Thompson Reveals Social Security Plans

Former Sen. Fred Thompson who also is one of the stars of TV's Law & Order had offered a Social Security plan in his race for the Republican presidential nomination. From the Washington Post...

Republican presidential candidate Fred Thompson yesterday proposed slowing the growth of Social Security benefits and creating voluntary, government-matched savings accounts, becoming the first candidate of either party to offer a detailed proposal to fix the nation's retirement system.

Thompson's plan draws on ideas favored by conservatives: a reduction in benefits, rather than an increase in payroll taxes; and a shift toward private accounts, rather than government-provided payments. As a result, the proposal drew immediate criticism from liberals, who said it would severely reduce Social Security benefits, especially for low-income older Americans who rely most heavily upon them once they reach retirement.

Under Thompson's plan, Americans would be offered the option of contributing an extra 2 percent of their salaries to a retirement savings account. As with many corporate 401(k) plans, the government would contribute $2.50 for every dollar that an individual saved, up to a maximum of $12,000 per year.

To pay for the savings accounts and to help keep Social Security solvent, Thompson would change the way benefits are calculated. Over the next 50 years, benefits would grow much more slowly under Thompson's proposal than in the current system.

Those who are now nearing retirement would be exempted from Thompson's formula. But Thompson argued yesterday that even by requiring an increase in the retirement age to receive full benefits, people will be better off with the combination of reduced Social Security payments and money from their savings accounts.

"There's an awful lot of people out there who depend on Social Security for all or part of their income," Thompson told reporters. "It is unsustainable as presently constituted, and everybody knows it."

Economists have said that without changes, the Social Security system will no longer have enough money to pay benefits to all retirees starting in 2041. The problem has gotten worse as the baby boomers have begun to retire and draw their checks this year.

But with less than two months before the 2008 voting begins, candidates have generally been reluctant to confront the Social Security issue. Sen. Hillary Rodham Clinton (D-N.Y.) has said economic growth will deal with the projected shortfalls in the system. Her chief Democratic rivals have said that wealthy people should pay Social Security taxes on the money they make above the current cap of $97,500 each year. But neither has offered a specific plan.

Among Republicans, former New York mayor Rudolph W. Giuliani, Arizona Sen. John McCain and former Massachusetts governor Mitt Romney have talked in general terms about private savings accounts, but none has offered a specific plan. All the major GOP candidates have explicitly rejected increasing Social Security taxes as a solution.

Thompson's aides said they hope their candidate will get credit for tackling a difficult issue directly, without fear of the criticism he is likely to get. In 2005, President Bush pushed for private savings accounts but abandoned the idea in the face of withering opposition.

I've always wondered why if I was working I'd have taxes taken out of my check towards social security. What if I don't want to pay into that system? Shouldn't I be allowed to use my earned wages/salary as I see fit?

I'm all for allowing for a more voluntary system that encourages savings. Me personally I'm not sure I'd be for a "voluntary, government-matched savings account" but it's a start in the right direction. As a worker, I should be allowed to keep more of the money I have earned and then put that towards the future.

Blacks & Social Security

I found this article on social security from the Washington Post. President Bush has made social security reform a part of his agenda. He stated this as a goal in the state of the union.

However, in this article he's courting black support for his social security agenda. As seeming to be a pattern right now, President Bush is meeting opposition not from individual blacks but by the "black leadership".

Jesse Jackson says:

"This move on Social Security is really an attack on Roosevelt...It reflects the extreme right-wing ideology that says there should be no roof for the wealthy and no floor for the poor."

The vice president of the Congressional Black Caucus Foundation Maya Roceymoore also chimes in:

"Any financial planner will tell you that retirement should rest on a three-legged stool: pensions, savings and Social Security...The only secure leg of that stool is Social Security. But if you move to private accounts and something happens to the stock market, you have a collapsed retirement stool."

Of course this article at least mentions a very low level example outside of the black activists. Robert McFadden from Medford, NJ describes how his father paid Social Security taxes for 30 year but died at age 57. McFadden's sisters and brothers were too old to collect survivor benefits and his stepmother is likely to qualify for a higher SS payment than Mr. McFadden's father.

Robert McFadden says:

"When my father passed, his Social Security passed with him,"

"Some people say this idea will only help people with certain lifestyles and certain incomes, but I challenge that...I see seniors in my church right now who cannot even live off of what they are getting from Social Security. I think the idea of taking a small portion of your taxes and creating personal accounts in minimal-risk investments will teach people who don't save the concept thatcompounding interest over years provides an opportunity to increase their family's wealth."

You've got the activists claiming this is an attack on a late President's memory, that there will be increasing disparities with Social Security privatization, and then you've got a person who's not an activist who sees how unfair social security is to so many in his community. Can one see who is truly out of touch?