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Here's a selection of what some of the Presidents responding
to this Executive
Decision said:
Option A: The "Soft" Option
The decision was difficult, and I would basically favor a compromise between the two options. I chose option A, although at my age and income level any additional payroll taxes would be a burden. I would say raise the tax to no more than a maximum of 3%, tax actual benefits up to 100% for individuals with retirement income above $50,000 per year, and raise the retirement age to 65-70. At today's income and savings level there are very few people who have adequate personal savings to make retirement at 62 a realistic option, unless there is a medical reason. Most people I know are too active and involved in their professional lives to want to retire that early.
Money adequate to fund the entitlement programs has been collected. The fact that it has in effect been loaned to the beneficiaries of the income tax cuts of the past 15 years simply means that the people, nearly all of them upper income, who benefited from the income tax cuts will have to have their taxes raised to pay back the money that they have been earning interest on rather than paying their fair share of the costs of living in a civilized society. Everyone says they like means-tested programs, but the fact is that means-tested programs are the least popular and are the objects of great political wrath, even when the programs in question are tiny compared to much less controversial non-means tested programs.
Actuarial realities taken into account, the same Manifest Destiny/blooming America that the Social Security creators believed in still can happen. How? By becoming a bigger system. Allow immigration to people willing to deposit 10 years worth of Social Security into the system, thereby alleviating fears of their becoming public charges and expanding the contributor base. Sooner or later we need to add STATES!
To me, my candidate could not possibly vote for the "hard" option. In an election year, with the "graying" of America becoming so evident, to vote any other way would be political suicide. I'll be honest, I can see the utility in the "hard" option . . . but as a campaign manager, to choose anything but the "soft" option would be crazy!
The decision was a virtual no-brainer. Aside from the obvious political benefits -- older Americans are the most active and regular voters -- the soft option would keep Social Security spending from becoming fodder for the growing conflict between the classes. Everybody benefits. Persons earning more than about $50,000 per year and receiving benefits should pay a little bit more in taxes on those benefits. I do think the retirement age needs to go up a couple of years. Americans are living longer and working longer. I'm not suggesting raising the age to 80 or anything, but adjusting the qualifying age by about three or four years would keep Social Security going a few more years.
I feel that benefits should be kept as they are. If benefits to the retiring boomers are cut then the transfer of wealth to my generation will also be cut. For example if my parents' benefits were cut now they might have to sell one of their homes; this would reduce my future benefits and their quality of life. I am quite willing to accept the fact that the Social Security program may be broke by the time I am eligible for benefits. In the future I will receive enough from my parents' estate to cover any loses that a reduction or loss of benefits from Social Security would cause. If many other people are in my situation then they would also be able to survive the loss of future benefits. Per this theory a model might show that there would be enough benefits to cover the poor come 2050.
The Social Security and Medicare programs are important to me and my wife in retirement (now in my 14th year). My company pension (not "COLA'D" was geared to what I was expected to receive from those programs. Already, the tax on Social Security benefits has diluted that expectation. Further reduction would seriously affect our living standard as we approach the ends of our lives. Option B: The "Hard" Option President Joseph Stidham, Republican: If the situation is to be salvaged, we will have to limit the medical procedures available to those in the latter stages of life. There will have to be some cost/benefit analysis if we are to cap medical costs.
To pass these necessary reforms the President must accomplish two things. First the American people must be persuaded, indeed coaxed, as Peter Peterson exhorts, that they must increase personal savings and that this increased savings, in concert with entitlement reforms, will indeed solve the problem. Second, the President must properly package the reforms into three pieces: an entitlements package, a tax package and an infrastructure-spending package. Single item projects will almost certainly favor the well-off, and since this whole thing is a web of two-sided coins, only comprehensive programs can work. To educate the public, I propose that the President make two speeches per month on the first Monday and Thursday of the month. The Monday speech is a rah-rah we're America, we can do it and it is our duty to do it speech. The Thursday speech is either a there-are-two-sides-to-every-coin speech or a nuts-and-bolts speech refering to Monday's topic. With this format, the President can expect much better than 50% approval for the program in six months with a public versed in the give-and-take nature. When other news seems ripe to preempt or overshadow these speeches, include a segment in which politicians or media who favor the hot news over these speeches are mocked as unpatriotic short-sighted and selfish. The three packages can be formulated during the same six months and subsequently introduced. The three packages are designed to be independent of one another but mutually reinforcing. This allows both a multifaceted attack on the problem with fault tolerance in the sense that success can be achieved on the overall goal when any of these makes progress. I disagree with Mr. Peterson's consumption-only tax system. Rather than being progressive as he claims because the rich spend more, it is truly regressive because, despite that increased spending, they spend a smaller percentage of earnings. The tax package I like continues to be an income tax which promotes or requires personal retirement savings but would not include federal subsidies to rich medical programs such as the tax-exempt medical accounts proposed by Republicans.
