I like it that the Dems seem fit to go to the mat against the corporate Republicat agenda for social security. But I'm disappointed that they don't seem to be willing to grasp firm hold of a ready-made opportunity to give the GOP a Wedgie....wedge issue, that is.
Recently diaries by georgia10 and SanJoseLady have vehemently questioned why the Dems seem adverse to presenting a competing plan for SS reform. Add me to the list because not only do we have an alternative, but it's one that will put the GOP into quite a difficult spot.
More after the break.
Here's the proposal:
- Uncap the employee portion of Social Security. Make it apply to all wages.
- Reduce the overall SS rate for all wage-earners, splitting the reduction evenly between employee and employer contributions. Calculate the new rate so that it does put SS into indefinite (75 year horizon) full-funding status.
- Offer a income tax deduction (100% of contribution) to any SS recipient that voluntarily agrees to sign their SS checks over to a non-religious school or district (public or non-selective private) located in and serving a designated high-poverty region. Call this the Re-Generations program. It amounts to voluntary means testing with a charitable twist.
- Establish optional USA Retirement accounts that are privately owned individual accounts designed to encourage savings over and above SS. These accounts can be filled tax-free (reducing taxable income by contribution amount), withdrawn tax free after SS retirement age, and inherited tax free. There should be a maximum contribution limit per year of 5% of US median income (currently, this would somewhere north of $2000).
Here's how to frame the battle:
- Our plan fixes the social security problem without going further into debt; yours costs $2,000,000,000,000 in new public debt and, if everything goes exactly right, leaves exactly where we are now...maybe.
- Our plan is secure; yours is risky.
- Our plan reduces payroll taxes for 80% of workers right away, providing an economic stimulus; yours doesn't.
- Our plan reduces the cost of employment for most new jobs, stimulating job growth; yours doesn't.
- Our plan strengthens the inter-generational commitment of our society; yours weakens it.
- Our private accounts come with true investment freedom; yours are subject to heavy government regulation.
- Our plan actually helps build our national rate of savings; yours helps build the private profits of Wall Street firms.
Having a competing plan allows a focus on the numbers and an expansion of the thinking about the problem that merely saying "No, never. Bad idea," does not.
Here's why its a wedge issue: Democrats are offering a plan that 1)"saves SS"; 2) is fiscally sound; 3) LOWERS taxes for most people; 4) makes everybody pay the same SS tax rate; 5) creates the personal retirement accounts more worthy of the name; and 6) involves LESS government regulation; and 7) demonstrates bipartisanship (cf. private retirement accounts). Jujitsu. Democrats have a plan. It's a better plan. It will sell much better nearly everywhere on its merits. Either GOP member flips to the Dem side or must go down defending the indefensible in order to stay loyal. Dems are clearly in a win-win situation.
BTW, should this proposal be adopted by some miracle, it will be easier (at a later stage of the progressive fight-back) to eliminate the payroll taxes altogether in favor of an more progressive tax system to pay for SS and Medicare. I'm working on a future diary about this.