Michigan has been the source of many inventions especially over the 20th century, however, today it has produced a Presidential candidate that no one except those who live in the state. Thaddeus McCotter is a special man with a great sense of humor, an ability to play the guitar and a very good congressman. I encourage everyone to read his proposal and spread the word. This is a very good proposal.
Presidential Candidate McCotter Unveils Social Security Plan
“I believe [the bill] will help save Social Security for future generations, and in doing so will not rely upon privatization. It will not rely upon raising the benefit age. It will not rely upon raising the payroll tax, and it will not rely on cutting benefits,” McCotter said at a Capitol Hill press conference on Monday.
The plan would establish voluntary retirement accounts for workers under age 50 beginning in 2012. That account would be funded with spending cuts mandated in the legislation – called the Saving Social Security Act.
The funds from those cuts would then fund the government’s contribution into the personal accounts each year, meaning Congress could not use future spending cuts to finance current contributions into the accounts. Under the plan, workers could send the equivalent of half their payroll tax contributions into their personal accounts.
If workers choose retirement accounts, their regular Social Security benefits will be reduced by as much as 50 percent. However, the accounts are guaranteed to pay out at least as much as workers would have received had they never participated and stayed with their regular Social Security benefit.
The accounts can be invested in a set of investment funds – similar to the federal Thrift Savings Plan – that have been approved by the Social Security Administration. Workers can elect to change how their accounts are invested every year.
Those funds are divided into two tiers, the first of which can be either 90, 70, or 50 percent stocks and 10, 30, or 50 percent bonds respectively. The second tier – which can only be accessed after a worker puts at least $25,000 into his personal account, consists of different portfolios ranging from a 95-to-5 percent stock-to-bonds ratio to a portfolio with between 45 and 55 percent stocks and between 45 and 55 percent bonds.
The plan, which has been scored by the chief actuary of Social Security, is projected to eventually eliminate Social Security’s projected deficits, as more people move into the personal accounts and their normal benefits are reduced. In other words, the legislation is projected to eventually eliminate all of Social Security’s unfunded liabilities.
The plan also apparently solves Social Security’s medium-term financing issues by allowing the program to borrow from the federal government once the program becomes insolvent in 2038. Those loans must be repaid, however, once payroll tax income again exceeds benefit levels.
The chief actuary of Social Security predicts that the McCotter plan will allow Social Security to repay its debts to the Treasury over time, as more people move to the individual accounts, allowing Social Security to use excess payroll tax income to repay its Treasury debts.
This happens because the McCotter plan does not affect payroll tax revenue, which would still be used to finance normal Social Security benefits. As more workers move to the individual accounts, Social Security will need to pay less in normal benefits and can then use payroll tax revenue to repay its debt to the Treasury.
All of the chief actuary’s projections are based on his assumption that eventually 100 percent of workers will choose the personal accounts, due to the fact that under the McCotter plan workers cannot suffer financially if they choose the personal account option.
“He concluded that the personal accounts are such a good deal that 100 percent of workers will choose the personal accounts. This is the chief actuary of Social Security,” Peter Ferrara, senior fellow at the Heartland Institute, said at McCotter’s press conference on Monday.
The actuary’s estimate does in fact assume 100-percent participation in the program, a McCotter spokesman told CNSNews.com, reflecting the assumption that workers will move into the personal account system because it poses no risk to them.
How does this cover the disability and survivor benefits from under age children, or are these to be dropped entirely?
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