The president’s Social Security Commission has acknowledged what politicians have been denying for decades – that Social Security has no true reserve fund and that much higher taxes will be required to make good on the promises made to you.
The politicians don’t put your Social Security taxes into a “lock box” for your retirement. They give part of the money to current retirees and squander the rest on their favorite boondoggles. Since they’ve set nothing aside for your rainy day, they can pay you a pension only by taxing your children and grandchildren at higher and higher rates.
“Solving” the Social Security problem wouldn’t be as difficult as the politicians and pundits make it seem. But to understand the solution, we must first deal with a few clich?s.
Investing for retirement
Clich? No. 1: “Some people can’t invest properly for their own retirement.”
This is typical of politicians’ justifying their interference by citing a problem they caused themselves. If they didn’t tax interest payments, and if their monetary policies didn’t create inflation, anyone could ensure a secure retirement simply by putting 5 percent of his earnings in a bank savings account. No speculation or investing expertise is necessary.
Clich? No. 2: “Some people are too irresponsible to plan ahead for their own retirement.”
Of course, some people wouldn’t provide for their own retirement – just as some of them won’t brush their teeth. But it’s wrong to hold the rest of us hostage – to force us into a fraudulent Social Security scheme (or force us to display our teeth for government hygiene inspectors) – simply because some people won’t take responsibility for their own lives.
Clich? No. 3: “Social Security would be more solvent if the politicians could increase the system’s earnings by investing the reserves in the stock market.”
Social Security brings a new dimension to such concepts as annuities, insurance and retirement. No long, complicated contracts. No actuarial tables to pore over. Social Security operates on a very simple principle: The politicians take your money from you and squander it. Allowing the politicians to boost Social Security’s earnings by investing its reserves in the stock market would just give them more money to squander – and they’d still be back soon enough to increase your taxes again.
Clich? No. 4: “Gradually ‘privatizing’ Social Security will wean people off the system.”
The first time the stock market dives, the politicians (both Democratic and Republican) will jump on that as an excuse to take away from you any further control over your own retirement.
The problem and solution
Social Security is inherently unsound because it’s a political program – run by politicians for political purposes. It will never work. And no attempts to fix it, reform it, or refinance it can make a silk purse out of a politician’s ear.
Only a purely libertarian solution can make things right: Shut Social Security down – completely, immediately and for good. End the Social Security tax tomorrow morning and stop making Social Security payments tomorrow evening. Anyone under 50 can have a better retirement putting 10 percent of his income in the bank instead of 15 percent into Social Security.
And what happens to those who are currently dependent on Social Security and those too close to retirement to build a new nest egg?
Have the government make a one-time purchase of private annuities – secure, non-political annuities that guarantee the same income Social Security is paying now to senior citizens.
How will the annuities be paid for?
Sell off assets the federal government shouldn’t own anyway – power companies, pipelines, unused military bases, Western lands, oil rights, mineral rights, and the hundreds of thousands of federal buildings that serve no constitutional purpose.
This approach doesn’t appeal to politicians, because it takes tax money and power away from them. But the only alternative to it is to resign yourself to having more and more of your income taken from you and poured down the drain.