The following was among many handouts I recently gave for a seminar (Saving Social Security, the World, and Your Souls)
here at the retirement community I live in.
I do a lot of them. Be happy to do one for government people or anyone else for that matter.
OOOOOOO
Defined benefit pension systems in the private pension world are like Ferraris.
They took a long time to develop---most of this century, especially in the post-war years.
They are a bit cantankerous, and take some maintenance, but when that is done right, what a gorgeous riding and driving machine. The driver and the passengers love it, and even the public loves to watch it go by wanting to be in one, even if only as a passenger.
The Democrats think that their Social Security system is that Ferrari. It is a defined benefit plan, so they say at least. Admittedly it also looks great---just like the ones in private industry--leather seats and all---bright shiny red. It even goes pretty well, especially when it went down hill for a real long while. But alas, it has slowed up to a crawl and just ahead is a long hill upwards.
Alas, there is no engine in that sleek gorgeous car---nor even a drive train for that matter. Instead the Democrats have been cutting holes in the floorboards and asking everyone inside to run as fast as they can, because big trouble lies just ahead. They may even have to jettison some passengers soon to lighten the load. Hope it ain't me. Hope it ain't my dad. Hope it ain't my kids, or my grandkids.
Now the Republicans for a long time had the engine--unfettered capitalism---and a powerful engine it is---450 horsepower of earthshaking fury. But they left out the car---and the drivetrain too---laws to constrain that mighty engine. And there is room on top of that engine for only one or two people.
So they are looking to their right and see---the Cato Institute---the Libertarian Privatizers, who never met a law they liked or a government program either.
The Cato people have what seems, at first glance at least, the real deal---a Ferrari that looks great, has a wonderful sounding engine, and even runs fast too, at least for a while.
But something is wrong here too. The drivetrain is only made of wood---and will, if driven a while real fast, break. And something else is wrong too. The car, once started, has no steering mechanism and hardly any brakes. And there is something else also. The gas pedal tends to go all the way to the floor, and has a strong tendency to stay there. If you drive this car, eventually---sooner rather than later---that great looking car will kill the driver, the passengers and probably a lot of the viewing public, even some overseas folks who love fast beautiful looking cars.
Ladies and Gentlemen, you have to have the whole deal---the whole Ferrari, engine and drivetrain---get a good trained set of drivers, and maintain it well too.
You simply can't have a pretend Ferrari or a partial Ferrari. It's not the same thing at all.
You have to make Social Security a true defined benefit pension plan, replete with the engine---actuarial advance funding that accumulates assets that enhance security and also provides returns that pay for more than half of the benefits, rather than a mere 5% at best. And you need the drivetrain too---the laws with teeth that protect plan participants, define benefits that cannot be taken away, and hold people accountable and responsible.
And yes, you also need to separate the system from politics as much as humanly possible.
