Opportunity always arises from crisis. There is no better example of this than the coming collapse of the Social Security System. The opportunity that I'm referring to has arisen from the failure of the government to deal honestly with the people, and realistically with the program itself.
Theoretically speaking, Social Security and Medicare are supposed to be supported by payroll taxes and FICA,while general spending by the federal government is supposed to be supported by personal, and corporate income taxes.Throughout their history, FICA taxes have provided more than was required by Social Security payouts,leaving an excess of money. Congress, as usual, being unable to control its appetite for"pork", borrowed(read:misappropriated) from this account to fund any pet project that they wanted that went in excess of what was made available to them by general taxation. As a result, the Social Security Trust Fund is now filled with IOU's from Congress that need to be repaid from the general fund.
As Baby Boomers reach retirement age, this scam must come to an end. It may yet go down in history as"their finest hour" (I am one among them). Any excess funds remaining from FICA income are drying up,and will be gone by 2018. After that date, those IOU's will become due and payable immediately.
They will, of course, have to be paid from the general fund which will require the federal government to choose one of two possible options-they will either have to run up a surplus in the general fund, forcing them to cut government spending, or they will have to raise large sums of money via raising taxes in order to pay back those IOU's. Not liking either fiscal responsibility or accountability, they will not desire either of these options, however, there will be no other choice.
So,the federal government has built for itself a gilded cage. Inevitably, by the sheer size of it,Social Security obligations are going to squeeze out a great deal of the available money in general funding. And make no mistake about it, re-paying those IOU's are a government obligation, and not a hand-out, a sort of reverse I.R.S tax, (I like that!) if you will. As a result, the size of government will be reduced whether Congress likes it or not. (they won't)
The people are also going to have to get used to fewer goodies from the "nanny state". They will need to learn to do more for themselves without asking the government to do it for them. And there is nothing but good news here! The sooner, the better. Amen.
We have not had an opportunity like this to return real power to the people in my lifetime. Once again, I find myself indebted to President Bush for handing this goodie to us on a silver platter.(I'm really trying to love that man) His plan for Social Security Reform is to gradually phase out Social Security with compulsory personal investment for retirement. While I do have some reservations about this method, especially for the long term, and the underlying motives of its principle initiators(see'Corporate Communism"), I still truly believe that this is one for"we the people" if we see it in its best light.
Of course,"compulsory" anything goes against my libertarian principles, and the constitutionality of any government program can always be argued.But I do think the right course of action is to support the president on this one. We can talk about "tweaking" the particulars later.
This is how I think it will work. When FICA funds are diverted into these personal accounts for younger people, money will be removed from the Social Security System, and thus will bring its day of reckoning closer even than the projected date of 2018. It will also increase the need for the general fund to repay its obligations to retirees still in the system. The borrowing that will be necessary for the transition will use up all of the government's ability to fund itself. Quite simply, Congress willbe forced to live within its means, and government will begin to shrink. The only"mosquito wing"on the track that could possibly derail the train would be additional taxation from the federal government. We can, and should "head them off at the pass" by supporting real tax reform that will come by replacing income and payroll taxes with a national retail sales tax
. In order to make Americans more resistant to any attempts to put off the collapse of Social Security with higher taxation.
I believe we have a small window of opportunity here. Yes, I still have concerns as I stated earlier in this text, however, this is a genuinely golden opportunity to move this country in the direction that it was originally intended to go.
If we"damn the torpedoes",and take this opportunity to transform the country's retirement system from a tax supported entitlement to a private investment, and at the same time bring clarity and fairness to our system of taxation, we can leave our kids with a world that rightly may be called "the land of the free, and the home of the brave".
The Revolution will not be televised.
