From what my conservatives friends have said recently, it seems that George W. Bush has settled on two main goals with Social Security, making it more progressive and fixing the shortfall. I'm all for it. But the Pozen plan isn't an efficient way of doing that. It hurts the middle class, reduces benefits, etc. So I'm going to help the president out, I'm going to tell him how to fix the shortfall in a progressive way. Ooh Mr. President, you're going to love this!
• First, raise the cap on earnings subject to the payroll tax so 90% of all income is included, That, after all, was Ronald Reagan's magic number. What the Gipper failed to foresee was that the earnings of the rich would spring forward, laughing maniacally as the rest of the country's income tried and failed to catch up. Because of that, 15% of earnings are outside the tax. So increase the earnings cap by 2% more per year than we would otherwise and, by 2043, we'll hit the magic 90%. Not only that, but you'll cut the program's deficit by almost 1/3rd. Whee!
• Bring back the Estate Tax in it's 2009 form and make it a dedicated revenue source for Social Security. As you yourself clearly realize, it's silly for the rich to pay so little and get so much. That's why you want the program to be more progressive! But where Pozen tried to do that by cutting benefits for the wealthy, my plan* does it be taxing them after they die! When they don't even know they're being taxed! It's a much better system, I'm sure you'll agree. And here's a bonus: last week, in the NY Times, Paris Hilton said:
"I'm glad I got the partying out of my system when I was young, because now I'm so over it and I can focus on my career," Ms. Hilton said one balmy afternoon late last week. "Now I'm trying to build an empire. I don't want to be known as this Hilton hotel girl my whole life. I want to make my own name."
Isn't that just like so ew!? Paris Hilton got her partying out when young? She makes Jenna look like a school marm! Well, let's help Paris achieve her goals and take a cut of her inheritance. After all, she doesn't want all that hotel money anyway...
• Now don't get all excited, Mr. President. I know you want your private accounts. But who wants a lot of little ones? We're gonna give you giant private account! 20% of Social Security's assets should be invested in equities. We'll phase it in, keep it as a percentage, and the massive amount of cash will let the program ride out the markets ups and downs. So it's still a private account, but without all that pesky risk to the individual. And it'll make money!
Do all this, and Social Security is basically balanced -- the shortfall's down to .49% of GDP, having started from 1.89%. Good stuff, and enough to be considered within "close actuarial balance". But you're a perfectionist, right Mr. President? Fine. Well. Good. Let me reach into my bag of tricks here...
