From the Washington Post:
... Senior White House economic officials also are exploring a proposal floated by two conservative scholars that would allow Americans to choose to receive checks of up to $5,000 in exchange for a delay of their Social Security benefits, according to three people familiar with the internal matter. That plan was written by Andrew Biggs of the right-leaning American Enterprise Institute and Joshua Rauh of the right-leaning Hoover Institution at Stanford University. ...
11 comments:
They are not nutty - they just want to use this crisis to pursue their goals. Many people have lost their jobs and are desperate or going to be soon. When people are desperate they sometimes take a bad deal. The article doesn't say how long a delay for $5000, or how much of a benefit cut for $10000 mentioned later, but I would guess they are both very bad deals. But people need money to live, so some would take it.
Meanwhile the federal reserve has feathered all already well feathered nests. Maybe the Hunger Games will be next! They hate all of us who are not wealthy and powerful like they are. They tolerate professionals and scholars/experts in the middle class that will sell their souls to them and help do their bidding. This is why we had a real progressive movement 100 years ago that made them give up power. The progressive movement made life safe for the middle and working classes. They hated FDR and Eleanor Roosevelt because they considered them "traitors to their class."
"...Joshua Rauh of the right-leaning Hoover Institution..."
One of the authors of this proposal is from the Hoover Institution. That seems appropriate as the incompetent Republican administration has saddled us with a Herbert Hoover economic disaster resulting in millions being unemployed and now the victims of this incompetence are being asked to pay for it out of their own retirement benefits. Unbelievable! Is this 2020 or 1929?
There is the common belief that the money paid in FICA taxes in some way goes into an account for your use later in life. This is incorrect, as I hope everyone reading this knows, in that from the very beginning the system was based on an insurance model with the taxes paid being the premiums for the insurance, monthly benefits, paid at a later point.
Telling people they can take their money out, $5,000 or whatever, violates the basic principle, in a way that reinforces that false notion of the nature of Social Security benefits. I have little doubt that this is the real intention of this scheme.The next step would be to allow a greater or even full withdrawal of "your money" in return for agreeing to not ever collect benefits along with telling people that they do not have to pay into SS at all in return for not being able to collect benefits of any kind at a future point.
This is the dream of the anti-Social Security forces from the 1930's on. If adopted, we will go back to the situation that existed before Social Security where there was no retirement possible at all for the vast majority of people because they would have no support at all. And the large families that once provided that support in pre Social Security days, don't exist. And people who had the good sense to die in their 50's and 60's are now living into their 80's and 90's and re needing that help for much longer. Well good luck to them.
Given the desires of these people like Biggs, and the fact that there is no one in the current administration to represent the other side and the lack of a President that would even understand the issue, this is a proposal that might just go forward. Pray for us all. They do not know what they do.
There are more nutty proposals in the article, but you can trust one thing - if Andrew Biggs is in support of it, it is intended, however disguised, to dismember Social Security. It makes reviewing things easy - he wrote it or supports it, it's a bad deal.
Yes, it's completely nutty to think outside the box. Brainstorming unconventional ideas is just so stupid because we might actually come up with something decent. We've got to stifle all this unconventional thinking, make sure no one brings up an idea that might stimulate people to think differently. We want everyone to accept the way things are and accept what the conventional wisdom says, don't we? To do otherwise is just "nutty," I guess.
A terrible idea. I've seen people do similar things by opting to take all of their state retirement at once and seen how they suffer when the money is gone and they need health care and money to live.
To 8:26
Yes, that cliche of thinking outside the box. For sure, there is a place for looking at new ideas and approaches. But not every new idea is a good idea. And, in the context of Social Security Biggs idea is not a good idea. Not nutty in the sense that there is no reason behind it. Rather, just a terrible idea because of what is the reason behind it, the desire to get rid of Social Security and this would be just the first step.
As someone who is inclined to agree with the proposition that there are nutty people in the white house, this isn't as bad an idea as I expect the proponents want it to be.
1. The delay in social security benefits is a misnomer. It isn't a "delay" in terms of duration, it is just a repayment of the $5,000 loan out of the first benefits you are eligible for, with interest at the 20-year treasury bond rate (1% currently, has ranged from 1-3% historical). Because SSA COLA adjustments nearly always have exceeded this amount, that will result in a net loss to the government, but not a particularly large one. 0-1% per year, or $0-500 per loan, and that's assuming treasury rates remain stable. Assuming inflation actually spikes, which is possible, it actually would be a financial hedge in favor of the trust funds. Then again, if inflation spikes, that could result in an equivalent COLA adjustment.
2. Other articles say Congress should make the loans come from the trust funds. That's a particularly bad idea given I expect the current job loss will be stressing the trust funds at the moment worse than the peak retirement of the baby boom the trust funds were already experiencing. If it were loaned out of the treasury general fund, that actually would result in a net inflow into Social Security, with benefits being "repaid" when they were never drawn out. I expect that actually might be a reasonable compromise position.
Biggs and the AEI are shills for rich people who want to cut and then eliminate your Social Security benefits. This is just their latest snake oil sales pitch. No thank you sir. Once again, we see through you.
This is an attack on the very idea of Social Security. This person obviously believes Social Security is some kind of a handout. Not true. It is a retirement system where presumably the worker paid into the system. That is why I do not like to refer to Social Security disability as welfare. Typically, I define welfare as something for nothing like food stamps. Social Security is a forced retirement and disability insurance program through the payroll taxes.
Making a claim for retirement or disability is not welfare. It would be like making an claim on auto insurance welfare. So it is a ridiculous idea that giving them $5,000 now is welfare.
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