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Social Security: Responsible Proposal For True Reform

Short story By: EdwardJBradleySr
Editorial and opinion

Social Security: True Reform: A Responsible Proposal.

Submitted:Nov 12, 2006    Reads: 420    Comments: 8    Likes: 3   

What kind of "reform" would actually work and be most beneficial? If "surplus" monies were actually placed in a true Trust Fund and properly invested, the increased benefits to future retirees and the American economy would be substantial. A "solvent" Social Security Trust Fund could provide future retirees with higher monthly benefits and this would stimulate the economy by providing seniors with a greater capacity to consume needed goods and services. At the same time, it would also provide the American economy with an enormously greater supply of available working capital for investment purposes. This too will stimulate future economic growth and prosperity.

Examples of this already exist. Many state employee and teacher retirement funds are now and have been successfully managed for several decades providing both their members and the national economy with enormous financial benefits. Why can't a Social Security Trust Fund be managed the same way? There could be more than just one set of investment managers and strategies, all modeled after currently successful state-run retirement funds. When one considers how private sector retirement funds are being plundered and destroyed, Social Security will probably be the only source of retirement income for most working Americans in the future. Right now, about 50% of all working Americans have only Social Security on which to retire. This has left them impoverished after a lifetime of working and paying into Social Security.

The time has come for all working Americans to contact and "pressure' the White House and the Congress to find an honest, fair and effective way to truly "reform" Social Security so that it will be able to fulfill the promise of 1935. This would include restoring the 1983 "benefits cuts" implemented by the Reagan White House with the help of both Democrats and Republicans, then serving in the U.S. Congress.

PROPOSAL: Congressand the White Housecould enact legislationtoestablishone or moreTrust Fund boards to invest "surplus"Social Security tax revenues. To ease the transition: the 1st year could be 15% of all "surplus" revenues; the 2nd year could be 20%; the 3rd year...25%; the 4th year...30%; etc, until all "surplus" revenues can be invested withoutthe disruption ofother neededU.S. Government spending.

Opposition will be forthcomingfrommany "special interests", now receiving federal funds, and for whicha reduction in the federal revenue stream might cause them to fearreducedfederal funding. To name but a few: the AARP; Public Broadcasting; numerous federally funded partisan and bi-partisan think-tanks paid to defend and justify every federally funded program, subsidy and policy; etc.. Excessive incometax cuts can alsobe viewedasa federal grant, subsidy or, perhaps,a "kickback".

Social Security "surplus" moniesneed tobe used to benefit those who paid them.Without true reform,Social Security tax increases willbe placedon those still working and theirfuturebenefits cut. Not a pretty picture.


In his 2006 State of the Union message, President Bush mentioned his prior attempts to "reform" Social Security. In what looked like a skit from the Ringling Brothers Clown College, Congressional Democrats then jumped to their feet to give themselves a thunderous standing ovation for having thwarted Bush. Neither deserves praise.

In 2005, President Bush wanted to implement voluntary individual retirement accounts. These would be funded with "surplus" Social Security taxes, now amounting to about $600 billion, annually. This is $6 trillion every 10 years without applying any returns on investments.

The problem: What part of an individual working American's Social Security taxes can be called "surplus"? Those with higher incomes, no doubt, would be credited with paying more in the way of "surplus" taxes and, therefore, would have more to invest and add to their own retirement incomes and estates. This anticipates the "cap", on individual incomes, being lifted so that no new revenue will flow into the Social Security System from people with higher incomes. In other words: a rebate of Social Security taxes to people Bush sees as his "base". Clever! Wouldn't you say?

One good feature of this proposal might be:Working Americans might provide their survivors with a more substantial inheritance. That is: If their incomes are high enough for them to be said to be paying "surplus" taxes. But Social Security was intended to provide financial security to retired seniors, disabled persons and surviving spouses and youngchildrenof those who, at one time, worked and paid Social Security taxes. Also to their surviving spouses and young children, should they die or become disabled, prior to being old enough to retire. Never was it meant to be a mechanism for building personal or family wealth.

Congressional Democrats want the Social Security System to remain as it is so the "surplus" can continue to pay for programs they favor while, at the same time, creating the illusion of lower (read: more responsible) federal spending. But this poses a problem for future retirees, born after 1945.

In 1935, the U.S. Congress and the White House misled the public into thinking that "surplus" tax revenues were being placed into a Social Security Trust Fund where they would be gainfully invested to pay for future retirement and other benefits. The Social Security Administration further misleads the public by telling us the Trust Fund contains around $3 trillion, a number which is supposed to soothe our concerns, though trillions more have been paid in "surplus" taxes. If there truly is a Trust Fund, it is either empty or filled with useless IOUs. The post-WW2 "baby boom" generation is now beginning to discover that all monies, comprising the Social Security "surplus", have been "taken" to artificially lower the size of the federal deficit and debt. Until now, there has been no real intention to pay back what has been "taken". Nor will there be without true reform.

Social Security "surplus" monies should be used to benefit, primarily, those who paid them. And not be used to fund special interest "pork barrel" programs or to subsidize annual federal deficits and accumulating federal debt.

Copyright � Edward J. Bradley 2006

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