Restructure Social Security
This is part of an Economic Security Plan that I proposed during my 1996 campaign for U.S. Senate. Consider the time-frame when reading this piece.
Because of the impending crisis facing the Social Security Trust Fund, we need to engage in a national discussion of how we will continue to fund Social Security. Should a fair pay-in level be based on all personal income, not just earned income? And what part should Social Security continue to play in assuring a basic minimum income for the retired or disabled?
1. Convert Social Security to an income insurance program, instead of an entitlement paid out regardless of need.
Up to now, the high numbers of people in the work force compared to those in retirement have allowed payment of Social Security benefits to almost every retired worker. But my generation did not have as many children as did my parents. Thus the ratio of workers to retirees has dropped, and will change even more dramatically when the Baby Boomers, of which I am one, start reaching retirement age in less than 20 years.
When we reach the point that the demographics will not support the current system, we will have to change the way we look at Social Security. We will of necessity have to stop seeing it as an entitlement based on contributions, and look at it as similar to an insurance policy, with the payroll deductions as the premiums, and the pay-outs in retirement based on need. And, like car insurance, we pay our premiums but do everything we can to reduce the need to file a claim.
2. Program funded by a reasonable tax on all types of income, not just earned income.
If we accept Social Security as a national program set up to guarantee income security to our nation's elderly and disabled, then the reason to limit the revenue source to earned income simply disappears.
We need to consider assessing all income, including income from interest, dividends, and capital gains, at the same rate.
By the same token, everyone paying into the system under such an extended plan would become a potential beneficiary, based on need.
3. Basic payments made to retirees, disabled and other qualified individuals based on need.
Pay-outs would be made starting with those most in need, at a basic minimum level, and only then advancing to those less in need, to the point where annual income to the fund does not exceed expenses.
Once a universal health care program is established, the medical portion of Medicare and Medicaid can be folded into that program, taking it out of the Social Security system. Social Security would continue to cover basic needs, including the non-medical portion of long-term care for those in nursing homes or those needing assisted-living care in their homes.