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Signal boost for political petition - Input Junkie
December 3rd, 2012
11:38 am


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Signal boost for political petition
Gene Treadwell, a friend of mine, has a petition up at We the People.

If it gets 25,000 signatures by January 1, the White House will have to view and address it.

You can sign it here.
Make Social Security an Ind. agency, like the Federal Reserve, to
prevent Congress from raiding the S.S. Trust Fund.

Making The Social Security administration an independent agency will
prevent The Congress or Administrations from diverting Social Security funds
to other uses and replacing them with worthless ( unfunded) I.O.U.s. S.S.
funds should only be used for; Social Security Insurance, Supplimental
Security Income, Social Security Disability Insurance, Medicare, and
Medicaid. Social Security would most likely be completely solvent if not
for past diversions of Social Security funds by Congress, and past
Administrations. There should be an Independent Director and Trustees
managing an independent and Secure Trust Fund (Independent of direct
Congressional; Access, Control, or Political Manipulation).

The Social Security Trust fund is not and ought not be a part of the Federal
Operating Budget.

I'm not sure that it's a good idea-- I'm no expert on the likely effects of those rule changes-- but it's not obviously wrong.

This entry was posted at http://nancylebov.dreamwidth.org/998921.html. Comments are welcome here or there. comment count unavailable comments so far on that entry.

(3 comments | Leave a comment)

[User Picture]
Date:December 3rd, 2012 05:04 pm (UTC)
To be fair, the IOUs have nothing to do with social security projections -- and there are huge advantages to the federal government treating the SS trust fund as a bank (specifically, it means the federal government is spending less of it's money on debt interest; if it's going to run a deficit, I'd far rather it be to itself than an external agency).

Really, though, the easiest way to guarantee SS's solvency, regardless of whether the money for it is sitting in a big jar or getting loaned to the greater federal government, is to start treating SS taxes as a real tax, rather than a regressive payroll tax that is structured like an insurance payment but isn't optional, and funds a service that serves the general welfare (except that the higher your class, the more likely you are to see a return on your investment). Even if it were kept at a strict percentage of general income, removing the cap on SS payments (and ideally, extending the tax and eligibility to cover non-payroll personal income) would easily deal with the problem.
[User Picture]
Date:December 3rd, 2012 05:06 pm (UTC)
There are some significant problems with this at the macro level. I'm not a pension actuary but I'll make a stab at it.

One problem is simple demographics. Thanks to boom-bust cycles in population growth, the number of people drawing out of the system compared to the number paying in varies pretty widely over a period of decades (there's a similar problem with school funding, for basically the same reason). Even a well-reserved, actuarially sound system (which SS is emphatically not) would have reserves fluctuating by trillions of dollars, which has all kind of macro implications; it's hard to see how a truly independent organization could manage that.

Another, related problem is that you can't just put the SS reserves under the bed, or inflation alone will erode them quickly; if there were an independent fund, it would have to be invested somewhere. Remember how the Republicans proposed allowing people to independently invest part of their SS money? Remember how furious everyone got about that? Well, what's the alternative? Basically, the alternative is T-bills, wwhich is nothing more than giving the money to the government to spend in exchange for a (possibly worthless) promise to give it back someday.

The whole thing is kind of like fractional reserve banking: when you look at how it actually works, it seems surreally bad, and then you try to figure out how else it could work and you realize just how hard the problem is.

It would probably be best to give up the illusion of a trust fund and fold SS into a GBI, but that would be politically impossible.

Edited at 2012-12-03 05:07 pm (UTC)
[User Picture]
Date:December 4th, 2012 04:31 am (UTC)
I'm perplexed at Medicaid being included. Medicare is effectively part of Social Security and is paid for through payroll taxes in the same way. Medicaid is not paid for through payroll taxes; it's a straight redistribution of income to people too poor to afford medical care. The federal government does kick in funds to help keep state Medicaid going, but those funds don't come out of Social Security or Medicare taxes. In fact, there are a lot of people who have what's called "Medi/Medi": they're on Medicare, which covers most of their health expenses, but Medicaid kicks in to pay most of the costs of supplemental health insurance associated with Medicare. Two separate programs—and incredibly complicated together, as I found out when Bush's prescription drug benefit was set up and I spent two or three hours helping a friend get signed up, cyclically talking to the Social Security Administration, to the California agency that handles Medi-Cal (our state's name for Medicaid), and to the insurance firm that covered her particular prescriptions, and then back to the Social Security Administration to give them the next bit of information they needed.

So I'm not seeing that including Medicaid in this makes even a little bit of sense. Medicaid has no trust fund and has never been part of Social Security. It's currently been dragged into Obamacare, as a device for "insuring" people so hard up that it's insane to force them to pay even a fraction of the cost of health insurance; but Obamacare's relationship with Medicare is likely to be increasingly hostile as they compete for government funds and medical resources.
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