The 'cut a check' idea is stupid and $600 is not enough, whether for an individual or a small business. It's basically nothing, when given as a one-time act (or two-time act, spread out over 10 months).
Unless the gov't was going to give monthly checks, they shouldn't have bothered in the first place. It's just taking money and throwing it the trash can.
I have a very Keynesian idea related to this that I've been kicking around in my head for a number of years. Someday when I get into Congress I'll propose it, LoL.
Background:
Social Security and Medicare are both operating at significant deficits. Some people think that there is a "reserve" saved up and in theory there is but in practice there isn't. When Social Security was implemented in the 1930's they immediately began to pay benefits to age-qualified individuals even though those individuals (born pre-1870) had never paid anything into the system because it didn't exist when they were working. The idea was to get older people to retire so that younger people (who had families to support) could get those jobs.
The obvious problem was (and still is) that the Social Security taxes charged to workers in the 1930's went to pay benefits in the 1930's, not into some double-secret trust fund.
That said, for many years the system (and medicare) did collect more than they paid out and the surplus was theoretically "saved". It wasn't really saved though. Instead, the surplus was "invested" in Federal Treasury obligations. Ie, the Federal Government used the excess on other things they wanted to spend money on and wrote "IOU" on a slip of paper. The Social Security (and medicare) trust funds are nothing more than a bunch of IOU's from the Federal Government.
The equivalent for an individual would be if
@FearlessF took the money out of his "Vette Fund" and used it for vacations and meals out while putting IOU's to himself in a box. Then when he had enough IOU's saved up to buy the Vette . . . Well, he couldn't buy the Vette because he wouldn't actually have the money. All he would have is a bunch of IOU's from himself to himself.
Bottom line, the Social Security and Medicare Tax Rates are going to have to be increased at some point. The huge group of baby-boomers (born 1946-1964) started to turn 65 back in 2011 and at this point the boomers are all 56-75. Ie, they are all either already eligible for Social Security and Medicare or they will be soon.
When the rates are eventually increased, my proposal would be to make the rate automatically adjust based on the growth in the economy. I would pick an actuarially appropriate rate then have it adjust as follows:
- +3% if the economy grew by more than 4% in the previous quarter
- +2% if the economy grew by more than 3.5% in the previous quarter
- +1% if the economy grew by more than 3% in the previous quarter
- +0.5% if the economy grew by more than 2.5% in the previous quarter
- even if the economy grew by between 1.5% and 2.5% in the previous quarter.
- -0.5% if the economy grew by less than 1.5% in the previous quarter.
- -1% if the economy grew by less than 1% in the previous quarter.
- -2% if the economy grew by less than 0.5% in the previous quarter.
- -3% if the economy shrunk had negative growth in the previous quarter.
The current rate is a total of 15.3% (12.4% for Social Security and 2.9% for Medicare). Self-employed individuals pay the whole thing, for everyone else it is split 50/50 between employer and employee. I would apply my automatic adjustments to both the employee share and the employer share (doubled for self-employed individuals) so that it would impact both companies and individuals. Ie, based on the current rate it would work as follows:
- 10.65%/21.3% if the economy grew by more than 4% in the previous quarter.
- 9.65%/19.3% if the economy grew by more than 3.5% in the previous quarter.
- 8.65%/17.3% if the economy grew by more than 3% in the previous quarter.
- 8.15%/16.3% if the economy grew by more than 2.5% in the previous quarter.
- 7.65%/15.3% if the economy grew by between 1.5% and 2.5% in the previous quarter.
- 7.15%/14.3% if the economy grew by less than 1.5% in the previous quarter.
- 6.65%/13.3% if the economy grew by less than 1% in the previous quarter.
- 5.65%/11.3% if the economy grew by less than 0.5% in the previous quarter.
- 4.65%/9.3% if the economy had negative growth in the previous quarter.
Functionally:
- When the economy was growing 4% employees would get a 3% paycut, employers would get a 3% increase in employment costs, and self employed individuals would take an 6% hit.
- When the economy was growing 3.5-4% employees would get a 2% paycut, employers would get a 2% increase in employment costs, and self employed individuals would take a 4% hit.
- When the economy was growing 3-3.5% employees would get a 1% paycut, employers would get a 1% increase in employment costs, and self employed individuals would take a 2% hit.
- When the economy was growing 2.5-3% employees would take a 0.5% paycut, employers would get a 0.5% increase in employment costs, and self employed individuals would take a 1% hit.
- When the economy was growing 1.5-2.5% there would be no bonus or hit.
- When the economy was growing 1-1.5% employees would get a 0.5% raise, employers would get a 0.5% decrease in employment costs, and self employed individuals would get a 1% bonus.
- When the economy was growing 0.5-1% employees would get a 1% raise, employers would get a 1% decrease in employment costs, and self employed individuals would get a 2% bonus.
- When the economy was growing 0-0.5% employees would get a 2% raise, employers would get a 2% decrease in employment costs, and self employed individuals would get a 4% bonus.
- When the economy was shrinking employees would get a 3% raise, employers would get a 3% decrease in employment costs, and self employed individuals would get a 6% bonus.
