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"Government is not reason; it is not eloquence; it is force! Like fire, it is a dangerous servant and a fearful master."
" ... There will always be a party for giving more to the rulers, that the rulers may be able in return to give more to them. Hence as all history informs us, there has been in every State & Kingdom a constant kind of warfare between the governing & governed: the one striving to obtain more for its support, and the other to pay less. And this has alone occasioned great convulsions, actual civil wars, ending either in dethroning of the Princes, or enslaving of the people. Generally indeed the ruling power carries its point, the revenues of princes constantly increasing, and we see that they are never satisfied, but always in want of more."
-- Benjamin Franklin, in a letter to the Federal Constitutional Convention, as recorded by James Madison on June 2, 1787.
Read Ayn Rand's book Atlas Shrugged
Investor's Business Daily, Feb. 22, '99
by Doug Bandow, a senior fellow with the Cato Institute
Even the Clinton White House admits that Social Security is a bust. The program's only defenders are a small, dispirited band of labor union leaders, left-wing redistributionists and, curiously, Christian leaders. Americans concerned about family values deserve better.
We know that Social Security's payouts will exceed collections by 2013, or perhaps earlier. We also know that the promised trust-fund accumulation expected to tide the system over another 20 years is a myth. Social Security has accumulated government bonds, not cash.
Social Security's official unfunded liability, adjusted for inflation, now tops - quadruple the current national debt. Even this figure understates the problem, since Americans are living an average of three years longer than the Social Security Administration projects.
This problem is no minor, temporary glitch. Social Security's pay-as-you-go structure can't survive an aging population that's living longer. To continue robbing young Peter to pay old Paul will require confiscatory tax rates - an employer-employee payroll tax rate of nearly 40% later next century, for instance.
Regrettably, Bill Clinton's prescription to throw money at the system and have the government invest in the stock market would limit benefits to retirees, deny them control over their own economic futures and let politicians further meddle (Editor's synonym: steal is the verb or theft and thievery are the appropriate nouns) in the economy.
Even more unfortunate, the president has gained some curious allies in his attempt to stave off privatization. One is would-be Republican presidential candidate Gary Bauer. The former head of the conservative Family Research Council charges that "American families, which time and again get the short end of the stick," are likely to be "the chief victims" of privatization.
Bauer's argument is threefold: Social Security is pro-family, privatization entails transition costs, and people shouldn't waste their time investing in the stock market. The socially conservative Rockford Institute raises some related concerns, proposing to build into Social Security certain incentives to apportion benefits based on family size.
Although many weird arguments are often advanced in Washington, few are as strange as the claim that Social Security is pro-family. How can turning the care of one's parents over to Uncle Sam strengthen generational ties?
Social Security does include a bonus for non-working women, but the overall rate of return for a family would still be far higher in a private system. Assume a single-earner family with an income of $36,000: A bond fund would deliver 50% more than Social Security, a mixed bond and stock fund would provide nearly three times as much, and a stock fund would yield more than five times as much.
Social Security provides only a transfer that ceases on their death. But with privatization, retirees would own their investments and could pass them on to their children. What could be more pro-family than that?
What of privatization's transition costs? By one estimate, privatization would expand the deficit for 16 years, after which time the revenue impact would turn positive. (This, like all Social Security estimates, is sensitive to certain economic assumptions.)
That comes to about $2 trillion, or 11% of the estimated cost of doing nothing - the aforementioned $17.9 trillion unfunded liability.
It's not hard to figure out which cost would be easier for families to bear. The burgeoning surplus should be devoted to financing privatization, not propping up the existing system. Serious budget cuts - in corporate welfare and the like - would finance tax cuts as well as the transition.
Last is Bauer's claim that "no matter what the market does, why do we think the nation will be better off by forcing workers to put their money into stock rather than, say, spending it on rearing children?"
Nearly half of American households already invest in the stock market. Would Bauer turn those portfolios over to the state? In fact, most parents have managed to both play in the market and play with their kids.
Moreover, a few hours devoted to improving one's economic security, by helping protect one's family from the depredations of government and letting a mother (or father) stay home, is time well spent. Families should control their own financial destinies.
Social Security can't survive the next century. Women and children have the most to gain from reform that returns responsibility for retirement to families, where it belongs.
NET in your
7% OF NET
Let Americans save and invest their own hard-earned money without government interference. Anyone who really saves and invests 12.4 percent of their income can, over their working lifetimes, make themselves financially independent millionaire retirees, not poverty-stricken elderly of the "Social Security class," regardless of the job they choose.
Social Security is, in fact, the single tallest, most difficult hurdle standing between most working-class Americans and their hopes for security in their senior years. Let's recognize this fact, and let's end it now.
|"On Opting Out"
Alan Greenspan, Fed. Reserve Board Chmn.
"My own preference is strongly in the direction of moving towards a privately financed system."
Edward H. Crane, Pres., Cato Institute
"Social Security privatization is, nowadays, the single most important step toward a society of liberty. It combines personal freedom with widespread property ownership, and those are the pillars of a free society."