Milton Friedman's Social Security Solution


#1

Cato Paper by Milton Friedman

Summarized:

For those already retired, that would be an obligation—a treasury bill or bond—with a market value equal to the present actuarial value of expected future benefits minus expected future payroll taxes, if any. For everyone else, it would be an obligation due when the individual would have been eligible to receive benefits under the current system. And the maturity value would equal the present value of the benefits the person would have been entitled to, less the present value of the person’s future tax liability, both adjusted for mortality.

This would end Social Security, while ensuring that everyone gets what they payed in. Obviously, the debt would have to be paid off, but it would be worth it.


#2

[quote=“Bigfoot_88, post:1, topic:36787”]
Cato Paper by Milton FriedmanSummarized: This would end Social Security, while ensuring that everyone gets what they payed in. Obviously, the debt would have to be paid off, but it would be worth it.
[/quote]SS’s unfunded liabilities (present value of projected tax revenues + SS trust fund - present value of projected benefits) is $20.5 trillion, according to Bloomberg. Social Security Hole Overwhelms Taxes, Cuts - BloombergWe will never be able to pay that, so Friedman’s plan would be great.


#3

How exactly would the debt get paid off though?


#4

[quote=“UNTRugby, post:3, topic:36787”]
How exactly would the debt get paid off though?
[/quote]Taxes.


#5

Why would the younger generations agree to that system? They would have to essentially pay double first for the obligation and then 2nd for either private SS or whatever other retirement they choose. The baby boomers who let SS get like this will have to bear some of the burden for the transition.


#6

It would be paid for out of the general fund, not payroll taxes. Payroll taxes would be gone. The key is to end the system.


#7

Then you either have to raise taxes or cut other spending. Either way the younger generation has to fully pay for the older generations mistakes and get none of the benefit.


#8

That is true.

Of course, most government spending benefits nobody as well, so I would be happy to cut that out.


#9

I think some federal govt spending is good, military and infrastructure mostly. To the issue at hand though, the reason why we cant end SS is because the retireess wont give up any benefits because of the govt “promise” and the younger voters wont willingly accept all the responsibility when very little of the problem has been their fault. The only way you could do it is for both sides to take on some of the responsibility but politicians are beholden to the high turnout of older voters so we just keep kicking the can.


#10

This would be uniquely new how?