published Sunday, January 5th, 2014

Cook: It's not really about entitlements

The following ideas are possible solutions to our retirement crisis, cobbled together from different sources: Forbes, bar stool conversations with a financial planner, the news out of Australia, an email from an anarchist.

See if you can guess which idea is the best.

• Make employee retirement savings mandatory. You work? Then you're also required to save in a retirement account. It's pulled out of every paycheck. And no early withdrawals allowed.

Make employer retirement contributions mandatory, too. All employers -- those with five employees to five thousand -- must contribute a percentage (start at 5 percent, move toward 10) of earnings to their employees' retirement accounts.

However, implicit in such contributions is the understanding that employees would receive less salary and fewer raises. Employers would not be saddled with both.

The federal government ups its retirement benefits to everyone. The benefits are means-tested and paid on a sliding scale; those with less receive the maximum amount each year (say, $25,000) and those with more receive less than their poor neighbors, kind of like the lines bookies put on games to equal things out.

Here, everybody plays, everybody pays. Each player -- government, employee, employer -- is both alleviated of responsibilities and also put on the hook for more.

• Implement a basic income.

Each year, everyone receives a guaranteed $10,000. Doesn't matter how old or young you are. Doesn't matter how rich or poor, how lazy or hard working. An unconditional 10 grand each January, just like passing Go in Monopoly.

The idea is being debated in Switzerland and has become an increasingly

popular alternative to the host of payments a federal government may make. A basic income check would free up the middle class to explore entrepreneurial opportunities, buy a second car or take a big vacation. The $10,000 also would supplement those on the bottom, helping stabilize the already fragile poor.

"Even better, conservatives think, such a program could significantly reduce the size of our federal bureaucracy," writes Annie Lowrey in The New York Times. "It could take the place of welfare, food stamps, housing vouchers and hundreds of other programs."

She then quotes conservative Charles Murray, who once wrote: "Give the money to the people."

"He suggested guaranteeing $10,000 a year to anyone meeting the following conditions: be American; be over 21; stay out of jail; and -- as he once quipped -- 'have a pulse.'"

• Raise the retirement age. Slowly.

To glue the retirement age to its current spot is to ignore the coming world; science, specifically nanotechnology, promises to increase life expectancy in unbelievable ways. People won't just live longer, they'll live healthier. One hundred will be the new 70.

"Nanotech could make humans immortal by 2040," a ComputerWorld headline reads.

The retirement age should reflect our current world, not a 20th-century one.

• Expand Social Security.

There is a huge savings gap between households. Those with means are able to save more; those with less aren't.

"Near-retirement households with annual incomes over $200,000 had saved an average of $885,000 in 2010, compared with just $49,600 for households with incomes ranging from $30,000 to $45,000," claims Reuters, citing data from the Investment Company Institute.

Safe and secure retirement shouldn't be reserved just for the wealthy; Social Security can be a beautiful system, a sort of financial democracy that promises the pursuit of happiness long after work ends. How, you ask, can we afford to expand it?

• Put an end to corporate theft.

All this talk of retirement crisis and entitlements and pension cuts? It's a hoax, a smokescreen that keeps our attention distracted and helps us buy into the myth that ordinary America must continue to dilute itself: more work and fewer benefits. We have internalized "The Shining": All work and no play makes us crazy.

This retirement crisis? Not everybody's suffering.

"Although the U.S. economy is still recovering from the economic collapse of 2008, corporations are recording record profits," states a 2012 Public Citizen report. "Corporate profits as a share of the gross domestic product have risen to an all-time high. But corporate income tax payments have fallen to near historic lows."

The richest people in the history of the world bed down each night in this country, overseeing corporate operations that garner annual profits worth trillions and trillions while the rest of us argue over minimum wage and the retirement age and whether to expand Medicaid in Tennessee.

We're being played and conned. Social Security isn't broken. The corporate tax code is.

Contact David Cook at dcook@timesfreepress.com or 423-757-6329. Follow him on Facebook and Twitter at DavidCookTFP.

about David Cook...

David Cook is the award-winning city columnist for the Times Free Press, working in the same building where he began his post-college career as a sportswriter for the Chattanooga Free Press. Cook, who graduated from Red Bank High, holds a master's degree in Peace and Justice Studies from Prescott College and an English degree from the University of Tennessee at Knoxville. For 12 years, he was a teacher at the middle, high school and university ...

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conservative said...

Mr. Cook has officially come out of his Socialist closet.

If you were an observant person and knew the 3 main characteristics of a Liberal then you knew it all along.

January 5, 2014 at 7:54 a.m.
soakya said...

expand the earned income credit to capture all federal welfare programs and move the charitable deduction to an adjustment on the 1040.

end all corporate welfare at every level, local, state, and federal this includes PILOT agreements and TIF. Quit funding the Chamber of Commerce with taxpayer dollars.

January 5, 2014 at 9:49 a.m.
jjmez said...

soakya, you keep repeating yourself over and over, but you haven't broken down and explained how this would all work in the real world. It's easy to sit around in a group with everyone in agreement, then send them out to regurgitate what they've been spoon fed, without any real knowledge or clue to what they're repeating. But we've already learned that matters and issues discussed in groups don't always work when applied to real life issues and matters.

January 5, 2014 at 12:26 p.m.
soakya said...

not too hard to understand jj. pretty straight forward if you how to use that rock that sits on top of your neck. the only folks regurgitating is the politicians and you keep lapping it up because you don't know any better. don't let the politicians think for you, think for yourself. quit being a talker and be a doer. quit demanding the government has to take care of people, you do it, do what you can. convince your liberals friends to do the same. actions speak louder than your words.