Clearly a laissez-faire attitude here doesn't work. Nor does a "Social Security as welfare" solution. I'd favor a more Draconian solution than your "hard option". The real question here is how long we will tolerate giving such tremendous benefits such as Social Security, medicare, tax breaks (i.e. extra deductions for being a widower over 65 etc.) to such a small portion of the population. We practice a strange form of socialism here. A 3rd option: slowly eliminate Social Security and other benefits for the elderly. Everybody stops paying now and everybody gets what they put in--no more or less. Allow lump distributions of Social Security. A 4th option: Don't estrange younger generations by saddling them with this incredible tax burden. Allow them at least some of the benefits given the elderly, i.e. universal health care. Eliminate the tax benefits that the elderly receive. The question really is: To be socialist or not to be socialist?
This is an extremely easy decision for me to make as a young American, but I realize that this scenario is an extreme oversimplification when I think about the fact that the lobbying and voting forces of the retired and near-retired are very formidable. In order for "Option B" to be anywhere near politically viable, there must be a related initiative to mobilize the vote among the 18-35 crowd. "Rock the Vote" has the right idea, but the campaign has to be expanded into all areas of interest for this group and not just pop (rock) culture.
Mutual funds and similar investments are a much more productive use of retirement savings than any program run by the government.
It's time to stop kidding the elderly. We who won World War II, went to school under the G.I. bill, and helped the country come to its present position of wealth and power are quite willing to do what is necessary for the common good.
The "hard" option is the best and most correct decision for the future of this nation. We are all responsible for our own retirement, not the government, the nation or our fellow neighbors. This option may keep me from being reelected, but as an elected official it is my job to make the right decisions for the people I am serving, not for myself.
This is hard. Social Security was a founding accomplishment of the modern-day Democratic party. Yet, the same pragmatic liberalism that justified its creation now argues for its dramatic revision. It is unconscionable to continue to allow discretionary spending and infrastructural spending to atrophy to near non-existence while middle-class entitlements remain untouched. We are a rich nation with an impoverished public sector, and we are also a rich nation which allows a shameful amount of poverty to exist unalleviated. Yet an entitlement that predominantly benefits the affluent is considered untouchable. If we think that reasonable means-testing endangers the political viability of the program, then what are we saying of our opinion of our citizenry. Are we a nation that will provide for the elderly-poor only if the elderly-rich are also entitled to benefits? Do we really buy the mythical "insurance" analogy to that extent?
In a time when the word "crisis" is used every other minute, this situation is truly a "crisis". As to the decisions that need to be made: there really aren't many. Either President Clinton or Dole totally revamps not just the present programs but the entire concept behind them, or we all go bankrupt. It's not really about being a hero; it's about being a realist -- not Clinton's forte. The kernel of the conundrum is how we got here in the first place and that can be addressed by examining the overriding entitlement: the government's entitlement to private property, namely income, for purposes admittedly other than "governing". Transfer payments, social programs, redistribution of wealth, goods and services do not qualify. The dialogue needs to take place out "here", concerning our money, who it belongs to, who gets it and why. The answers to the "entitlement crisis" will follow and Americans will surprise some with their generosity and grasp of solid solutions to real needs.
The impending problems with the Social Security Trust Fund have long been debated. The stability of the Fund is threatened not only by the shifting demographics of this country but also by the willingness of the government to utilize those funds for other then their originally intended purpose. If I pilfered my retirement fund as often and as deeply as the government has the SSTF, I would retire destitute.
Enough Americans are sick and tired of the politics of rights and entitlements that now is the time to usher in an era of the politics of responsibility. The American people respect leaders who articulate positions based on principles of responsibility and fairness. What wealthy senior can argue that they deserve government checks more than children in poverty do? A program of means testing should be adopted over a period of ten years. The first year the wealthiest 5% of seniors receiving SS checks should be excluded, the second year the the next 3%, and so on.
From an objective economic standpoint, the decision is easy and clear: Option B. From a political standpoint the decision is also fairly easy: Option A. As long as this is the case, politicians will choose A since B is a near guarantee for losing an election. The political pendulum will not move to B until more people feel the economic pain of excessive and uncontrolled entitlement spending.
