Social Security and Medicare Projections: 2009.

I would love to cut them immediately as I would many other programs, but that isn't a wise move. There should be as smooth a transition as possible so as not to create other problems elsewhere.

Though they should have known better, the reality is that too many people rely on SS and medicare 100%. These programs were NEVER sold to the people as complete replacements or substitutes for their own savings and retirement planning, but that hasn't stopped a very large bunch of uninformed sheep from thinking they were. The reality is that we can't end the programs instantly or chaos will ensue and we'll end up with a bunch of "wards of the State" anyway.

For sure, we need to identify exactly who really needs these programs and begin cutting benefits for everyone else. I would start with reducing or eliminating benefits for anyone who has other retirement support payments or annuities from non-government sources. The current maximum benefit is $2323 per month and the average is $1153. ($27,876 and $13,836 per year respectively) Thus we could set a pro-rated payment accordingly. If say you have other retirement plans that pay less than your expected benefit from SS, you will receive only the DIFFERENCE between this and the expected benefit you would get under current rules. If your other payments end, then your OASDI benefit would correspondingly increase. This means however that if you are receiving MORE than your SS benefit, you will receive NOTHING from SS. (again, if non-government plans end or drop below the SS level you would otherwise be paid, then you will start receiving those benefits up to the difference)

This is the best "needs based" test we can apply. COLA's will still be used, so likely current retirees except those making more than the SS benefit, will continue to get them.

We should then establish formal procedures for opting out of the program. Currently there is no way to officially do this. The only thing the SSA suggests if you don't want to participate is to stop using the SSN. After 5 years it will be declared and marked inactive, but once earnings are recorded for that number, it never goes away. There should be a way to officially withdraw from the program and not participate at all including paying FICA taxes. (this will revoke all eligibility for any SSA administered benefits or any related benefits tied to participation in the program)

The program should be put back on the general budget and apportioned taxes levied to handle any short falls the program incurs due to default on treasury IOU's that were exchanged for previous reserves, or for loss of tax revenue due to dropouts from the system.

There should be a cutoff age set, likely at the worst to be anyone 18 years of age or younger that no benefits will be paid to those people and the program will officially end by that time and no new retirees will begin receiving benefits. In a better case scenario, the limit could be set for no new retirees period, or a compromise of 5-15 year back. This would ensure a faster transition out of the program.

Of course, from the point of effective date, there should be no new signups allowed for the program, and anyone under the age of 18 should be purged from the system. Other workers would continue to pay FICA if they do not withdraw, but benefits may end before they reach retirement. Provisions might be made to re-imburse them for all or a portion of FICA taxes paid if they choose to remain in the system to support it. One time refunds would be issued at the close of the program with a last apportioned tax levied to cover closing expenses such as these refunds.