decline in 2021 and become exhausted by 2033. The 2013 Trustees Report shows little change from the previous year.
If no action is taken, incoming Social Security taxes would cover about 75 percent of scheduled benefits. Which is to say, they are out of money. Money that was supposed to be saved. Money that many were counting on.
Take Social Security, a tax purporting to be a savings plan for all.
In their 2012 annual report, the Social Security trustees--the trustees-- predict that assets in the federal Old-Age and Survivors Insurance and federal Disability Insurance trust funds will begin to decline in 2021 and become exhausted by 2033. The 2013 Trustees Report shows little change from the previous year.
If no action is taken, incoming Social Security taxes would cover about 75 percent of scheduled benefits. Which is to say, they are out of money. Money that was supposed to be saved. Money that many were counting on.
All sorts of options are springing up. Benefits can be reduced, they can be slowed--perhaps on a sliding scale based on income, the retirement age for receiving benefits could be raised--and then linked to longevity, or Cost of Living Adjustments (COLAs) could be modified (i.e. reduced.)
There are calculators for these ideas. ( http://crfb.org/socialsecurityreformer/ )
For example: Slow benefit growth for the top half of earners. Result: 35% of the 75-year gap is closed.
Or: Index the age to longevity. Result: 19% of the gap is closed.
Or: Index COLAs to CPI minus 1%. Result: 63% of the gap is closed.
For example: Slow benefit growth for the top half of earners. Result: 35% of the 75-year gap is closed.
Or: Index the age to longevity. Result: 19% of the gap is closed.
Or: Index COLAs to CPI minus 1%. Result: 63% of the gap is closed.
If you do them all together, 35 + 19 + 63, we close 117% of the gap.
See how much fun. It's sort of technical. You can mix and match and do all sorts of creative things.
There are 50 ways to break a promise.
Get on the bus, Gus..
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