How Can We Solve the Social Security Crisis?
Each time that we have approached that point where Social Security payments
would exceed Social Security revenues, our federal lawmakers have averted the
crisis by raising the Social Security tax rate. This action, while
assuring that benefit payments can continue, denies the American worker the
full benefit of the funds that have been invested by generations of American
workers, and lessens the tax burden of those Americans who have benefited most
from the system through "investment" of the continuing surplus.
Some have proposed that the Social Security System can be saved by
converting to a system of
private investment.
Others propose a complete end to the system, reverting to a time when each
American was individually responsible to save and invest in anticipation of
that time when work would no longer be possible, and rely upon family whenever
savings were not enough.
So, how about private investment of the Surplus?
Many Americans will be surprised to learn that this was exactly what was
initially proposed by Franklin Roosevelt and passed by the U.S. legislative
branch, at a time when Democrats controlled the U.S. legislature. So, why
Wasn't the surplus invested in mutual funds as many Republicans are now
proposing? The answer is that their own party opposed the initial plan in
the U.S. Supreme Court, claiming that it comprised an unwarranted and illegal
involvement in private enterprise. Most Republicans then, as well as many
of those who currently embrace that party, felt that government investment
in private corporations would lead to eventual manipulation and control of
those enterprises for political purposes. The Supreme Court ruled the plan
unconstitutional, and there is nothing in the current proposals to overcome
that ruling.
Let American Citizens Manage their Own Retirement Funds
Well, if the government can't invest in private enterprise, why don't we
just let the individual citizens manage their own retirement savings and
investment plans? Doesn't anybody remember why we have a Social Security
System? The reason for the existence of the Social Security System in
the U.S. is the widespread failure of personal investment plans, largely
due to widespread involvement of private individuals in the U.S. stock
markets. We now refer to this cataclysmic failure of personal investing
as the The Great Depression. The success of private investment plans
can not be assured for a number of reasons:
- No individual human being is able to foresee the exact length of their
own lives, and therefore cannot anticipate just how much cash will be
required to see them through to the end of their lives.
- Since we are unable to judge the length of our lifespan, we must
conserve the balance of our retirement funds, living only on each year's
profit from those investments. This fact makes most low-risk investments,
such as insured savings plans, impractical, since the proceeds on such
investments have not, traditionally, kept pace with inflation. Therefore,
those individuals who are attempting to live on such investments will face
a continually deteriorating standard of living.
- Individual human beings cannot control nor foresee the future of our
complex economic system. Therefore, those investements that do bear the
possibility of conserving value through inflation, will also carry a
significant risk of complete ruin.
- As the human lifespan continues to increase, more and more of us
live beyond the time when we are at our mental best. Many aged Americans
simply cannot be relied upon to conserve and manage their own funds.
Finally, those Americans who have invested large portions of their income
in the existing system are entitled to receive benefits from their
investments.
A Fair Solution to the Social Security Crisis
It is time for fair play in the Social Security System. It is time for
the federal government and those wealthy Americans who have benefited most
from this system to begin to repay their debt to American workers, by paying
some portion of Social Security benefits from the general revenue fund and
setting an income tax rate that will allow those benefits to be paid to the
workers who have contributed more than their fair share to this system
for decades.
