Social Security ...
"It
is, in
short, a law that will take care of human needs and at the same time
provide the United States an economic structure of vastly greater
soundness." – Franklin Roosevelt on Social
Security
Senator Barry Goldwater was one of the first politicians on the
national scene to recommend privatization of Social Security.
He
openly advocated this position during his 1964 campaign for
President.
It probably cost him the election.
Social Security is a giant pyramid scheme. It's like a
multi-level marketing scheme or a "mail a dollar to the ten people on
this list" chain e-mail. Almost everyone has seen these
schemes.
In the chain e-mail, the reader is invited to send a dollar
to
each of the ten people on the list, remove the last name on the list,
put his or her name at the top of the list, and e-mail the list to ten
friends. In a few short weeks the reader will be rich, or so
he's
told. This sort of scheme relies on a constantly expanding
base
to succeed. What happens when the base does not expand fast enough to
pay the pyramid above it? The investors lose their money.
Such schemes are generally illegal.
Social Security works like any other pyramid scheme. We pay a smaller
number of people above us in the pyramid in the expectation that many
more people will form a paying base beneath us. The long-term
sustainability of the system has been the matter of much debate for
decades. This system worked when the ratio of payers to payees was
large. In FDR's time it was about 16:1. Now the
ratio is
closer to 2:1. The federal government has raised Social
Security
taxes periodically over the years to keep the system afloat. The
sustainability of the system is in real doubt now that the 'baby
boomers' are about to become payees instead of payers. Current
estimates are that out-go will exceed income in 2012, and the system
will go bust in 2015 to 2020.
Another serious problem is that the federal government
regularly
takes
money from our retirement plan, Social Security, and uses it to cover
general expenses. Social Security taxes are periodically raised to keep
the system solvent; then Congress raids the Social Security Trust Fund
to cover other government expenses. Corporate officers who
raid
employee retirement plans go to jail. Our government
officials
get
re-elected.
The present Social Security system is not sustainable in the long term
with relatively slower population growth expected in the United States.
Furthermore, the system is vulnerable to government misuse.
The Social Security system should be de-emphasized over time so that
newer generations of payees are not faced with investing lots of money
in a plan that they will not see significant benefit from.
The
best alternative is to expand the role and availability of tax-deferred
Personal Retirement Plans like IRAs and 401(k)s. These plans
should be available to everyone at all wage levels and in all kinds of
employment. You need to be in charge of your own
investments, because the federal government has proven that it cannot
be trusted to take charge of them for you.
Medicare, Medicaid, and National Health Care ...
In most Medicare and Medicaid programs government functions as
the
health care insurer. It pays practitioners for services
rendered.
Unfortunately, administrative overhead is tremendous and these systems
are vulnerable to abuse by unscrupulous health providers. There are few
incentives to investigate, curtail, and punish abuse. One estimate
suggests that over ten billion dollars a year is paid in fraudulent
claims. The systems are inefficient, corrupt, and wasteful of our tax
dollars.
National Health Care proposals are not the answer. Most
proposals
suggest expanded coverage of a universal government program to every
man, woman, and child. This approach will magnify the current problems
several-fold.
A better solution is for government to act as honest broker, working
with private health care insurers to create incentives for health
insurance plans that will provide multiple choices of coverage at
multiple levels of ability to pay for anyone that wants health care
insurance.