January 5, 2014 at 1:40 p.m.
conservative said...

Mr. Cook wrote:

"Make employee retirement savings mandatory."

Ever here of Socialism Security?

January 5, 2014 at 1:46 p.m.
conservative said...

Mr. Cook wrote:

"Make employer retirement contributions mandatory, too."

We have that under mandatory Socialism Security also.

January 5, 2014 at 1:55 p.m.
soakya said...

I believe if I was a liberal I would surely start to see a pattern with how politicians especially liberal and progressive politicians see their base; you do understand they think you are dumb as a bag of rocks and are not capable of taking care of yourself. they view you as a burden on society.

January 5, 2014 at 2:01 p.m.
una61 said...

10 grand for each of 320 million Americans amounts to 3 trillion, 2 billion dollars. Is Cook serious? Does the TFP actually pay this guy to write such drivel?

January 5, 2014 at 4:42 p.m.
davidcook said...

una61, what do you say to the conservative Charles Murray's claim that this would be an excellent thing to reduce the US bloatedness? That if a govt pays a basic income, it also reduces other benefits? So your math - $3 trillion, $2 billion - is only part of the story. The other part is all the subtractions (see Murray's quote above).

January 5, 2014 at 7:09 p.m.
soakya said...

I'd say if we're going to be an entitlement nation then lets do what I have suggested. Expand the earned income credit to cover all welfare programs, eliminate all the agencies that handles these programs, send thousands and thousand of federal employees home without their lifetime pensions and healthcare benefits. And, no, those lost government jobs is not going to hurt the economy because those lost jobs means the tax dollars that paid their salaries is going to be spent, invested, or giving to charities by the taxpayers.

Then let everyone deduct their charitable deductions as an adjustment to their income instead of an itemized deduction with no limit based on their adjusted income. Non charitables and individuals can do a better job of helping the poor than any government agency. This would encourage more giving.

January 5, 2014 at 7:41 p.m.
soakya said...

I said non charitable but I meant to say non-profits in the above post.

January 5, 2014 at 7:58 p.m.
jjmez said...

You got it right the first time, soakya. non-charitable under the pretense of being charitable. They'd pick and choose who they want to help based on race, religion, and other characteristics. Take for instance a very well known charitable organization that rakes in possibly millions annually who is said to have turned away a homeless gay couple because they were gay. Surely gays have donated to this organization without a thought of their religious beliefs. You'd have organizations who would deny help to unwed moms based on their religious beliefs. Or, like one local homeless organization someone said refused to allow anyone to eat until someone walked to the front to get saved.

Yeah! We can picture it now who would be in and who would be left out.

January 5, 2014 at 10:10 p.m.
soakya said...

If that is the case, what would happen when you found out your donations were not being used the way you wanted them to be used? Would you continue to donate your money there? no! easier fix then using a bloated inefficient government to hand out charity, try fixing that by withholding your tax dollars because you don't want your tax dollars going to planned parenthood.

January 5, 2014 at 10:41 p.m.
soakya said...

the very poor with children that earn minimal income are already receiving close to 10, 000 dollars every January thru the earned income credit and the additional child tax credit. free healthcare for children under 18 and free college for children over 18. free lunches, free phone, free food at home and school and reduced housing. So 10,000 dollars ain't going to do it. The earned income credit would have to be adjusted to cover all these things.

January 6, 2014 at 9:07 a.m.
LibDem said...

soakya, You do understand that the EARNED income credit is based on EARNED income? The disabled (you see them walking about sucking on huge sodas) do not earn and never will. People on SS may have no earned income. Interest/dividends/pensions? Not earned.

As for deducting charitable contributions, it doesn't matter so much where you deduct. There's only a benefit if you have income and taxes.No taxes, no benefit. (As I've mentioned before, you can get a charitable deduction for funding any off the wall religious undertaking without regard to its contribution to the quality of anyone's life.)

I think you have some good ideas. Get over lambasting Liberals. I know I'm evil. Concentrate on your ideas.

January 6, 2014 at 10:50 a.m.
soakya said...

I said EXPAND IT. Liberals aren't the only problem. I'm an equal opportunity lambaster.

It does matter where you deduct. To deduct them on schedule A you need total deductions that exceed your standard deduction. By moving it to the front of the 1040 as an adjustment you would encourage more giving. Also do away with the limit on the amount a person can give based on their adjusted gross income. If a person wants to give 75% of their adjusted gross income away in a year, let them deduct it all. I would be willing to bet a dollar given to charity is worth more to society than a dollar given to the government to handle the same need.

I'm just saying if we're going to have an entitlement society then lets find the most efficient way to do it. A bureaucratic, bloated, crony, inefficient government is not the way to go. Individuals can respond faster to an out of control 501 than they can to any level of government. The point is, you decide where you want your contributions to go, you don't have to donate to any off the wall religious groups.

January 6, 2014 at 12:49 p.m.
LibDem said...

soakya, "I said EXPAND IT". If it's no longer "EARNED income credit" give it a new name.

"It does matter where you deduct." If you have no tax, there is no benefit in reducing your taxable income. Zero be zero.

The reason itemized deductions need to exceed the standard deduction is that they are all included in the standard based on some statistical model. If you separate charitable contributions, you need to include that calculation in your model.

Charitable operations, non-profits as it were, do some great things. I contribute. But I think there will always be a need for an umbrella organization to fill in the holes.

January 6, 2014 at 1:33 p.m.
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