A Fix for Social Security

Social Security was originally sold to the American people as a government run insurance policy.  I remember when the deduction on my pay stub was called FICA, which was an acronym for the Federal Insurance Contributions Act.  The program was intended to help out the poor and middle classes to allow them to retire with some income.  The premium was and is a percentage of your salary, but only the amount of your salary up to a cap.  Rich people that make high salaries or receive their income from dividends, interest, or capital gains don't need this program, so only the first salary dollars you earn up to the cap are used to figure your premium due.  For 2013, the cap is $113,700 of salary or self-employment income.

I have purposely called the Social Security tax a premium, but I realize that any mandatory payment like this that is a percentage of your income is certainly an income tax.  However, I'm not willing to let the government off the hook since they want to call it an insurance policy for your and my retirement.  If this is going to really be an insurance policy, then why not make it act like one.

Insurance companies are "for profit" enterprises.  If an insurance policy holder is doing an activity that increases the risk and causes the insurance company to lose money, what will they do?  That's right; they will increase the premiums for new policies or renewals.  Why can't Social Security do the same thing?

I don't remember ever signing a policy when I started working that guaranteed me a certain benefit or explained how much my premiums would be throughout my career.  It seems that the Social Security system could change the rules any time.  We have all signed on to this insurance policy with our first job at 16 years of age or whenever you first worked.  Were we given any rules?  No.  Was this policy optional?  No.  Did we have any choice in the type of policy we purchased?  None whatsoever.  I guess there was some sort of implied contract that our Congress has written into an unsustainable MessAPolitico.

I think Congress should raise the premium to the real cost of providing Social Security as the current law was written.  We should all have the option of accepting a reduced benefit that is the value you would buy with the current premium amounts.  In other words, we would have two choices:

• Keep you Social Security premium the same percentage it is today, but with lower benefits upon retirement.
• Keep your benefits the same as they are under the current rules, but pay a higher premium that covers the cost of these expensive benefits.

Let me guess, you don't like this idea.  We all still want to have our cake and eat it too.  Congress sold everyone a "bill of goods."  They said this was not a tax, so everyone feels entitled to receive the benefits they have purchased with their FICA "premiums" over the years of employment.  I feel the same way, but something has got to give here.  The Social Security system will be just like an insurance company that miscalculated life insurance premiums for the policies they have sold for years.  As policy holders begin dying off earlier than expected, the company eventually won't have the money to pay out the death benefits.  It will eventually be bankrupt, and beyond that point, there will be no death benefits paid to the beneficiaries.  In the case of Social Security, what will the federal government do when Social Security premiums (taxes) no longer bring in enough money to cover the payout due each month?  Then, I guess they will just borrow the difference until the debt gets so high that we can't afford the interest on the National Debt.  If you can't cover the interest payments, you have default.