Modify Social Security so that Americans invest in America

Today I received my Social Security Statement. My employer and I each pay into Social Secuirty taxes 6.2% of my salary, up to an annual limit of $106,800, an amount which increases each year. In 2008, these taxes collected about $800 billion.

Compare this number to the $500 billion worth of U.S. Treasury debt purchased by foreign countries from October 2008 - October 2009, and you see that we "save" about as much for our elderly as we borrow from other countries.

I propose a modification to restore Social Security as insurance, rather than entitlement.

1. Set Social Security Taxes at 12% (6% each from employee and employer) up to $120,000 annual income, but do not adjust the income limit each year.
2. Add a 4% deduction (2% each from employee and employer) onto annual income above $120,000, which goes into a Personal Retirement Account (PRA), which exists in the name of the employee and invests automatically into 10-year inflation-indexed U.S. Treasury bonds
3. Upon death, disability, or retirement, the PRA money can be withdrawn (at a limited rate) by the account owner to use for living expenses
4. Once the PRA account is depleted, Social Security kicks in, if needed (Note that the longer you wait to receive Social Security, the higher your monthly payment is.)
5. If the account holder dies with a PRA balance, that money passes to heirs

If you are fortunate enough to not need Social Security Insurance then good for you, but when you do need it your payout will be higher since you waited longer to start collecting.

By not raising the Social Security income limit, over decades more Americans will transition into PRA levels due to inflation and wage growth. Gradually, we will modify ourselves into a nation of self-supporting savers who have insurance against calamities, rather than an entitled population of older retirees paid by younger workers.

By placing all PRA funds into Treasury bills, we eliminate market risk, remove the inevitable lobbying establishment that would flock to PRA funds invested in private securities, and establish a large, reliable source of buyers for U.S. Government debt. While government debt in general should be avoided over the long term, when we need it we should have American debtors. That way Americans are funding the government's debt programs, rather than relying on foreign investors who may dump our debt or use it as leverage against us in international politics.

The details of this plan will need thorough analysis, in order to validate that it accomplishes the goals of (1) gradual change toward a more financially sustainable future (2) solvency for the existing social security insurance program (3) establishment of a solid personal retirement savings program, and (4) reduction of our reliance on foreign-owned government debt.

Honor top tax-payers at Presidential dinners

All Presidents hold many domestic events where the typical audience consists of top party donors, wealthy executives, powerful lobbyists, celebrities, leading politicians, media contacts, and so forth. If America were a business, this would be like the CEO hosting dinners for bankers, executives, and friends - but never inviting the top customers or salespeople.

America's finances are like a business - we bring money in to pay for the government, which then tries to invest in the common good in ways that no individual or private organization could. So why not have presidential dinners with the Americans who are most helping our nation's business of governance? I'm thinking of audiences with:

• Citizens who paid the most personal income tax last year
• Executives from the top ten corporate taxpayers
• Federal agency heads whose departments accomplished their goals and came in the most under budget
• Federal contractors who completed their projects the most under budget (and returned the money to the treasury)
• Whistle-blowers who exposed the ten largest amounts fraud and waste
• Representatives whose districts had the fewest earmarks or highest ratio of taxes paid to federal funds accepted

In other words, give access to Presidential influence through paying taxes and improving government performance, rather than raising thousands or millions for one candidate or party.

Mayor Bloomberg should have let voters give away $100 million for his campaign

Congratulations to New York City Mayor Michael Bloomberg, who won his third term as mayor, after spending close to $100 million on the campaign.

This was his money; he earned it, and in America you choose how to spend your money. As a practical matter, however, I think that Mayor Bloomberg could have accomplished his reelection goal while donating most of that money to improving the lives of New York's least fortunate citizens.

Here's how: First, set aside maybe $10 million for traditional campaign expenses - an office, staff, public appearances, press interviews, and a solid Web site infrastructure. Then, put $90 million into a pool that will be donated to New York City charities over the 10 weeks leading up to the election. Each week, voters go to Mayor Bloomberg's campaign web site, register in his database (with appropriate precautions to confirm the person is an individual voter), and then select from a list of local charities who they would like to receive a $1 donation from the Bloomberg campaign. Each Saturday night, the selections are tallied and checks are presented to the charities in a nice public appearance (covered in the Sunday papers, of course). The next week, the donation amount may grow (or shrink) depending on how many voters directed contributions.

Instead of political activitists calling you during dinner to support their candidate, the PTA and local Boys & Girls Club would be hanging out at the grocery store, asking you to visit the Bloomberg campaign site and help them raise money for a new computer or trip to the Capitol. By the end of the campaign New York City schools and charities would be $90 million richer, Mayor Bloomberg might have a nice tax deduction, and the publicity and goodwill from this campaign would far outstretch anything his mailers, robo-calls, radio and TV ads could have done.