It's not as simple as either cutting entitlements or not cutting entitlements. People should be provided with incentives during their working years to invest for their retirement. Employers should be provided with incentives to contribute to employee retirement plans. I'm sure I'm paying more into Social Security than I'll ever get out of it. That doesn't bother me so much. Many elderly people need the income. To take it away, especially from the very needy, would be inhumane. I feel fortunate to have a job, to be young and healthy. Sometimes we forget that it is good fortune (combined with hard work) that enables us to bring home a paycheck--and then complain about all the people who want to chip away at it.
Subsidies, in all forms, are at best inefficient. At worst, one might call them immoral, unethical and un-American. The founding fathers never intended the older generations to ride on the backs of those who happen to be younger than themselves. Pro-government forces in this nation have created a nation of dependence, which needs to be dismantled for the greater benefit of all. Rather than allowing workers to invest moderate amounts of money tax-free in investments for their own future, we limit individuals to $2000 apiece and force everyone at gunpoint to throw money into the bottomless hole known as Social Security. We then need hundreds of "administrators" to collect, juggle numbers and then redistribute to other individuals. The only people who win from this scenario are the government workers. As taxpayers we all lose. Social Security needs to be phased out. Those over age 55 should continue to receive full benefits when they retire. Individuals 40-55 should receive partial benefits and those of us under 40 (myself included) should be happy that we will now get to keep more of the paycheck that we earn. The best man to complete this tough job would be Libertarian candidate Harry Browne, who explains the specifics of his plan to do exactly this in his book "Why Government Doesn't Work."
These two options are totally unacceptable. And if you ever send me a memorandum again suggesting that we rob Peter to pay Paul and I quote--"There is no reason, Mr./Ms. President, that the future of entitlements for the poor should be threatened because we are unwilling to take them away from the rich"--I will ask........NO....I WILL DEMAND.....your immediate resignation. I suggest you get the right people together and research how Chile privatized their Social Security System. I hear it has been a fair sucess. Perhaps something similar could be used here. Any citizen who has been made a promise by their government deserves an accounting. Maybe take a look at Tauzin and Schaeffer's Bill (HR 3039 Abolish the Income Tax and the IRS). Maybe we could specify 2% of the National sales tax into a special untouchable fund for those truly in need. Make a cut-off date for more entrance into Social Security. Let me make it clear that anyone still in gets full benefits. The buck stops here and as long as I am in office I will make sure the U.S. government keeps its promises! We'll provide legislation that anyone who opens up a retirement account with a private insurance agent can have a secure account that can't be levied or used to settle bankruptcies if they agree not to touch it until they die or retire. Find a way to encourage the young to begin early and to always contribute. Perhaps we could teach better economics in schools to prepare our youth for their futures. We need not burden them with our debts! The people of America are not stupid, and government should not be in a position to let them down. To quote that movie Apollo 13, "FAILURE IS NOT AN OPTION." Now get to work.
Our current group of senior citizens represent the greatest generation in American history. They grew up in a depression, fought a war, and placed the United States in a position of world dominance. They should not be affected by the cuts we will be forced to make. Slowly pushing back the age of receiving benefits is an excellent start. Today's Boomers must be encouraged to plan for their own retirement as future benefits will have to be scaled back. Medical savings accounts should be instituted to help relieve the costs of Medicare. The Medicare and Medicaid systems must be changed so that recipients have a reason to keep medical costs down. Federal election laws must be changed so that special interests cannot dictate more and more spending. America must elect officials who will vote for spending cuts, not those who give into the PACs that currently control Congress.
Entitlement programs are not the government's job. Nowhere in the Constitution or the Bill of Rights is there any proviso for entitlement programs. Therefore, we will be privatizing Social Security, Medicare, Medicaid, and all other entitlement programs. This executive office will no longer collect taxes for these programs. We will be utilizing existing capital to allow those individuals currently receiving entitlements to seek whatever program provided by the private sector they wish. Everyone will be able to make their own decisions regarding how they wish to take care of their future.
While I feel that President Clinton would choose to go the other way on this, I see that there is a definite need to curtail the spending on this entitlement. Social Security was never intended to retire on solely. You were still supposed to save for your own golden years. My mother taught me that no one should be responsible for taking care of you in your old age. She planned and retired owning her house. I understand this at 29 and am putting away a little here, a little there, so that when I hit my 60s, I can be comfy. Those people who don't recognize this fact, do so at THEIR OWN PERIL, and while I may feel sorry to see them flounder in their golden years, I am not responsible for their choices. In a nutshell, you plan to provide for yourself, or you plan to exist on someone else's good will (and that's a very thin shaky reed to bet your life on).
Copyright ©1996 by The Atlantic Monthly Company. All rights reserved. |
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