Fred Thompson Proposes Social Security Fix
Posted on November 9, 2007
While I’m still undecided, I can’t help but to mention that Fred Thompson keeps impressing me. While many are dissappointed that he hasn’t met the overhyped Reagan incarnate buildup, I’m being impressed that he is one of the only people actually offering actual plans on things that matter. Here is a brief outline of his thoughts on Social Security. Now, I’m not qualified to pick his plan apart, but at least he is proposing a solution, unlike other candidates.
Thompson would leave Social Security benefits unchanged for people who are currently retired or are near retirement. No one now over the age of 57 would be affected.
He would provide voluntary personal retirement “add-on” accounts to supplement benefits and index the program’s benefit system to prices instead of wages, as is done under the current plan.
Thompson’s plan would give current workers the option of making voluntary contributions into personal retirement accounts similar to a 401(k) plan.
Workers would be able to contribute 2 percent of their monthly wages and the federal government would match that contribution.
Thompson said under his plan, a worker earning $40,000 a year who started contributing to the plan at age 22 and worked until age 67 would accumulate more than $280,000 for retirement.
He said he opposed trying to overhaul Social Security by raising taxes on wealthier Americans, as some Democratic candidates have proposed.
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22 Responses to “Fred Thompson Proposes Social Security Fix”
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FTA:
Let me see if I have this right.
- The SS tax will remain just as it is
- Benefits will remain just as they are
- He will add a new optional program that doubles your donations, courtesy of the American Taxpayer
What I want to know is, why aren’t the Democrats cosponsoring this thing? Unless I’m missing something, it doesn’t solve s#!* and it’ll cost even more.
BTW, there’s another candidate that has a perfectly plausible solution to SS. You just don’t happen to like it.
The actual way to solve social security is to allow people to invest the money in accounts set up in their names so that what they pay in goes to them. Currently we pay in and it is used for current retirees. Anything left over each month is pilfered by Congress and they leave an IOU. By setting up individual accounts (similar to the government employees TSP) the money would be dedicated to those who paid it in and they could pass it on to their heirs. As it stands now if you die you forfeit what you paid in to others instead of to your family.
It would cost money up front to pay for those too old to benefit but if there were a law passed that forbade Congress from touching the money paid in there would be enough to do this. We could also offset up front costs by cutting unnecessary programs.
In the last 5 years I have put away (and earned) more in a 401k than What I have earned thus far in SS in 36 years of work. The market, no matter how bad, will give a better return than the gvt gets on SS (which is less than 1%).
Set up individual accounts. They can be life cycle or people can manage them but the money belongs to the person paying it in so he should have the say in how it is invested for his retirement.
That’s all well and good, Big Dog, but how will they pay for all of the things they’re currently paying for with SS funds?
Same way they do now, Jeff.
Dazzle us with smoke and mirrors.
I prefer just giving Social Security to the states to handle as they have the capability and the money. Then each state can decide for itself what it feels the best solution is. Fred Thompson should actually advocate that position since he claims to be for states rights. The federal government would have to pay off those IOU’s to Social Security they have been building up. I think they just want to make them go away instead.
Good point.
Fred’s solution suggests like GWB’s plan to bifurcate the already irresponsibly financed system. We know that GWB just put his toe in the water and that is what Fred suggests here. Fred will have no more success with his plan than W.
There is however a plan that works - I call it Rise Up to let the poor and middle get rich just like trickle down has made the rich even richer.
Under Rise Up all 15.3% paid into SS & MC is put into personal accounts, invested in indexed funds for a $40m000 a-year workers life which generates a $3.2 million nest egg after 40 years - and an monthly retirement check of $27,000. Under my plan a worker will get in ten months what Fred’s plan would get that $40,000 a year worker in 40 years.
The creation of personal accounts will reduce our unfunded potential entitlement liabilities of $83 trillion to $6 trillion which can be easily financed off budget - we just did a $100 trillion write down of our currency off budget - $6 trillion is a cakewalk to guarantee our existing and future retiree will get no less than that which is promised under the existing plans.
