An astute reader of these pages, commenting on my last Discourse, brought up the issue of Social Security. I wasn’t going to write about it quite so soon, but this is always a topic of interest.
As we all should know, some 40 years ago, Congress got a look at the books of the Social Security Trust Fund and decided that it was just ripe for the picking. So, they did what all good Congresspersons do, they picked. They picked to the point of stealing every cent of the fund, which was solvent at the time and took it as their own and spent it. Now, they tell everyone that the younger generation’s contributions to Social Security will pay for the older generation’s Social Security payments. The main problem is that the way the fund is currently structured, it will be broke by 2017, and that is a conservative estimate. Well, let’s put the proper name on this scheme; it is called a Ponzi scheme. If I were to set up a fund in this manner, I would go to jail for 20+ years. But of course we are talking about Congresspersons, they can’t go to jail. OK, enough ranting. It is time for me to discuss how I would fix Social Security.
First, it would be painful because the good Congresspersons, who don’t have to worry about Social Security for their retirement, have made sure that there is no money in the Trust Fund. In my plan, everyone who is within 10 years of drawing Social Security would be “grandfathered” and remain in the plan as they are today. Their plan and benefits will not change.
Now comes the pain. The first thing that should happen is for the good Congresspersons to come up with the money they stole from us over the last 40 years and allocate all of the money to those over 10 years from drawing benefits who have paid into the program. Notice I said “who have paid into the program?” That’s right, if you did not pay into the program, you don’t get anything out. That is all inclusive. All of the money allocated to the wage earners would have to go into investment grade instruments, not Uncle Joe’s latest get-rich-quick scheme. All workers and employers would continue contributing as they have, but they would now be making payments into the investment grade instruments that each worker has designated. You might call this a “Super 401.” The stipulations for withdrawing these funds would remain the same as they currently are. However, that is only a point of departure for further investigation.
Let’s look at the goods and the others. First, let’s look at the “others.” (That’s Navy speak for bad stuff) The worst part of this plan is that the good Congresspersons will not have billions of our dollars to call their own. But, I’m not sure that is a bad thing. I would complain that the good Congresspersons are spending like drunken sailors, but as a former drunk sailor, I take exception to this. When I ran out of money, I quit spending. Another drawback of this plan is that the government bureaucrats will have less visibility into our personal lives. Oh, is that bad?
OK, let’s look at the goods of this plan. We will have much greater control over the future of our finances. If we decide to keep all of our money in a money market plan, we can do that. If we want to loan the government money in the form of savings bonds we could do that too. Or we could go into high quality mutual funds. The choice would be ours, not some bureaucrat sitting in Washington.
As I have stated in the past, I am not an economist but I understand a bit about how money works and can recognize theft when I see it. What Congress has been doing over the past 40 years is criminal. Bernie Madoff is in jail for doing exactly what Congress has been doing all these years. Why has the Justice Department given Congress a pass? Is it because they appropriate the money for the Justice Department?
Do I sound a bit exercised? You bet I am. I work hard for my money and so do you. Where is it written in the Constitution that Congress can just waltz in and appropriate our money for their pet projects? I have read that revered document many times and I have yet been able to find such authorization.
I had better stop ranting or I will never get to sleep tonight.
As always, I welcome your comments and discussion.