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Show Securing Social Security Congressman Rob Bishop The second inherent problem is that the system creates no wealth, but is only a transfer of dollars. The system does not benefit from what Einstein called the most powerful force in the world: compound interest. Despite all the rhetoric and promises, there are no assets in the Social Security trust fund. For the past 40 years, the federal government has invested our excess Social Security tax money in government bonds. The interest rate has been a pathetic 2 percent, but it probably doesn't matter since the owner of the bonds is the government itself. Einstein's principle of compound interest doesn't work, because ultimately the government pays the government. It's as if I were to write an IOU, put it from one pocket to another, and say, "I'm rich! I've got money invested." If the bond were to someone else, we could claim an asset, but government debt to itself has no intrinsic value. So far there has been no harm because we had lots of taxpayers to keep the system going, but when the baby boomers retire, without a system change, someone down the line is going to lose. That will be our kids. I am offended because it is my money the government misspent and it is my kids who will suffer for it. It's easy to see why Americans feel more comfort in people's ability to partially manage some of their own money over the federal government's failed record of 40 years of poor choices. We cannot put off reform too much longer. The first baby boomers are eligible for retirement in 2008. The issue is closer than one thinks. The Power to Change and How to Change Who is Powerful This mismanagement of 40 years has made the problem severe. And it's our money at the core of the issue. To make Social Security whole for our kids' future-in other words, to pay off the IOUs and keep the cash for the kids-would cost, by the most conservative estimates, $11 trillion. Some say it is as high as $27 trillion. $11 trillion is larger than our entire economy. For every year we wait to make our kids' retirement secure, the cost increases another $600 billion. Just letting the economy grow will never solve the problem. If the economy doubled, it would still not be enough to keep the system solvent. The present system takes a lot of money from you, me and our kids, without giving equal value in return. It is legitimate to ask why so many politicians are so set against change. It's simply a matter of power. If Social Security is only an entitlement program, citizens, especially senior citizens, need politicians. The politicians make the rules, control the money and determine the benefits. If a person has a personal account, using Einstein's principle of compound interest accumulating real assets, not IOUs, the citizen may need to talk to a financial advisor, but not necessarily to a politician. And with a simplified system that has sensible controls and a few prudent choice options, you probably wouldn't even need that. Liberal politicians fight change because they want the power of being needed. Smart politi- cians will recognize the power loss; dumb ones will be the best demagogues. We're seeing that already. That is tragic and wrong, because we put our own money in and deserve a secure system responsible to us. Unfortunately, the original Social Security system was never based on an ownership right. The Supreme Court in the 1930s concluded people had no ownership or control of Social Security dollars. You see, the present system is not risk free. With no ownership rights, we're all at the mercy of political whims. Today, we should emphasize ownership. If people have a chance to be a part of the economy, it's the difference between giving a guy a bottle of Coke or allowing that guy the choice to own part of the Coca-Cola Bottling Company. Personalization is not Privatization What President Bush has proposed is not privatization. A private account is where one owns the money and has unlimited options to invest or spend it. A personal account, on the other hand, is where one owns the money and has a few, safe investment options from which to choose. Under our present system, no one owns anything nor has any voice in what happens. Privatization would be the complete opposite method. I like the middle approach. It would be a good bipartisan course to chart. The question is what is the best way to invest our money for our future. Social Security must be a part of that future, because the government made a pact with generations of Americans. The question is how do we best secure that pact in the future. With a personal account plan, we pay into the system just like now, but the government doesn't spend it. Instead, the government puts it in an account for us. We own the money. We have a voice. We have a future for our kids and us. I've heard those who have no plans for the future complain. If one listens carefully to those voices of opposition, they are first of all very partisan. If one also listens carefully, the solution is always the same: wait and eventually raise taxes and lower benefits. I reject those options. Good minds, working together can find another way. One of the Senators of the minority party was on a TV talk show protesting that Social Security wasn't "broke," it merely could not fulfill its benefit pledge in the future. The moderator reminded her that in the real world when a company doesn't have the money to meet obligations we say it is "broke." Regardless of the words used, I support President Bush in his goal of paying future benefits by making the system secure now. If we continue to pay the full 12.6 percent payroll roll tax without a change, it will mean our kids will get less than half the benefit they were promised. However, had you and I been paying only a 3percent payroll tax over the past 40 years with this money placed into a personal account consisting of a sensible mix of bonds and stocks earning the average rate of return, there would be a secure 100 percent benefit for us and our kids. That's what Einstein meant by the power of com- 84 |