We need to expand it.
Many, many moons ago (2013!), some asshole with a blog wrote this:
If we had wanted to guarantee good retirement plans for most workers, we could have simply allowed workers and employers to increase their contributions to the Social Security Fund and then increase their guaranteed retirement payouts accordingly (remember, one-third of Social Security payments do not go to retirees; this ‘bonus’ deal would have been very good for most workers). But we didn’t do that, because retirement security was never the goal, neo-liberal propaganda notwithstanding.
Recently, Robert Kuttner wrote (boldface mine):
Fifty years ago, the typical worker in a primary labor market job had a true pension. The pension was based on years of service times wages paid in the final few years. A worker might retire with 80 or 85 percent of his or her final wages. These so-called defined pensions operated not just in unionized companies but in Fortune 1000 employers generally.
In the 1970s, when industry had a bad decade, major companies began shifting to 401(k) plans, where the worker paid more of the cost and bore all of the risk. Today, only 11 percent of workers have traditional pensions, and only a small fraction of workers in their fifties and sixties have enough money in 401(k) plans to finance more than a few years of retirement. Workers risk outliving savings, getting caught in a down stock market, and making bad choices in terms of which financial companies hold and manage their accounts.
All told, 401(k) accounts hold about $7 trillion of assets. If Wall Street middlemen take out 2 percent, that’s $140 billion a year. Comparatively speaking, the public Social Security system is simplicity itself. You pay FICA taxes during your working life, and when you retire the government cuts you a check that reliably comes every month. It’s adjusted for inflation. It comes as long as you live. Administrative costs are trivial and no fees are taken out by middlemen. There is no risk of making bad investments.
The sensible and radical remedy is to create a second tier of Social Security, as a universal, portable pension. Unlike Social Security, which is pay-as-you-go, the second tier would be funded. Income on the fund, as in a traditional pension, would pay out benefits. That would require higher taxes—on the rich, please. The system would take a generation to mature. Canada is moving toward such a system.
If it’s going to take a generation (not sure I buy that), then we need to get started now.
mikethemadbiologist
The premise of Kuttner’s point is that dollars grow on billionaires. As Alan Greenspan said, the government can always issue more dollars when it needs them (https://www.youtube.com/watch?v=DNCZHAQnfGU), the trick is making sure the goods and services are there for the money to buy. There is literally no need to “tax & spend.” That’s the wrong sequence anyway. Where would taxpayers get the dollars to pay those taxes if the monopoly provider of dollars didn’t spend them out into the economy first?
So…it’s actually “spend first, then retrieve some dollars in taxes.” The taxes do not (and cannot) provision the spending, but they do provide an incentive to collect dollars.
What do we call the dollars spent, but not yet retrieved (you know, the ones in your wallet)? Answer #1: the dollar financial assets of the population. Answer #2: national debt. This is analogous to your bank account which is both your asset and the bank’s liability. You could march down to the bank to demand it reduce it’s debt (i.e. make your account smaller) but it wouldn’t be very sensible.