During his State of the Union address,President Bush proposed certain changes to "rescue" Social Security from bankruptcy.The centerpiece of his proposal was the establishment of individually owned retirement accounts,to which workers could contribute up to 4% of their earnings. This money would come from their Social Security "premiums".
Pardon my ignorance,but it seems to me this would hasten
of Social Security !
Before I propose an alternative,let's address (for the sake of my Libertarian friends) the inherent value
of Social Security.
In the "good old days" before Social Security,the question of what to do about the elderly poor - (which,in real world terms,meant just about everybody too old to work any more)-was handled by
a local official called The Overseer of the Poor.If there were no relatives who could be dunned for the oldster's support-(and this was done with ruthless efficiency)-the oldster was stripped of all assets,and sent to the Poor Farm-or its urban equivalent;where he or she could be warehoused at minimum community cost,until death relieved the community of its grudgingly-accepted burden.
This is not "Socialist rhetoric". It's the way things were until shortly before I was born.I remember seeing the local Poor Farm,and I recall the dread with with it was pointed out to me.
Not far from where I live,there is still a little lane-off a busy highway-that older maps identify as "Poor Farm Road".
Social Security,although it could not completely "cure" the problems of elder poverty,did much to alleviate it,and to give our senior citizens a sense of dignity, participation,and worth.It had another benefit,which is seldom mentioned.
Without Social Security,older workers would have no choice but to keep on working until they were incapable of doing so.They would not retire-which means,those below them in seniority and experience would have little chance to advance.The result would be a totally stratified workplace
. (If you thought Union Seniority rules were restrictive,imagine what things would be like if most workers refused to retire !)
A second factor,often ignored,is the impact of Social Security on the economy.Advertising agencies may concentrate their efforts on the 20-something segment of the market,but-year after year-it is Senior Citizens who help keep the economy afloat.
Here's what I suggest as a "rescue strategy" for Social Security:
Every year,for a period of 10 years,the sum of one billion dollars (figure is arbitrary) should be posted to a special "Rescue Account".
This would be money from the general funds-but appropriated with the express proviso it cannot be used for any other purpose,"borrowed",or otherwise tampered with .
The monies thus collected would be used to buy non-voting stocks (US issues only) and bonds,in a prudent mix of stable and volatile offerings-just as any well-managed mutual fund or pension plan would buy:all dividends to be re-invested;all profits and operations to be tax-free.
The Rescue Fund would be run by salaried,highly qualified,and closely accountable fund managers.
Given the usual market conditions,prudent management,and freedom from taxation,it is anticipated each billion dollar investment would come close to doubling at the end of the ten year period;at which time:
Half of each decade's matured Rescue Fund monies would be credited to the Social Security accounts;
The remainder would be used to purchase a new "10 year annuity"...OR would be returned to the Treasury.
This is not an overly-convoluted plan.It involves money we will eventually have to pay out in a never-ending attempt to bail-out a sinking system.Let us be prudent enough to make the investment now -while we can-instead of waiting for a later-that might not be far too late