What is a practical fix for a trust fund that has run out of money? ( http://www.thebiglie.net). The answer is relatively simple. Be honest with the American people! Our president needs to end the charade being perpetuated upon the American public in regard to the solvency of the Social Security trust fund. He should reveal in detail what occurred to the trust fund money, instead of attempting to chip away at the federal government’s obligation to pay benefits. He should do the honorable thing and keep the promise the nation made to the American worker when it comes to Social Security benefits. By keeping its promise to the American worker of providing full retirement benefits based upon the obligation of the program, the federal government lifts the economy out of the worst downturn since the Great Depression. The cost to the federal government had the trust fund not been mismanaged would be zero as the dollars necessary to sponsor this deficit neutral Job Creation Plan would be available. Baby-Boomers as stated, by taking decreased monthly payments offset the impact of partial distributions to the fund, as over the life of the fund, the up front payments are recovered. Additionally , the increased tax revenues to the treasury due to the infusion of up to $800 million dollars a day into the economy will provide more offset.
The obvious first step would be to recommend that the fund’s proceeds cease to be a part of the regular operating budget of the federal government. The task of fulfilling this recommendation may not be completed immediately as the federal government may have to be weaned off the proceeds from our payroll taxes to the Social Security trust fund. Nevertheless, a plan to do just that should be set in motion. Once that task is completed, a plan to restore the money which was “mismanaged” should be instituted. Obviously, it will be a long-term plan. Any fund restoration plan should allow retiring Baby-Boomers to take up to $40,000.00 from their Social Security principal. Giving Baby-Boomers the option of taking a partial distribution of their Social Security principal is a “win-win” for boomers, the economy and the federal government because of the added tax revenues created from jobs the boomers will generate as they spend this money.
Additionally, the president and Congress should 1) remove the cap on retirees earnings; 2) allow boomers who are retiring at 62 years of age to take partial distributions of up to 6.5% of their Social Security principal leaving 93.5% of their remaining pension proceeds to be received monthly, and 3) push the requirement to sign-up for medicare to 66 years of age to match the full retirement age of Social Security. To add additional revenues to the economy, 4) allow high income earners above $350,000.00, to take up to a one time $100,000.00 partial distribution from their private pension funds unencumbered by taxes. Finally, 5) all partial withdrawals whether from Social Security or private pensions funds should not be taxed, creating the incentive to put this money to work. Essentially the Social Security program and private pensions plans become effective vehicles through which Congress and the president can add needed revenue to our economy, creating jobs and ending this economic downturn.