America has some tough choices to make with respect to Social Security. The current course is unsustainable and is a major unfunded liability. There are straight forward solutions that need to be brought to the table. However, everyone needs to understand that change is necessary and that it could be significant for some. The graphic below shows the size of the unfunded liabilities we are facing. These have not been addressed by our elected officials in Washington, therefore, we need to challenge them to either step aside or actually deal with reality.
Below are my suggestions for addressing this over unfunded liability. They are based on common sense and the reality of the numbers.
- Place Social Security payments on the annual budget. The science of demographics can predict within reason the funds needed based on the age distribution for each year. The Heritage Foundation predicts that the amount of liability is $6.6 Trillion. This is not a small number. We need to be honest with the American people and ourselves. The current situation is like not saving money each month for the rent or mortgage payment. It’s time we own up to reality.
- Scale back payments to Wealthy Retirees. Currently, there are millionaires collecting Social Security checks each month. This is not sustainable. The limit should be set at around $75,000 of combined income per year. A sliding scale could be included down to some level closer to the poverty level for adjusting benefits.
- Audit all those who collect benefits. The audit should identify those who are collecting benefits that have not paid into the system during their working years. These individuals should be terminated from the program. Being $12+ Trillion in debt, we cannot afford to be generous with our great grand children’s tax revenue.
- Adjust the Retirement Age with Life Expectancy. In the 1930s the life expectancy was only around 60 years. Today, the life expectancy is much higher, nearly 80 years. This puts a much greater burden on the program. The retirement age, or age at which full benefits kick in should be adjusted over time. Currently there is token adjustments, but postponing full benefits by only a month or two will not make the system solvent.
- Forbid Congress from spending the Trust Fund for annual budget items. Since the mid 1960s, Congress has been stealing from the trust fund and returning only IOUs. This intergenerational theft has been practiced by both major parties and must be stopped.
- Develop a plan to terminate Social Security for those born after 01 Jan 2001. This program has been a PONZI scheme from the beginning. In a growing economy and population, it was easy to hide this little recognized fact. But today, with a terrible economy and much lower birth rate, the evidence should be clear that the program has been a house of cards from the start. We need to develop a plan, over several decades, to work our way out of this program. See the chart below, if Social Security is not a PONZI scheme, then why would they track this information?
- Replace Social Security with Individual Retirement Accounts (IRA). We need to educate our children that they are responsible for their retirement. Everyone should be guided into an IRA at an early age. Some say this should be mandatory, some say it is an individual responsibility. Either way, we need to ensure that Congress cannot get their hands on the funds.
These are my common sense solutions to actually deal with Social Security in a fair and honest manner. Will this solve the issue completely, I don't think so, but it will be a significant start. Yes, there are some tough choices here, but dealing well with reality is what Manufacturing Engineers do for a living. My thanks to the Heritage Foundation {Heritage.org} for several of these ideas and the informative graphics.
Doing nothing is not an option. Nibbling around the edges is not leadership. It is time for bold actions, not pastel efforts.
Richard Grimes - Revolutionary Conservative March 2010
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