On Suggestions to the Super Committee

Several weeks ago, I sent a letter to Senator Rob Portman (R-OH), who not only is one of my senators, but he also was my former representative and is a member of the Super Committee. I focused on retirement, including Social Security by aiming at four points: 1) Establishing individualized, privatized Social Security accounts, 2) increasing money flow into the Social Security system, 3) maximizing avenues for individuals saving for retirement so they are less likely to seek government assistance, and 4) decreasing the tax rate for all businesses (employers).

With this focus on retirement, examining the current system of retirement accounts is part of the solution. For instance, the IRS currently limits IRA contributions based on income. To be honest, there is no good reason to limit retirement contributions in this manner. After all, Bill Gates has as much of a right to deposit into his retirement account and any middle class citizen.

With this in mind, I suggested these 11 points.

1)   Everyone 30 years or younger shall establish an individual, privatized account into which a 5% payroll deduction is automatically deposited. These accounts should be employee-directed, but with limited investment options to minimize risk.

2)  Everyone 30 years or younger shall have 1% withheld to be sent to the current Social Security fund.

3)  Employers deposit 4% payroll deduction into the employee’s individualized account.

4)  Employers also send 2% to the current Social Security fund.

5)  Raise the Social Security salary cap to $150,000.

6)  For all salaries above the salary cap, employees pay 1% to the Social Security fund.

7)  The employer’s obligation ceases at the salary cap.

8)  If they so choose, all employees can deposit into their approved IRA regardless of salaries: limited to $2000 into a traditional IRA and $5000 into a Roth IRA.

9)  If they so choose, an employee can submit participate in a 401K up to a maximum percentage established by the law. Whether or not an employer wishes to contribute to an employee’s 401K is a business decision.

10) Contributions to 401K, IRAs, and individualized Social Security accounts should have no cumulative bearing on the others, thus allowing n employee to build retirement wealth; therefore, no need for government assistance.

11) Employees currently over 30 years old continue to pay in accordance to the current system with the salary cap raised to $150,000 plus the additional 1% for income over $150,000 to the general fund.

I realize that each committee member is probably swamped with correspondence, so I do not have much hope that Senator Portman even saw my letter, let alone the committee doing something with the suggestions – but at least I tried.

On Double Standards and Deficits

Presumably, our elected representations are facing voter anger. Presumably, American voters are tired of Washington’s inability to reduce the federal deficit. With the possibility of majority changes in one or both Capitol Hill chambers, the news is running rampant with various polls regarding the upcoming election. My take – what a bunch of crap!

All of the House of Representatives’ 435 seats are on the upcoming ballot. As analysts focus on the 100 or so seats that are up for grabs, 335 are safe. On the Senate side, voters will determine the fate of 37 seats; the majority of incumbents are safe. If voters are angry and fed up with our elected representation, why will the majority of incumbents get re-elected? Obviously, voters must be fed up with others representatives rather than their own.

Deficits, a 40-year trend, occur when expenses exceed income. I firmly believe that voters believe that our elected officials need to get control on the spending. The real point of contention is finding agreement of where to cut the expenses while determining how much. Even without special interest influence, what is good for some is probably bad for others. In other words, who is to sacrifice?

As extending the Bush tax cuts remains a current debate, one fact remains fixed: taxes are the major source of government income. Republicans love the cut taxes mantra, but would you go to your boss asking for a cut in pay if you were operating a personal deficit?

Interesting, conservatives are now Great Britain’s party in power. Although they do not have a majority, conservative leadership is approaching their deficit with a novel two-prong approach: cut expenses and raise taxes. Besides these recent columns by Ruth Marcus and David Broder, seems I mentioned this approach in October 2008 in relationship to the Obama-McCain campaigns. Thus, I continue to maintain that much of America wants leadership capable of making tough decisions that are contrary to campaign rhetoric and party ideology.