Rachel Maddow’s web site has the article We should be talking about expanding Social Security benefits featuring the Elizabeth Warren floor speech below.
Over the past generation, working families have been hacked at, chipped, and hammered. If we want a real middle class – a middle class that continues to serve as the backbone of our country – then we must take the retirement crisis seriously. Seniors have worked their entire lives and have paid into the system, but right now, more people than ever are on the edge of financial disaster once they retire – and the numbers continue to get worse.
That is why we should be talking about expanding Social Security benefits – not cutting them…. Social Security is incredibly effective, it is incredibly popular, and the calls for strengthening it are growing louder every day.
Search this blog for all I have written about Social Security. After all that, Elizabeth Warren’s speech inspired a new idea for me.
What we need is a 401K option to invest into a Government run pension system that invests wisely. Such a plan has almost been proposed at MIT by Modigliani, et, al, Such a plan has almost been put into legislation by Rep. Peter DeFazio (in 2001). What is new in my idea is that this plan is not (only) to be part of Social Security, but it expands Social Security to cover the 401K also. Think of this as the “public option” for retirement that is the equivalent of the “public option” we so much wanted for health care in the Affordable Care Act
I just realized that this “public option” idea is very nearly contained in the article that is the subject of my previous post Saving Social Security: A Better Approach. Not excerpted in my previous post, is the following excerpt from the article Saving Social Security: A Better Approach by Thomas K. Philips and Arun Muralidhar.
In addition, centralized administration and record keeping make pension portability exceptionally easy to implement. Therefore, workers would be free to gravitate toward the most productive sectors of the economy without fear of losing their accrued pension benefits. When an employee left a company for a job elsewhere, his vested pension benefits could be sent to the Social Security system for credit to his account. Adding a table to each account to track all the additional contributions made to it over the course of time would be a relatively simple matter. Employees’ payments in retirement would be based on the sum of their Social Security contributions and any additional contributions made to those account.
My innovation takes this idea for portability of vested part of an employer provided pension, and applies it to the 401K plans naming it the “public option”. If the private pension assets were put into this new “public option” right from the start of the accrual of benefits, this would do away with the possibility of vulture capitalists taking over a company to raid its pension system. This would be a tremendous benefit to society all by itself.
The extent of the howl of complaints about this from the private sector would be a good measure of the wisdom of this plan.