BTW the $27,000 a month can pay for an affluent lifestyle and the best medical care on the planet. If you are interested in solving this dilemma and doing a lot of great things that dumping $1.2 trilliion into the capital markets every year will do rather than blowing them down a “consumption” rathole then go to www,riseupamerica.us or http://www.riseuptheoryofeconomics.com. All your questions are answered there and in the free e-book offered.
Those are pretty numbers, Dick. I especially like the part where you pull money from the market by selling $4 trillion in bonds and then put it back in the market. You then claim the “infusion” will spark an economic boom so large that tax receipts will double in 4 years.
And do you have any idea what kind of return you’d have to offer investors to sell $4 trillion worth of bonds in a short time???
Begone with your snakeoil, Dick.
P.S. Depreciating the currency even farther was a nice touch, too. Just let me know before you do, so I can put all my savings in euros.
Jeff,
Obviously you haven’t gone to Dick’s web site and read his plan. You gave a quick snipy answer to a serious solution to the Social Security program.
Nowhere in Dick’s plan do you “pull money form the market by selling $4 Trillion in bonds and then put it back in the market.” If you really want to know the plan go download his free book on “Rise up economics.”
His plan has been vetted by serious economists and presents a real way to solve the problems of social security and to cause the average worker to become rich.
Actually, I did, Gary. It was in one of his spreadsheets about how we pay for the transition. That is the crux of the matter, after all. There are a ton of ways to implement a decent saving/investment plan. The problem is that we’ve been living on debt. How do you transition without reneging or doubling some generation’s tax bill?
His answer was to magically double tax receipts. If he can do that, tell him to go ahead and get started. As soon as he shows me the money, I’ll approve the rest of his plan.
Thanks Gary but Jeff is referring to just one of 20 different ways I pose in my book to pay for the transition. The $4 trillion he refers to is on a spreadsheet that details just one of those methods. As Jeff no doubt already knows we don’t have a real $9 trillion national debt. $4 trillion of that amount represents “intergovernmental holdings” which were never really amounts borrowed from anyone - they were simply amounts of excess receipts from emtitlement programs Congress confiscated to pay for unrelated government expenses. In setting up these amounts as part of our “national debt” they issued special bonds in an identical amount that can only be redeemed by Congress. The effect on the American balance sheet? - One offsets the other. I merely posed as ONE of the methods to finance the transition is to cash the bonds as needed and liquidate the $4 trillion of the national debt.
We could financed the first $4 trillion of transition costs by entering the bond market and selling bonds but reducing our natioanl debt sinuktaneiusky by extinguishing this fictional “intergovermental obligation in a like amount. In other words cash in the $4 trillion in bonds, liquidate $4 trillion in the national debt bringing it to $5 trillion and then going into the bond market, borrowing $4 trillion and paying benefits out of these sales. We would then run up our debt up to $9 trillion where it is right now. The public won’t know the difference.
Then, as I determine that the transition will only cost $6 trillion, the ANNUAL infusion of $1.2 trillion into the capital market (the payroll taxes put directly into personal accounts is invested directly into the capital markets) for FOUR years income tax receipts both corporate ($500 billion and personal $1 trillion) would double to pay any further transition costs. Therefore $4 trillion in bond sales and $2 trillion in increased income tax receipts would cover the $6 trillion. And this is just one method to pay for the transition.
Now that is not my preferred method to pay for the transition - I would pay for it off budget just like we solved the last depression by lowering interest rates which dropped the value of the dollar but has increased the value of stocks. So since we spent $100 trillion dropping our interest rates I would expect Jeff to endorse a $6 trillion cost which is not oppresive to MAKE THE POOR RICH.
Jeff can put his money in stocks as they will follow inflation up the charts. He might go long the dollar here at the bottom as those rates will go up and the value of the US dollar recover.
