Saving Social Security - a policy proposal from AFP

Americans for Prosperity has a policy paper, Social Security Reform: Freedom and Prosperity for American Workers, that presents an interesting alternative for addressing the unfunded obligations of the program:

Social Security currently consumes over 20 percent of the federal budget, and that spending will only continue to skyrocket. With a wave of retiring Baby Boomers, people living longer, and a workforce that is growing slower than it used to, it's clear that Social Security’s current system is unsustainable. Any talk of trimming the federal budget must include a plan to reform this broken program.

Some policymakers have talked of increasing payroll taxes or cutting benefits for future retirees to put off the program’s inevitable bankruptcy. Thankfully, there is a better way. Social Security personal savings accounts put the program back on a sustainable fiscal path and offer a better deal for workers than the current system.

The paper below provides an overview of the advantages of personal savings accounts. We hope it can start a more rigorous and fact-based conversation about the future of Social Security in our country.

Ferrara - Social Security Reform

How long do Americans work for each type of tax?

From the National Center for Policy Analysis:

In 2011, Americans will devote 2 hours and 13 minutes of every eight-hour workday, or over a quarter of their working hours (27.7 percent), to paying taxes. In a nine-to-five workday, it takes until 11:13 a.m. to earn enough to pay that day's share of taxes at the federal, state and local level. If we add the federal deficit to the picture -- that is, if the federal government were planning to collect enough in taxes during 2011 to finance all of its spending -- Americans would work until lunchtime, 12:07 p.m., for the government, before keeping any of their earnings for themselves, says the Tax Foundation.

These calendar- and clock-based illustrations are a useful way to explain how much the nation as a whole spends on government:

* Individual income taxes require the most work; all but seven states, and some localities, levy an income tax. When these are added to the federal income tax burden, income taxes are projected to amount to an average of 46 minutes of work in an eight-hour workday.

* Social insurance taxes (taxes dedicated to funding social insurance programs such as Social Security and Medicare) require 29 minutes of work.

* Sales and excise taxes require 20 minutes of work.

* Property taxes require 16 minutes of work.

* Corporate income taxes require 16 minutes of work.

Source: Kail Padgitt and Alicia Hansen, "Nation Works until 11:13 a.m. to Pay All Taxes, Lunchtime to Pay off the Deficit," Tax Foundation, May 5, 2011.

For text:

http://www.taxfoundation.org/files/ff268.pdf

If health care bill just like Social Security and Medicare, how long until bankruptcy?

In looking at the news coverage of Saturday's vote on the Pelosi health care bill, nearly all reports include this statement:

"A triumphant Speaker Nancy Pelosi, D-San Francisco, likened the legislation to the passage of Social Security in 1935 and Medicare 30 years later."

And I just have to shake my head and wonder what happened to the brains these people were born with.

Why in the world would anyone liken this bill to two failing and bankrupt programs?

Do they not care that both Social Security and Medicare are insolvent and are paying out more than they're taking in? Do they not care that people who are paying into the system now are probably never going to see any benefit from those taxes they've paid?

Do they not understand that these two programs are just ponzi schemes that would put them into prison if they were in the private sector? As the Wall Street Journal reports:

The House also contains a new government long-term insurance program that starts collecting premiums in 2011 but doesn't starting paying benefits until 2016 and then runs out of money in 2029. North Dakota Democrat (Senator) Kent Conrad called it "a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of" in an interview with the Washington Post in late October.(emphasis added)

Maybe they understand all this - and are doing it BECAUSE of these facts. After all, we've continued to let them. And the more people they put onto the programs, the more support they have for extending them.

Under these rules and outcomes, they expect the same thing with health care. They'll make Americans dependent upon the government for health decisions and can then make all the decisions for the American people. We let them do this with our retirement, so why not health?

And when we are dependent upon government - that is, the politicians - we'll vote for the ones who promise to give us more, even if there is no way to pay for it.

Eventually, there won't be anyone left to tax to pay for the 'free' services others are getting. Then what? Will the politicians just borrow the money from China? And what if China stops buying debt?

Ah, those pesky 'what if' questions that politicians avoid like the plague.

If this health care bill is just like Social Security and Medicare, you can be sure it is not sustainable, will result in higher taxes, have limited service and, eventually, will result in bankruptcy for the program.

Pelosi said so herself.


Side Note: The Wall Street Journal has a great take on this as well.

Did you know? Government already coerces your health care choice

I guess I wasn't aware of this fact until reading this article in the Wall Street Journal:

"A centerpiece of the debate over ObamaCare is government coercion and the right to choose a health-care plan. So it's worth watching a lawsuit now making its way through the federal courts that seeks to let seniors keep their Social Security benefits even if they reject Medicare. This could be a big deal."

