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View Diary: Mr. Roosevelt's Social Insurance (197 comments)

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  •  This comment is kind of confused (1+ / 0-)
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    Your para three kind of answers the question you posed in your 9:34, that is there are reasons to create the donut hole (as proposed both by Obama during the campaign and Sanders this week) as opposed as just adjusting the cap from the 84% level to the 90% level. I don't particularly agree with either but it is you that proposed the latter, I just asked what was the justification for that precise number (other than history).

    As to para one, yes they benefit but at a reduced rate. That is the goal of Social Security is to insure against poverty in old age and secondarily against such drastic drops in income that middle class people simply drop out and lose the benefits of what they worked for. But at some point it is reasonable to ask that people provide for retirement income at the margins on their own terms. By the same token of "they can afford it" they also have the means to do their own planning, taking more or less risk or simply using current income to buy something other than future income. Who am I to say that some person who has thirty years or so paying into Social Security during a successful career that they should plow extra dollars into an annuity rather than say a lake cabin, or starting their dream business. It may be that the government has an insurable interest in having people making above $106,800 make even higher mandatory contributions into a program which already projects to meet their specific needs, but someone needs to make the case why the burden should fall on this band of earners rather than the bands above or indeed below. The solution is easy, it is the justification that is hard.

    As to para two it is a little naive to think you can buy off the enemies of Social Security by demonstrating better solvency, as the main post points out that was not the source of their hatred of the program. On the other hand raising the cap makes the case for opt-out that much easier, it being fairly easy to make a plausible case that ROI on that last marginal dollar would be higher given an 'optional' personal account. And once that camels nose is under the tent you can bet they will push and push. Hell a simple examination of the literature on this subject shows that.

    To para four. Well I never claimed you did, if anything I advanced those claims in respect to myself and not you. What I asked was why target THIS specific band. And you have yet to come up with an answer.

    Finally as to five. Well I don't have a political strategy other than just getting all the numbers and all the options out on the table and asking the proponents to argue why we should choose one plan over another. That isn't happening today, in fact there has been essentially zero discussion about fixing Social Security in the same way it generally has been fixed in the past, that is by increasing FICA across the board at a phased rate that would be a fraction of real wage increases over that period. Instead almost all discussion has been confined to the other three options of changing benefit indices, changing retirement age, or changing the cap formula. But putting out honest scoring on the fourth major alternative, that of across the board rate increases? Crickets.  Even though CBO has scored such plans.

    Please visit, follow or join our Group: Social Security Defenders

    by Bruce Webb on Sun Aug 28, 2011 at 11:00:52 AM PDT

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