BTW in 1982 when we instituted trickle down it took 7 years to double “income” tax receipts. However in 1982 it was a VOLUNTARY PLAN - the rich spent plenty on new planes and chalets before they put their $$$ into the market. Under Rise Up the annual infusion of $1.2 trillion is not voluntary - you can bet on the increased economic activity will reduce that doubling from 7 years to 4 years.
I want to thank Jeff for going to the website at least - most people don’t give a damn about solving this problem - all they want to do is whine.
As the people that are reading this are probably Fred Thompson supporters - I would suggest he adopt Rise Up as it cuts the national budget in half and generates the biggest tax cut in history. It liquidates $77 trillion of our potential unfunded entitlement liabilities, makes the poor rich, reduces financial crime, stress and potentially will empty our prisons, reduces to one plan the millions of pension plans, it can be structured to economically emancipate women and allow them to stay home, raise the kids and still retire a millionaire. Just take the time to read and UNDERSTAND the mathematics and social benefits. It could resusutate Fred’s flagging campaign. It IS the pocketbook issue that Americans are praying for.
Save Fred by going to my site, research my plan and inform him of the benefits to the American people and his campaign..
http://www.riseupamerica.us
http://www.anti-poverty.com
http://www.makethepoorrich.com
NONONONONONO NOOOOOO….
The solution to SS is right here.
That’s the same thing Dick posted, Kender. Why does everyone think there’s some perfect solution out there?
We’ve been postpaying retirement benefits for decades. In a few more decades, the demographic shift will make the impossible. We’ll need to either switch to a prepayment system or get out of the business completely. If we switch a prepayment system, there will be a period of time where we have to pay yesterday’s bill and tomorrow’s bill simultaneously. Or we can renege on our promises by cutting benefits, raising the retirement age and/or inflating the currency.
The SS transition will require a ton of cash and/or unkept promises. I honestly don’t care which details we settle on, but I’m tired of hearing this David Copperfield crap.
Jeff - the $4 trillion is the fictional part of the national debt called the “intergovemental holdings” that is a debt one governmental agency owes to another. In accounting you can’t owe yourself money - therefore the national debt is really only $5 trillion.
Now we can cash the fictional bonds and reduce the $9 trillion to $5 trillion and go into the market and borrow the first $4 trillion needed to cover the transition w/o causing Americans an extra beat of their heart - they think their national debt is really $9 trillion.
I figure the cost of transition would be $6 trillion. The next $2 trillion would come from increased income tax receipts.
As you no doubt recall it took 7 years after trickle down was introduced in the Revenue Act of 1982 (70% tax rate dropped to 28%)for actual governmental income tax receipts to double.
Trickle down was voluntary - the rich bought their chalets and aairplanes before they put the extra money in the capital markets.
Under Rise Up the annual infusion of $1.2 trillion into the capital markets is not voluntary - the amounts going into personal accounts is not voluntary just like payroll taxes for existing SS & MC plans are not voluntary.
I believe that we can double “income” tax receipts from $1.5 trillion to $3 trillion in 4 years and pay for all additional transition costs.
NOW THAT WAS ONLY ONE OF 20 WAYS I HAVE IN MY BOOK TO PAY FOR THE TRANSITION.
My preference to pay for the transition is to do it off budget just like we solved the last potential depression. We lowered interest rates at a cost of $100 trillion in value and a 33% drop in the value of the follar. Now I don’t think taking a $6 trillion hit would even cause a ripple especially when the country would be booming with a savings rate of 15% eclipsong the 1 and 1/2% negative rate we have now AND THE POOR WOULD BECOMING RICH.
Jeff had you noticed the stock market has rebounded from 7,000 on the Dow. That the devaluation of our currency hasn’t caused the market to falter?
Did you realize we have a $400 trillion country and only owe foreigners $2.3 trillion.
Most people whine and moan because the front page never consults the financial pages. America can pay for the transition out of petty cash - don’t listen to politicians or their comrades in crime in the media.
If you or others reading this are Thompson supporters I would recommend you diect him to my website. Rise Up is the pocketbook issue he and all other politicians are missing that the people want so badly.
