Bye Bye SS Reform

It would appear that Republicans in the Senate have decided that it is too risky to their politcal carreers to purse President Bush's plans for privatizing Social Security. It looks as if private accounts have no chance of becoming law during this President's term. So, what kind of reform can we expect?

Well, in order to appear "bi-partisan", the Senators are looking for a plan that Democrats will support. This means that we will see Social Security taxes on the rich increased. Right now Social Security taxes are only applied on the first $90,000 of income. If you happen to make more than that, then you only pay income tax on anything over the $90,000. This barrier will either be completely removed or lifted to something like $200,000 or $250,000. The media and Congress will report that expected proceeds from the new tax will keep the program solvent.

Of course, this doesn't really fix the biggest problem (it just delays it) which is the fact that Congress has been spending money collected from Social Security on other programs for years and just sending IOUs to the Social Security Administration offices. At some point in the future Social Security expenses will exceed Social Security taxes collected. At that time, those IOUs are going to be called in and Congress will either have to pay them out of the general budget (thus either cutting programs that are currently being funded with money collected for Social Security or raising taxes), cut Social Security expenses (resulting in either less benefits or a later retirement age), or default on the loan. Those are the only "non-privatized" account options for government to use if they are going to continue to accept responsibility for people's retirements.

So, why are Republicans (who are the majority and have the votes to fix this problem) running like scared rabbits from the President's Social Security legislative package. Well, it is because they are politicians. They are more interested in ensuring they have political cover when they run for re-election next year than they are in doing the right thing and fixing this problem. In thier minds, they believe that if they get enough Democrats to support a plan, then they don't have to rock the boat and labeled as an extremist.

I don't really expect to see Social Security fixed. I don't really expected to recieve any benefits from Social Security. So, I am planning for my own retirement without any money from Social Security. You would be wise to do the same.