Sunday, January 6, 2008

1-6-08: Social Security Debit Card

Did you hear about this new program the Treasury is doing with social security debit cards? Genius! I think it's a really great idea overall.

First, it saves the Treasury money on sending out paper checks, to the tune of $0.80 PER CHECK. All that money stays in the Social Security Trust Fund. The cost had been $44 million last year with all paper checks. If half of the approximately 4 million people sign up for the debit card, that will save multiple millions of dollars. That's money that can stay in the system and grow over time.

The target of the program is the abundance of people who receive the benefits but do not have bank accounts. Rather than encourage them to go out and get one, it's more practical to just give them the savings up front. It's a good idea either way, since it does save money on both ends because those people won't have to pay the check-cashing scoundrels a fee every time they want their checks cashed. I know it's a business, but I also know the word scoundrel is underused.

What I most like about this program, since I am decades away from collecting benefits, is that Treasury officials have noted that this is just a step forward in the goal of an all-electronic Treasury. They already encourage online tax return filing, which is very nice. My guess is that within 10 years, 99% of all of the average American's dealings with the Treasury will be all electronic. Hell, let's make it 5 years. I only say 10 because it's difficult for old people to adapt to new technology. Just four years ago, 28% of them said in a poll that they had bank accounts. With all the possibilities with online banking, and how advanced it is, you can't guarantee that that 28% will be willing to adopt new technology in any short span of time.

What this doesn't do is solve social security. It does make it a little more efficient, but it seems to me like a cork plug on a slowly sinking ship. It will help, but if things get too bad, it won't really matter. A cork plug does no good on a ship at the bottom of the ocean, and if the funds are depleted by the time I get a debit card, it'd only give me access to an account with nothing in it. But still, it's a good step in the right direction, but it doesn't even begin to solve the major issue.

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