That's right. If you want to collect your Social Security, you MUST enroll in Medicare, even if you don't want it or need it. If you've got a great health plan already and decide to 'opt out' of Medicare, the government will deny you the ability to collect your Social Security.

Seems contrary to everything we know and the rhetoric we're hearing in today's health coverage debates, doesn't it? Especially since the two are completely different programs, each funded by the individual through different taxes.

But there is some logic and reason making its way through this situation:

POMS were imposed in 1993 during the Clinton Administration and set forth rules that aren't in the statute or regulations governing Medicare. The three plaintiffs—Brian Hall, John Kraus and former U.S. House Majority Leader Richard Armey—all had health-care plans they preferred to the coverage they were compelled to receive through Medicare.

In her ruling this week, the judge said that "neither the statute nor the regulation specifies that Plaintiffs must withdraw from Social Security and repay retirement benefits in order to withdraw from Medicare." Article I of the Constitution gives Congress sole power to legislate—so when agency rules conflict with federal statute, the statute takes precedence.

The Obama administration opposed the suit saying that the plaintiffs had not yet exhausted their administrative remedies for challenging these agency rules. But the judge disagreed:

Judge Collyer rejected that notion, noting that one plaintiff had sought an administrative hearing but "received no response from the SSA for approximately three years." Exhaustion of remedies was therefore "futile." A three-year wait is precisely the kind of bureaucratic hassle, or deliberate stonewalling, that government is famous for.

The article continues with what appears to be just common sense - but also points out the contradiction when it comes to the actions in this situation versus the words coming out of politicians' mouths:

Keep in mind that the plaintiffs are merely asking for the freedom to spend their own money for their own health insurance. With Medicare careening toward bankruptcy, letting seniors opt out could help save the taxpayers money. The plaintiffs argue, and reasonably so, that they have paid a lifetime of taxes into Social Security and shouldn't have those benefits denied merely because they are willing to pay for their own medical care. Social Security and Medicare are separate programs, and both are financed by separate payroll contributions.

The response of the Obama Administration to this lawsuit is revealing about its principles, as opposed to its rhetoric. President Obama says his plan for a "public option" wouldn't be coercive, saying that "If you like your health-care plan, you keep your health-care plan. Nobody is going to force you to leave your health-care plan." But here is a case where federal bureaucrats are using their power to force Medicare on seniors. Let's hope the courts restore a genuine right to choose.

We need to keep this situation in mind and remember the excesses of government when it comes to a so-called 'choice' of health coverage in the future. Despite their words, we have a present-day example that demonstrates the words cannot be trusted.

49% want to opt out of Social Security, Rasmussen reports

I wasn't part of the poll, but you can count me in that group.

From the Rasmussen website:

"Forty-nine percent (49%) of U.S. voters say working Americans should be allowed to opt out of Social Security and provide for their own retirement planning.

A new Rasmussen Reports national telephone survey finds that 37% disagree and do not believe Americans should be able to opt out of Social Security. Fifteen percent (15%) are not sure.

A majority of voters under 50 say workers should be allowed to opt out. A plurality of those over 50 disagree."

With the unfunded liabilities this Ponzi scheme currently has, I have no illusions that the money I've paid into the system over the years will be available for me when I retire. In fact, I'm making other plans because I expect there to be nothing left by the time I'm eligible to collect.

And the trustees who oversee Social Security are predicting no cost-of-living-allowance (COLA) increases for the next two years, due to the formula which ties such increases to inflation. But politicians want to break the rules anyway, spending even more money and covering the cost by increasing taxes:

"The cost of a one-time payment, a little less than $8 billion, could be covered by increasing the amount of income subjected to Social Security taxes, ..."

This means younger workers would be paying for older recipients to get an increase in violation of the current rules.

This is proof that those younger than me are certainly at a disadvantage in the Social Security system. As the system goes broke, government must reduce the amount of payouts or massively increase taxes to cover the obligations. If younger workers could put the same amount of funds into an IRA or other type of retirement account, they own those funds and are assured of actually getting them back, plus interest. Such assurances are not possible with Social Security.

Where do you stand? Would you forgo any withdrawals of Social Security funds in exchange for having your own retirement system? Would you opt-out if you could?

Scary reality: $107 trillion in liabilities

An editorial in the Charleston Daily Mail spells it out in stark - but factual terms: we're in trouble because (t)he nation can't pay for Social Security and the health entitlement programs it has now.