Rise Up -
makes the poor rich -
cuts national budget in half - generates the biggest tax cut in history - extinguishes $77 trillion of the potential unfunded entitlement liabilities - creates million-dollar nest eggs for everyone - allows workers to retire at 800% of their last annual salary - increases their monthly retirement check over 20 times that which SS pays - it economically emancipate women through sharing of the personal account wherein she can stay home and raise the kids, not work a day in her life and still retire a millionaire - eliminates millions of pension plans and replaces them with one simple powerful personal account - reduces crime and financial hardship - it may even empty prisons and many more benefits you can read on the site and in the free e-book. You can review the mathematics and rates of return there too.
Now if Fred can’t win on that platform he should just retire.
Dick McDonald
I have posted two long posts on handling transition and Jeff’s other concerns - after I hit the submit button they never were recorded. Therefore the left must be working overtime.
He just has to stop whining and start reading and all his concerns will disappear. There is an answer and its time has come.
It’s the spam filter, Dick. You probably had too many links. Email Jay.
I did start reading, Dick, but I got just a wee bit skeptical when I got to the part where you were going to quickly raise $4 trillion in bonds and then cause an economic boom by dropping the newfound riches into various investments.
I see my posts were too long - therefore i will have to break it up. So let’s start. First we have a country worth $400 trillion and a debt to all foreigners of only $2.3 trillion. Therefore we vcan pay for the transition out of petty cash. I think the transition can be financed for $ 6 trillion. We just spent $100 trillion solving our potential depression by the off budget reduction in interest rates. What is a mere $6 trillion when the the poor are getting rich and we are dumping $1.2 trillion into the capital markets every year? Please Jeff - give us a break.
Ok, stop it right there. The “country” is worth $400t? Last I checked the “country” is divvied up between a few hundred million people. Are you going to tax us $6t?
Or did you mean the “government” is worth $400t? I know they don’t have $6t in cash on hand, so are you suggesting they should sell off $6t in assets?
Come again? The money supply is not even close to $100t no matter which aggregate you use.
I support the endgame, but your transition plan doesn’t even make sense. Where are you going to get the $6t? I already stated that I would support most any plan; I just want you to man-up and state the source of the transition money. Tax? Debt? Inflation? Santa?
Jeff -
You probably believe the only way to fund government is to tax the rich. You probably believe there is no way to solve poverty. Then answer this question why do we tax every worker 15.3% of his lifetime income and give him no investment at retirement? Do you deny the mathemetics that an average $40,000 a year worker having $6,000 sent to Washington for Social Security, Disability and Medicare every year would have $240,000 invested after 40 years at no return on investment? That if he had a 7% real return on stock and a 3% price inflation he would at a 10% ROI have $3.2 million nest egg at the end of a 40-year working life? If you don’t please explain your mathematics and how the table on my website is flawed?
Then if you agree with the math accept the reality that this $40,000 a year worker will retire on 800% of his last annual salary or $320,000 a year or 10% of his $3.2 million nest egg.
Then upset yourself further with the $27,000 a month retirement check he gets ($320,000/12 months)
Now considering existing SS pays $1,122 a month tell me about the fact there is no “perfect” solution. A $3.2 million nest egg to will his kids and $27,000 a month to retire on.
Dick: STOP MAKING ASSUMPTIONS about me and read what I’ve written. I support personal accounts. Actually, I’d rather trash the whole notion of government mandated retirement plans, but I’ll settle for a decent private account system.
So quit trying to sell me the roses and universal happiness at the end of the tunnel. I abhor the current system. Tell me how you get from here to there.
Hey, genuises - social security was never intended
to be a route to a well-funded retirement.
It’s insurance, fer cryin’ out loud; a basic floor
so people aren’t forced out into the streets
because of their advanced age or disability
(and thus their inability to continue working).
If you wanna retire rich, there are plenty of scams and
scam-artists more than willing to take your money.
But social security is freaking insurance for a worst-case
scenario. Nothing more.
Jeesh.