Over a Cup of Coffee

The Social Security Debate

Everybody knows by now that this debate is going nowhere. I read pundits from both sides that do nothing other than stymie the move to reform this ailing dinosaur.

Since I would like to go to my proposal quickly, let's summarize what both sides are doing in this debate.

The Democrats, whose power base are left wing liberals, refuse to concede that there is a problem [whether or not it manifests itself today or in the future is completely irrelevant]. Their motives are sinister and self-serving, the biggest of which is it's over-their-dead-body [hmmm, not a bad idea] that George W. Bush and the GOP get the credit not only for the ultimate destruction of their much beloved Social [IN]Security System but credit for giving the people a much better alternative. Note that even Alan Greenspan himself believes privatization is a good idea.

The Republicans on the other hand, are not using their resources to sell the idea "the American way" [which has always worked]. The White House is in the news as of this writing for publishing "propaganda" disguised as news. Since this practice is condoned by the Department of Justice and tradition [all other presidents have done the same thing], why not use this resource to generate testimonials of average Joe's and Jane's comparing the Return-On-Investment of their SSS contributions vs. say, their 401K contributions or IRA's [which are great examples of an existing private accounts]. Publish this in all the 50 states and let the liberal Dems challenge this numbers to numbers!!!

The only argument the Dems can offer is the supposed "trillions" that it will cost, as if its not the cost of the existing system already [but then that is the Dems propaganda].

Enough said. Here is my proposal.

The reform has to occur in stages. The timing is up to congress.

STAGE 1: Do NOT touch the SSS contribution yet. Everyone who wishes to do so may create a private account contribution THAT IS FULLY TAX DEDUCTIBLE, the amount of which maximizes at about double the amount of the SSS contribution. The rationale is this: Private accounts are such a great idea that we have to put our money where our teeth is and even double it for those who can afford. Three to five, or ten years from now, lets compare the ROI [Return on Investment] of SSS contributions vs. the Private Accounts. I am wagering that politics cannot stop the avalanch of income worker in all spectrum to move toward private accounts.

Why double the tax deduction? Well, warts and all, it sends the subliminal message that the Federal government rewards achievers, albeit purely financial, without necessarily penalizing the under achievers, albeit financially [but it is a might good subliminal message]. Negative repercussion? Tough, it's not a perfect world, unless you are dreaming and don't want to wake up!!!

STAGE 2: Similar to the FDIC insurance, a Federal Insurance agency can be created to insure private accounts up to say, $500,000.00. The amount is again up to Congress to determine what is fair, an amount that still sends the message of rewarding the achiever without penalizing the under-achiever [albeit, financially speaking only]. At this point the SSS contributions still continue, i.e., still mandatory up to the $80,000 cap or whatever Congress decides. At the same time a relatively small government agency can be established to audit investment companies involved in privatization.

STAGE 3. Start reducing SSS contributions. The SSS system is really an uncouth multi-level marketing scheme anyway, let's start getting rid of it. At this point, income earners may chose to voluntarily contribute to SSS an amount over and above the required and have it tax deductible as a "charitable contribution" which it is at this point. Note that we are still using moral suasion in all these procedures [no totalitarian measure which the SSS, and the existing liberal left, in terms of our taxes, desire]. Note that at this point, it is possible that the mandatory contributions will never yield the contributors anything but it should be more than offset by the private accounts. But a "reliable" congress may come up with a better deal.

STAGE 4. Retire the SSS system. Here is what we have accomplished: We have eliminated the most inefficient agency in the scenario, the SSS system. Note that anything managed by the government is almost 100% of the time financially inefficient. We have not only privatized the retirement account, we have also privatized the managers. Security? Hopefully, the "big-brother" government insurance agency can fill up the slack, that is their only reasonable role in this issue, and they may also spread the risk further to private re-insurers.

posted by The Sola Scriptura Theologian @ 11:43 AM