Social Security: A New Direction

By David Schaffrath

While the topics discussed at the panel this past week are fresh in my mind, I would like to offer a few thoughts of my own on the topic of Social Security.

The problems facing the long term sustainability of Social Security have been presented over and over again and most conservatives are steadfast in the belief that we need to privatize a majority of the program. Although I agree with this, there are the enormous problems of selling the public on this and the reality of what to do with those in our society who will fall through the cracks or will not assume responsibility of their financial futures. One need not look far to see evidence of this in our present societal mindset.

In order to fix the problems and gather widespread support we need to acknowledge that there is a certain framework that we must navigate and work within. Due to the insidious way FDR implemented the system, a majority of Americans see Social Security as entitlement. This view will most likely not be changed in our lifetimes nor do most wish to overhaul the entire system. We all saw what a disaster healthcare “reform” turned out to be. With this in mind it seems like the best choice for us is to expand our private savings (401k & IRA) systems while taking a play out of FDR’s playbook and intertwining it with the current system.

One of the main problems with social security is the indexing of the expenditures to the consumer price index (CPI) to offset the effects of inflation. In essence this creates a cost that grows parallel to the economy. If we can limit the expansion of the system the economy will outgrow the burden imposed by the program.  To accomplish this we need to use one of freedom’s greatest assets, choice. The choice to partially opt out is key to revamping the system.

The private part of retirement savings being 401Ks and IRAs have been wildly popular in part because of the tax saving opportunities they provide. We need to expand on this without compromising the current system. We can accomplish this with an opt out type tax credit. All persons would still be required to contribute to the current system at the current rates to ensure the solvency of Social Security in the long term but based on economic criteria they could choose to receive a tax credit. They would receive this credit in lieu of the cost of living increases. (COLA) Given how well tax credits are received within the voting public, and the volunteer nature of the program it would be difficult to politicize the issue. The program could also be structured on a progressive scale so that largest recipients of Social Security (the middle class) would receive the greatest incentives to participate. With each person that agrees to the volunteer program there is a increase in the ability of the economy to outgrow the program and that  participants  and future participants will become more self-reliant; a welcome “change” in America today.

The program I have suggested tries to leave a system in place that still takes care of the needy but adds sustainability that is currently lacking.  Although this program may not entirely fix all the problems that plague our current Social Security system I believe it is a step in the right direction and will help reduce the future burden that we ask our children and grandchildren to bear.