Don't Cut Social Security, Double It
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These personal deductions were enacted by Congress in part as a means to incentivize savings. While a certain number of moderate income Americans benefit from these, if we enacted Social Security Plus they would no longer need to rely on these deductions as vehicles for retirement savings. Instead of buying a home as part of their retirement plan -- which as we have seen is a risky investment -- they could put their money into Social Security Plus. In 2010 the mortgage interest deduction alone will amount to about $108 billion.
We also could implement this in stages, targeting first those who are most in need. We also could allow active seniors who have not yet reached full retirement age to take a half-pension and work at half-time without losing their right to a full pension upon their retirement.
An expansion of Social Security -- one of the most successful and popular social programs in American history, currently celebrating its 75th year -- would be good for the macro-economy as well because it would act as an "automatic stabilizer" during economic downturns, keeping money in retirees' pockets and stimulating consumer demand. Benefits would be portable when changing from one job to another.
It also would help American businesses trying to compete with foreign companies that don't provide pensions to their employees, since those countries already have generous national retirement plans. And it would be broadly fair, since even those higher income Americans who are losing their tax deductions would see part of it returned to them in the form of a greater Social Security payout.
In short, Social Security Plus would provide a stable, secure retirement for every American and contribute greatly toward a solid foundation from which to build a strong and vibrant 21st century U.S. economy.
Steven Hill is the author of the New America Foundation’s report "Secure Retirement for All Americans" and also author of "Europe's Promise: Why the European Way is the Best Hope in an Insecure Age" ( www.EuropesPromise.org) published recently by University of California Press. A shorter version of this article was published in the New York Daily News.