I went out and checked out the glassbooth website today. You know on the surface this seems like a cool concept. Fill out some Q and A to find out which presidential candidate best suits you. However on closer inspection I found a few things I really didn't like. One, it did not just show you the complete candidate comparison list by default. Two, it really didn't seem dead on regarding some of the things I was looking at. But that aside I think it is a fantastic website for taking a look at some collected information about the various candidate about 'THE ISSUES”.
Of course... this look mostly confirms my suspicions that sound bites just don't make for good issues discussion. For example lets take a look at the social security debate. Based on the quotes listed Hillary and Obama are pretty far apart on the issue of SS. They both think privatization is a bad idea but they are diametrically opposed on the issue of extending the cap on SS earnings. Hillary thinks it is silly to consider the additional tax without first dealing with fiscal responsibility and doesn't like the idea of increasing taxes (how very centrist of her). Obama looks at the new source of revenue as a means to attain fiscal responsibility. If you ask me they both are a bit off center on this one.
First I just have to pick on Hillary. Who says you have to increase taxes if you extend the cap? You could just as easily reduce the rates but extend the cap such that it was a relatively revenue neutral choice... one which in my mind would be VERY favorable. It would be a real drop in the middle class burden and significantly up the SS contribution made by the top 5% who account for more than 50% of the wealth in the nation. Bam Bam... you get raised taxes on the wealthy in a fair way (paying SS on all income and not just the first 90k or so) AND you drop the load on the middle/lower class. Seems like a no brainer to me if ever there was one. I mean come on... you get to hand pretty much anyone making less than 100 grand a 1-5% raise... if that ain't a vote getter I don't know what is.
As for Obama? Well his stance is classic “Counting chickens before they hatch”. I always disapprove of spending money before it comes in. The current available Federal Budget is in excess of a couple of Trillion dollars. Frankly, I feel if the Government can't be fiscally responsible with that then I don't think a new resource is going to help much. I think Hillary is right that we should sort out the current mess without asking folks for more money... however as I said above, you don't have to ask for more money (overall) when extending the SS cap.
Regardless of if the move was made to alleviate the SS rates, or just to extend through all earnings I think SS is long overdue for a serious overhaul. I think it is time that SS stopped being viewed as an individual bank in bank out program and instead be viewed as a general purpose program in which the healthy working population pays to support those that cannot. I don't think SS should have scaled payout rates according to pay in. Benefits should be based on cost of living and tied to inflation much the same way Obama suggests regarding the minimum wage. In fact I think the Minimum wage and SS benefits should be largely connected at the hip. After all, they are fundamentally about the same thing, how much it costs to live. I think folks should receive SS benefits and additional retirement income up to double the base living income (poverty line). IE their SS payouts begin to decrease once they get more money on their own than they do from SS alone until they receive no SS retirement benefits if their private sources are double the poverty income level.
Lets look at a simple practical examples. Lets say the SS payout is 100 dollars a year. With no private retirement income you get your 100 dollars a year of SS. If you have 50 dollars of private income you get 150 (SS + your income). If you get 100 in private you get 200. But if you get 150 in private income then you still only get 200 total. So once you get 200 in private income you receive no more SS benefits. The idea being that at that point you are privately receiving double the current poverty line in retirement income. I think the dead zone in there is more than worth the safety net you get in return.
I don't think this means you have to throw out the basic concept behind the privatization of SS accounts either. The Gore idea of a Locked box is comforting but in reality money locked away is generally money not doing what it is best at (making more money). If you are of a biblical bent then go check out the parable of the talents. I certainly agree that the government needs to stop using SS as a slush fund for government programs that realistically will never pay back what they take out. It needs to be a responsibly managed investment setup run strictly on conservative reliable return ventures. For example I talked a while back about how we could establish a pure scientific research facility whos technological achievements could be spun off on a for profit basis and it would take only a small portion of the SS fund to put it in action. Done properly it might manage to create a self sustaining system in which a large chunk of corporate profits ARE government profits used to sustain programs like SS without asking for tax money but instead by reaping the rewards of products in the market place utilizing government funded/developed technology.
At any rate the old saw goes “It takes money to make money” And it takes a lot of money to make a lot of money. Individual privatized accounts are not 'a lot of money' but there are few sums of money that match just the yearly income of SS... much less any kind of long term accrual in times when input outstrips payouts. The idea of individual money management is pretty absurd though attractive concept. Bet the whole pile and reap the benefits of large scale investments rather than throwing all the little peons to the wolves individually. Just whatever we do we have got to stop this raiding of the piggy bank with nothing but worthless agency iou's to show for it.
Ok I think I have ranted long enough....
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