OKLAHOMA LAW REVIEW
My solution is to raise Social Security’s full retirement age to sixty-eight or, perhaps, even seventy, raise the minimum retirement age to sixty-five, and replace the current system with a new, two-tiered Social Security system.
The first tier of the new system would provide a basic Social Security benefit to every older American — paid for out of general revenues. For example, the government might guarantee every retiree a benefit equal to 100% of the poverty level — about $800 a month in 2006.
In addition to that benefit, every worker would also earn a benefit based on earnings. These second-tier benefits would be financed with a much-reduced system of payroll taxes. Each worker would have an Individual Retirement Savings Account, and the payroll taxes that they pay would be deposited into those accounts — and earn interest. At retirement, the balance in a worker’s individual retirement savings account would be used to buy a lifetime annuity to supplement that worker’s basic, first-tier benefit.
In conclusion, I believe that government can, and should, intervene in the free market to encourage work and to reduce economic inequality. We simply do not have to settle for a society where the top 5% of households have dozens of times as much income as the bottom 20% and hundreds of times as much wealth.
The tax, spending, and regulatory proposals that I have outlined today would encourage low-income Americans to enter and remain in the workforce. Consequently, these proposals would increase the size of the economic pie and allow us to divide it more equally. In short, these proposals would help make America work even better than it already does.