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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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ggersh
To: ggersh who wrote (116027)10/26/2014 6:44:55 PM
From: Elroy Jetson2 Recommendations  Read Replies (1) of 116555
 
To "privatize Social Security" working Americans need to:

1.) continue paying the current 15.3% Social Security and Medicare taxes to support non-working retirees;
2.) pay an extra 15.3% or so to fund their new "private Social Security and Medicare;
3.) continue to pay their current income taxes.

Working Americans in the 15% income tax bracket would see their total income taxes rise by 50% to 45.6%, from their current 30.3%, to create their new private Social Security and Medicare system.

Of course wealthy Americans like Mitt Romney will continue paying only 13% taxes total for their Income, Social Security and Medicare taxes. Raising wealthy people's tax rates to the same 45.6% as lower income Americans will pay would of course be "class warfare". Taxes are supposed to be limited to "the little people" in the words of the late Leona Helmsley.

Ronald Reagan could have suggested privatizing Social Security and Medicare with the surplus tax revenues, but he opposed this sort of investment scheme as big government socialism. Reagan chose to distribute this tax surplus to the wealthiest Americans instead. Personal responsibility was not high on his agenda.

Some will suggest that the tax rise could be more limited. For example, if workers accept the premise that the stock market will provide an annual return of 35% the amount they need to set aside will be far smaller. But this means workers will have to be willing to accept the strong possibility that their benefits will not pan out as expected.

The alternate solution, favored by the Tea Party, is terminating current Social Security and Medicare benefits for the elderly and for those expecting to receive benefits in the future.

Retired Americans and those nearing retirement age will need to come to terms with these new facts. Their new private Medicare and Social Security plan will be limited to the extent of their current assets. If this new privatization causes elderly Americans to create a new burden on Medicaid, Food Stamps and other Social Network programs - then working Americans will again have to pay higher taxes than expected.

Republican strategists like the Cato Institute began to favor a private Social Security and Medicare plan once the revenue surplus generated by the Social Security and Medicare taxes was nearly exhausted.

This is similar to the way the Cato Institute and the Republican Party favored creating a private mandate requiring Americans to purchase their own health insurance, as Mitt Romney did in Massachusetts. Their overwhelming support for personal responsibility ended the very moment Barrack Obama suggested this same program.

Personal responsibility is very important to the Republican Party, just so long as they're exempt.
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