How To Fix Social Security

Warning! Warning!
I’m about to expose my political bias. Thus you may be triggered to unsubscribing. I am fine with that. But when it comes to Social Security, it is INHERENTLY political and thus must be dealt with as such.
I just got done watching Devin Carroll’s video on the Social Security 2100 proposal where he interviewed John Larson a Democrat Congressmen.

Now, Devin is the MAN on all things Social Security. After Larry Kotlikoff and Elaine Floyd, Devin is the first person I turn to when it comes to Social Security. In fact, Devin just published a book on Social Security, Social Security Basics: 9 Essentials That Everyone Should Know. You should get it.

I’m a big fan of Larson’s proposal for reforming Social Security, some of the elements I’ll discuss below. Here is my video on the topic. The problem though is that Larsen is a Democrat, Kotlikoff and Floyd are also on the left. I’m not sure about Devin but the issue is abundantly clear to me, the right has ceded the discussion on Social Security to the left. And this needs to stop.

Hopefully, it comes as no surprise to you, but while I was raised on the left, the FAR FAR left, i.e. Gus Hall and Angela Davis left, I’ve long since left that reservation. I am more aligned with the right, generally speaking, but I’m much more a libertarian than anything. Do what you want as long as you don’t hurt anyone else, is my mantra for living.

But when it comes to Social Security reform, the right has a golden opportunity to take the mantra and actually expand their base, significantly. And they would be foolish not to see the opportunity before them and actually make Social Security work better for more Americans. Here’s how.

Now, first we must address that when it comes to Social Security FDR was pure genius. Just as he anticipated, he wanted Social Security so ingrained in society no politician would dare belittle it. Watch this video from 1987 about Dan Rostenkowski, a leading DEMOCRAT to see how Social Security became the third rail of politics, just as FDR predicted.

Today the VAST majority of Americans rely on Social Security in retirement. In fact, “among elderly Social Security beneficiaries, 50% of married couples and 71% of unmarried persons receive 50% or more of their income from Social Security.”

And those numbers are only going to get bigger as more and more people become Social Security eligible. But Social Security as we know it today is NOT solvent in terms of its ability to pay out the promised benefits. And any politician who trys to cut benefits will be thrown out quicker than you can blink. So reform is coming. But why leave it to the left to offer proposals? Makes no sense.

So, what the right needs to do is take much of Larson’s proposal and add a few touches.

First Larson proposes a complete overhaul of how Social Security is taxed. Immediately that will provide more income to seniors simplify because most would no longer pay taxes on their benefits, which is a huge sticking point for many.

Secondly, he also wants to increase the FIRST bend point from 90% to 93%, I won’t go into bend points here but this is a big deal too, which rewards HIS constituency.

Thirdly he wants to have a floor benefit for QUALIFIED WORKERS of 125% of poverty. I can’t stress how important this is. A qualified worker is one who has 40 credits in which to qualify for full benefits. That means 10 years of working. You don’t need to make much to earn 4 credits a year but you do have to actually show up and…work!

The value of labor is something the right should be ready and willing to reward. If you actually do your part and get a job and do it for a certain amount of time, 10 years in this case we will give you a floor of 125% above the poverty level. I think this is a very conservative position to take and all right-leaning people should gladly accept this.

Now, what Larson’s bill does NOT do and where the right SHOULD take advantage of to make HUGE headway with a ready made constituency is to increase the second bend point from 32% to 35%.

Larson’s bill focuses almost exclusively on the poor, which, without question is a Democrat constituency. But he does NOT FOCUS AT ALL on the lower middle, which is a Republican constituency. These are the people who get a Social Security benefit beyond the first bend point and into the second. And it’s the second bend point that also SHOULD get an increase especially if we are going to say those in the first bend point will have a minimum benefit of 125% of the poverty level!

This is so easy the legislation writes itself. And yet…crickets on the right. They, for some reason, seem to think that ANY proposal is a socialist scheme. Yet the folks who are inclined to vote for the right rely on it heavily too, socialist scheme or not! In fact, I’d argue Social Security is not a socialist scheme as it is funded by payroll taxes. Those are wages workers did NOT receive in order for it to be paid to them during their retirement. How that is socialistic I don’t know.

So, how is this paid for? Well Larson’s bill tackles this. Payroll taxes are gradually raised by .50% on each, the employer and the employee and the caps on wages are eventually gotten rid of over the next 25 years, a gradual phase in.

He also proposes that essentially a 4th bend point is added for the “wealthy” at 2%. I’d argue against that bend point being that low, but if it’s in exchange for a raise to our lower middle class constituents I’d take it.

For the record, bend points are simply how your Primary Insurance Amount (PIA) is calculated based on your Averaged Indexed Monthly Earnings (AIME). The first $926 of AIME you receive 90%. The next amount up to $5583 you receive 32% and the amount over $5583 you receive 15%.

Thus you can see the progressive nature of how Social Security works. The lower your income the more as a percentage of that income you receive in benefits. But the person on the lower end is certainly not getting rich.

For instance, say you make $10/hr and you did that amount for life, adjusted for inflation. Your AIME is around $1833. Your PIA will be around $1123 a month. If you take early, at 62 your benefit will be reduced, we’ll say by 30% but it does depend on your year of birth. So, now your benefit will be $786.

Your Medicare Part B and D will come from that $786 too. Part B is $134 and D is $34. And this is BEFORE you factor in Medicare Advantage or Medigap, depending on what you choose.

So, as Congressman Larson says, NO ONE is getting rich off Social Security. No indeed! Thus, to give people a benefit increase is moral, in my opinion AND good politics too, especially when a huge portion of your political base will receive that benefit!

Will some of your constituents pay more? Yes. But who are the constituents for the Republican party? The MIDDLE CLASS! Who are the constituents of the Democrats? The wealthy and poor. So, increasing the tax on the “wealthy” is no different than putting in the $10k limits on SALT under the Trump Tax Bill. The bulk of the people who pay the increase in taxes weren’t voting for you anyway.

You ARE helping the poorest among us too, all the while giving a decent bump to many who could use it as well.

It’s a total win/win. And yet, I hear NOTHING on Social Security reform coming from the right. Why not???? it’s being delivered to you on a golden platter. Take it and run with it.

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