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Let's take the money and run.
Before Congress spends it.
Before today's $2.3 trillion cash surplus
becomes a $12 trillion deficit.
Before the reality of oil depletion savages
our economy and crushing debt renders our government helpless.
The ineffectual squabble in Washington is
not about private accounts. That's merely a façade of oratorical
pretense intended to deceive the gullible into believing Congress
actually gives a damn. Instead of honest debate based on an analysis of
carefully researched facts, we get ignorance, pretentiousness, and
outright lies. Although Congress has been pontificating about the
challenges that confront Social Security for years, and years, and
years, the fundamental financial structure of Social Security continues
to decay. And as Billy Clinton's 2000 Economic Report pointed out, the
Social Security "Trust Fund" has no real assets. At some point in time,
the world economy will be ravaged by oil shortages. With a growing load
of public debt and declining tax revenues, a recessionary America will
be forced to default on the IOUs in the "Trust" Fund.
But no one wants to even contemplate this
reality. Melodrama parades as legislative effort.
Are we happy yet?
We have reached an inflection point in
American politics. The acquisition, preservation, and enhancement of
political power has become far more important than integrity, teamwork,
and thoughtful compromise. Those who favor making "we the people" ever
more dependent on the largess and domination of "Big Brother" government
are determined to block meaningful dialogue. The champions of individual
independence are disorganized and out of touch with the American people.
The moderates in the middle of American politics have proven to be
cowards.
And no one wants to admit that the economic
environment of the next 25 years is going to be dreadfully different
from the economy we enjoyed over the last 25 years. We ought to know
better. Legislation without perception is doomed to failure. Congress
will not get the job done.
What can we do? If we want to fix Social
Security, we must take it away from an ineffective and contentious
legislative process. We must force the issue.
Take Social Security away from Congress.
Give it to the workers of America.
We can develop a workable plan for Social
Security. We can have a solvent and sustainable retirement system based
on participant ownership, choice and responsibility. We can create a
link between contributions and benefits.
Here are some of the elements:
Every worker has a personal account. No one
pays any tax. Instead, a fixed percentage of every worker's pre-tax
income is deposited into a personal account. All investments increase in
value free of current taxes. When a worker retires, funds can be
withdrawn in one of three ways: by transferring the entire amount into
an inflation indexed annuity; taking actuarially computed monthly
withdrawals based on life expectancy; or any combination of the first
two options. Monthly payouts are taxed as ordinary income.
Workers who want to put away additional
funds for their retirement could also participate in employer sponsored
retirement plans and have additional privately managed Individual
Retirement Accounts. Each worker has the freedom to take early
retirement whenever the accumulated funding in that worker's Personal
Retirement, pension and IRA accounts are at least 25 percent higher that
the projected minimum Personal Security benefits that would be paid
during the retirees remaining lifetime. There is no obligation to stop
working. There is no obligation to continue working beyond the
established retirement benefit age. Because all Personal Accounts belong
to the worker, they are freely transferable from employer to employer.
It's important to recognize these ARE
investments. They accumulate value. They are NOT worthless government
IOUs. They will, therefore, increase worker wealth.
Although many readers will wish that
participation could be on a voluntary basis, that ideological concept
will not solve the challenge of funding our nation's retirement
liabilities. In reality, over 40 percent of our brothers and sisters are
either unable or unwilling to plan for a financially secure retirement.
They come from all walks of life, occupations, and economic strata. If
we do not create a plan that automatically funds their senior years,
then some or all of their financial needs have to be met through
publicly funded welfare.
Is that what we want? Probably not.
So loath as I may be to prescribe mandatory
participation, cultural and economic reality demands we do for everyone
that which some of us may not do for ourselves. Every worker
participates. No exceptions for the rich or poor. No exceptions based on
occupation. Immigrants, whether temporary workers or permanent
residents, can participate just like any other worker. We want every
worker to have a strong personal interest in the success of this plan.
Individual private accounts would be managed
by specially chartered pension management companies which would have a
fiduciary responsibility to protect, preserve and increase the value of
each account. These companies operate under a strict set of rules, are
not allowed to engage in any other kind of business, and are subject to
public audit.
Existing Social Security participants would
be free to either stay in the present system, or "opt out" with a check
from the government equal to future benefits. That amount would be
transferred, tax free, to a new Personal Account.
For those who are unable to make enough
contributions during their working years to provide a suitable minimum
of retirement benefits, we can supplement their monthly income with a
"Personal Security" welfare benefit to make up the difference between
earned retirement income and a defined minimum level of financial
support. The tax cost of this supplemental plan will be substantially
less than the cost of funding the entire Social Security retirement
system.
How do we fund the Social Security deficit?
The transition to privatization? There are multiple options. It can be
done. People of good will can figure that out.
In my previous articles on Social Security "Will
Social Security Bankrupt America?", I pointed out that Social
Security accounting is done with smoke and mirrors, there is no such
thing as a "Trust Fund", and the Federal Government may not have the
resources to finance future Social Security benefits. In "A Responsible
Plan for Social Security" we stated that the fundamental purpose of
Social Security is to provide American workers with a dependable source
of monthly income when they retire. In order to do this, Social Security
must be administered by a system of management that has a defined
fiduciary responsibility to present and future beneficiaries; Social
Security funds must not be co-mingled with Federal Tax revenues;
Congress must divorce itself from any involvement in the management of
the Social Security system; and In order to insure its ability to meet
current and future beneficiary obligations, Social Security must have a
viable financial structure.
Social Security represents a contractual
obligation between the Federal Government and the workers of America. It
is part of the Social Contract that exists between any government and
those who are governed. As such, Congress has an obligation to put a
plan in place that is trustworthy as to purpose, and credible as to
substance.
Since it is obvious that Congress has
neither the will nor the legislative process to achieve the desired
objectives, the only realistic, long term, moral, self financing
alternative solution is to take Social Security away from Congress.
Force the issue. It's our money. Restore
fiduciary responsibility to our primary retirement system.
Take Social Security away from Congress.
If you agree, send me an e-mail with your
protest to
dtvjournal@wizwire.com.
I'll post the
"printable" e-mails on
www.tceconomist.blogspot.com
©
2005 Ronald R. Cooke
The Cultural
Economist
Author, "Oil, Jihad &
Destiny" and "Detensive Nation"
Editorial Archive
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Ronald R. Cooke | 13365 Via Del Sol,
Auburn, CA 95602 | Website |