$107 trillion in liabilities
Congress needs to fix existing programs if it creates new ones

AS Americans listened to people yammer on about "death panels" and other distortions of some of the health "reform" proposals circulating in Congress, larger and more important questions have gone unasked and unanswered.

First on the list should be: Are members of Congress out of touch with reality?

The nation can't pay for Social Security and the health entitlement programs it has now.

The Social Security and Medicare Trustees Reports for 2009, released in early May, laid out the situation plainly:

Social Security and Medicare have a combined unfunded liability of almost $107 trillion.

According to Pamela Villarreal, a senior policy analyst with the National Center for Policy Analysis, that's about seven times the size of the American economy, and 10 times as much as today's national debt.

Members of Congress have, over the decades, promised Americans $107 trillion more in benefits under these two existing programs over the next 75 years than they have provided for in taxes.

Medicare alone has an unfunded liability of almost $38 trillion.

By some people's reckoning, when today's college students reach retirement in about 2054, the burden of paying Social Security and Medicare benefits would consume one in three dollars of taxable payroll.

Yet some in Congress would create a costly new medical entitlement program to deflect attention from the fact that they don't want to deal with the problems they already face.

All responsible Americans should insist on better than that.

If corporations had such unfunded obligations, we'd have members of Congress demanding appearances and accountability in front of committees and lots of cameras. But they ignore their own house while complaining about others.

And these same people want to create a new government program based on the same pyramid scheme that puts non-elected people into jail?

Can you say stuck on stupid?

Totalization Agreements

You're probably wondering - what in the world is this? Congressman Ron Paul (R-TX) is one of my favorite legislators, specifically because of his limited government/constitutional perspectives that are supported by his votes. He does a weekly column and this week's is reprinted below. Love to know your thoughts on this!

Totalization is a Bad Idea
January 8, 2007

Through a Freedom of Information Act Request, a private group recently obtained a copy of a 2004 agreement between the United States and Mexico that will allow hundreds of thousands of noncitizens to receive Social Security benefits.

The agreement creates a so-called “totalization” plan between the two nations. Totalization is nothing new. The first such agreements were made in the late 1970s between the United States and several foreign governments simply to make sure American citizens living abroad did not suffer from double taxation with respect to Social Security taxes. From there, however, totalization agreements have become vehicles for noncitizens to become eligible for U.S. Social Security benefits. The new agreement with Mexico would make an estimated 160,000 Mexican citizens eligible in the next five years.

Ultimately, the bill for Mexicans working legally in the U.S. could reach one billion dollars by 2050, when the estimated Mexican beneficiaries could reach 300,000. Worse still, an estimated five million Mexicans working illegally in the United States could be eligible for the program. According to press reports, a provision in the Social Security Act allows illegal immigrants to receive Social Security benefits if the United States and another country have a totalization agreement.

It’s important to note that Congress, like the American people, heretofore had not seen this totalization agreement. This decision to expand our single largest entitlement program was made with no input from the legislative branch of government. If the president signs it, Congress will have to affirmatively act to override him and in essence veto the agreement. This is the opposite of how it’s supposed to work.

There are obvious reasons to oppose a Social Security totalization agreement with Mexico. First, our Social Security system already faces trillions of dollars in future shortages as the Baby Boomer generation retires and fewer young workers pay into the system. Adding hundreds of thousand of noncitizens to the Social Security rolls can only hasten the day of reckoning.
Second, Social Security never was intended to serve as an individual foreign aid program for noncitizens abroad. Remember, there is no real Social Security trust fund, and the distinction between income taxes and payroll taxes is entirely artificial. The Social Security contributions made by noncitizens are spent immediately as general revenues. So while it’s unfortunate that some are forced to pay into a system from which they might never receive a penny, the same can be said of younger American citizens. If noncitizens wish to obtain Social Security benefits, or any other U.S. government entitlements, they should seek to become U.S. citizens.

Also, totalization agreements allow noncitizens to quality for Social Security benefits by working in the U.S. as little as 18 months. A Mexican citizen could work here for only a year and a half, return to Mexico, and retire with full U.S. benefits. This is grossly unfair to Americans who must work more quarters even to qualify for benefits-- especially younger people who face the possibility that there may be nothing left when it is their turn to retire.

Those in favor of sending U.S. Social Security benefits to Mexican citizens argue that crushing poverty in Mexico demands some form of U.S. assistance to that country's aged. While poverty in Mexico truly is deplorable and saddening, the fact remains that Congress has no constitutional authority to enact what is essentially another foreign aid program.