Wednesday, July 14, 2010

Social Security; Unconstitutional but Fixable...

Social Security is simply a promise made by the federal government to take money from my paycheck (and the rest of the current workforce) and pass it on to people that have reached retirement age and put it into their account. There is no “lockbox” or “account” with money in it. The money that is needed to be paid to current retirees is directly transferred, and any current “surplus” is used to pay for other federal services and falsely offsets the federal debt. The surplus is running out because the federal government has spent every penny of what have should have gone into a “lockbox” or individual “account” on other “services” or handouts.

The original idea of Social Security was to “insure” that poor elderly folks had at least a small stipend so they could survive and not starve when they were no longer able to work. Over the years, self interested politicians have promoted the perception that Social Security is a pension fund. Unfortunately what this perception has accomplished is an “I paid in, I should get my money back in retirement” expectation. That is not sustainable. With the addition of COLA (cost of living adjustments), and the increased life expectancy compared to when the program began, most retirees today get much more in return than what they put into the system. The percentage of wages taken today is much higher than the current retirees put in, but it is still unsustainable and immoral. It is immoral because the retirees today are taking the money from their children’s paycheck whether they need it or not. Many of the current retirees are selfishly bankrupting the future of their grandkids. If the Social Security checks stopped for individuals after the amount put in was exhausted, I would rescind the charge. But try to touch Social Security today and the argument that ensues is the I “deserve” or are “entitled” to get these freebies because I paid in and was “promised” these “benefits.” As a politician Social Security is the third rail, for thinking people it is a problem that needs to be addressed even if the elderly scream and threaten to vote against the people that need to fix the program. The alternative is, well, coming fast; a generational revolt.

So what’s the solution? First, end COLA’s. Second, limit payouts to $750.00 a month per retiree starting with people that are currently 50 years of age and under (that includes me). Third, money collected needs to be put into individual accounts and taken out of the general fund. Individuals should be able to select where the money goes in conservative mutual funds. Finally, cap Social Security deductions from paychecks to 3%, end compulsory employer contributions, and allow individuals to opt out of the system if they have private retirement funds set up.

The result? People will change their saving habits or face limited retirement opportunities. More people will save for retirement through the 401-K plans (No matter what liberals say, it is safer than a bankrupt, unsustainable ponsey scheme the government is currently running). Politicians will have to find another way to balance the budget. Employers will have their burden of paying into Social Security eliminated, freeing up resources to be used elsewhere. If people fail to prepare for retirement they can apply for welfare because currently that is what Social Security has become.

The truth about Social Security is that the current retirees are getting a free ride and we all know nothing is free. It is being paid for by the grandchildren they claim to love. If we really want to fix Social Security we have to face facts. The constitution gives no authority to the federal government to administer a “retirement program.” It is an individual responsibility to prepare for retirement. Having a “safety net” and not a “hammock” should be the path we take.

I think these are the things that will get us there. All due respect to my elders and the constitution…


Anonymous said...

I think we need to recognize what social security was intended to be - it's a welfare program. And as such - only the truly needed should receive the SS welfare payments.

Rich said...

As I stated, we do pay into the system with the understanding it is ours for retirement. It's not. We need to minimize the reliance on all government programs and take care of our own retirements. We do that by reducing pay in, pay outs, and expectations of the entire Social Security program. A person 50 (me) paying into the system for the past 30 years if that money was in a 401-K even with the current downturn would have about $250K in a retirment fund today. What do we have in the Social Security program; promises and IOU's and the potential of politicians taking away the money we put in.

Lesson; Something as important and personal as retirement should be decided by individuals not government. Remeber the Constitution!