What's the best plan to fix Social Security?

We all know that with the wave of baby boomers retiring, the Social Security trust fund will have insufficient funds to cover Social Security costs fully by about 2037. That doesn’t mean it will be completely broke and stop all payments at that date. It means that it would have to start gradually reducing the amount paid to each retiree.

So the problem is far from the crisis that the doomsday crowd makes it out to be. You may have heard there is no Social Security Tust Fund. That’s a political lie. Over $4 trillion of our “national debt” is actually US bonds held by the Social Security Administration. So there is a trust find, actually two but it holds only US Government Bonds and thus is relying on the full faith and credit of the USA. This means that at some point, we the taxpayers need to pony up these funds. So long as there is no shortfall, the taxpayers never have to redeem all those bonds.

We could fix the future shortfall by raising the income cap above the current $106,800 in gross income subject to FICA withholding. The argument against this is that the higher income brackets usually have private 401Ks or other retirement funds they contribute to. Why should they be more heavily taxed than others for something that they likely won’t need?

We could fix things by adding a surcharge on benefits to the wealthy. If someone retires and doesn’t really need their full Social Security benefit, they would receive less in benefits than those in the low income brackets who have nothing but Social Security to rely on. The argument against this is the same basic argument against any progressive taxation.

We could fix it by privatizing Social Security, putting FICA funds into a relatively safe investment fund spread over the lowest risk investments available on Wall Street and elsewhere. The argument against this is that when market crashes occur, even safe investment vehicles can lose up to half their value or more. If you are a retiree living on a $1450 Social Security check each month, imagine trying to keep a roof over your head, buy food, medicine and keep the utilities paid on $725 a month. Many people feel that this is just another bail-out waiting to happen. When (definitely not if but when) the next crash hits Wall Street, will we really sit by and watch millions of senior citizens who have given their love and labor all of their lives get tossed out of their homes or have their heat shut off? If we wouldn’t be unwilling to shrug our shoulders at that, then the potential savings of privatization (AKA personalization in Republican newspeak) may be as illusory as most other something for nothing offers turn out to be.

Which approach do you think is best, or do you have a better idea than any of the above?