"Social Security reform requires mobilizing the various coalitions that stand to benefit from the change ... the business community, and financial institutions in particular ... (p. 553) http://zfacts.com/p/486.html.
Social Security will remain the primary retirement program for the majority of Americans. It is important that their contributions not be consumed with high administrative expenses. Any privatization plan or partial privatization plan must be conscious of minimizing the administrative costs of the program. That said, the current program, which is relatively inexpensively administered, provides very poor information to participants. Annual statements are still not mailed to all participants and the statements which are sent on request are misleading. For instance, the only contributions shown on the statement are the half of payroll taxes attributed to the employee; the other half, those paid by the employer, are missing. All economists agree that the employee bears both halves of the payroll tax and yet the average participant sees their projected benefits and half of their payments to the system. Any private mutual fund or insurance policy prospectus would be disallowed for failing to fully disclose the cost of the investment. In reforming the system, we should try to control administrative expenses, but clearly better and more informative communication to participants should also be a goal.
Social Security is a "pay as you go" system, which means the taxes paid by today’s workers are not set aside to pay their own benefits down the road, but rather go to pay the benefits of current Social Security recipients.
It’s financed using the Federal Insurance Contribution Act (or FICA) payroll tax, paid by all working Americans on earnings of less than about $90,000 a year. While the payroll tax is not progressive, Social Security benefits are—that is, low-wage workers receive a greater percentage of pre-retirement.........
