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I am not an expert on Social Security. The vast
majority of those who claim to be aren’t either as near as I can
tell, but my ego and livelihood don’t hinge on making myself seem
more qualified than I am.
In my day job I am a certified public accountant and
management and financial advisor so perhaps a little better able to
wade through the gobbledygook that flows out of Washington. I know
enough to suspect the battle over Social Security reform has more to
do with political brownie points than responsible management of the
contributions you and I make from our hard earned paychecks.
Social Security should be something considerably more
important than a way to gain political yardage scaring the elderly
into thinking their benefits are at risk or youth into fearing they
will be sucked dry to pay for the sins of the past. Not that these
aren’t real possibilities, but I am enough of a facts and figures
guy to want, well, facts and figures.
Consider this from the president of the United States:
“With the number of elderly Americans set to double by 2030, the
baby boom will become a senior boom. So first, and above all, we
must save Social Security for the 21st century … by 2013, payroll
taxes will no longer be sufficient to cover monthly payments. By
2032, the trust fund will be exhausted and Social Security will be
unable to pay the full benefits older Americans have been
promised.” He then proposed “investing a small portion in the
private sector, just as any private or state government pension
would do. This will earn a higher return and keep Social Security
sound for 55 years.”
The president I quoted is Bill Clinton, from his 1999
State of the Union Address. The only thing I quibble with is the
notion of a “trust fund,” which did not and does not exist. Nor is
there a “lock box,” another sweet nothing politicians are fond of
whispering into our ears. I feel like I’m kicking the Easter Bunny
here, but Social Security isn’t a retirement plan either, at least
not in the conventional sense.
What Social Security is, at best, is a stack of IOUs; at
worst it’s a pyramid scheme. Much of the money that comes out of
your check and mine as FICA withholding for Social Security is spent
any darn way Congress pleases. Some is used to pay benefits but the
system depends on more new tax money coming in every year than going
out. As President Clinton pointed out, the whole sorry mess will
come crashing down of its own weight if nothing is done.
President Bush has taken Clinton’s idea a step further,
suggesting the private sector investments (stocks and bonds) Clinton
proposed be held in personal accounts controlled and owned by each
individual taxpayer. Despite some of what has been written, I am
aware of no proposal to allow taxpayers to invest in anything they
desire, regardless of risk. In fact there have been few specifics
from the Bush administration but even fewer from his Congressional
opponents, leaving me to suspect their real problem with personal
accounts is that they could no longer raid the kitty.
I’d love to see a tape of the 1999 State of the Union
Address to see which of the Congresspersons who applauded then are
booing the idea of investing a portion of Social Security funds in
stocks and bonds now. I’d also like to see any proposal to create a
real Social Security lock box, not just a rhetorical one, and I
don’t give a rat’s rump who gets credit.
Neither should anyone else outside Washington. Social Security
taxes represent a huge portion of the total tax burden; our
representatives have a moral and ethical duty to manage it
responsibly and let politics be hanged.
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