RE: Why should Social Security reform happen now?

[Javier Jimenez <jimenj@yahoo.com>]

In response to PANELIST: Rep. Karen L. Thurman:

Without radical reform of the SS system, the bad deal for workers
continues to deteriorate.  Young workers today, one of which I am,
will pay more into SS that will ever get out, assuming SS will be
there when we are ready for it.

Social Security hurts the poor the most by confining them to years
of servitude to the economy and in return getting a payment that
barely keeps them above poverty.  Long years of service and, thus,
payment to this failed scheme does nothing for their heirs when
the workers die.  When the workers children are of legal age and
no spouse survives the worker nothing is left for the the workers
family.

Complete privatization provides for the best solution.  Each worker
personally will invest their contributions, much like we do today
with an IRA or a 401K retirement account, in instruments that they
can feel comfortable with.  If a person is conservative in their
investment approach, he/she can choose to invest in a bond mutual
fund; the bond fund may be invested in municipal, state, federal,
or corporate bonds. Union leaders may suggest and sponsor funds
for their constituents.  In this way, the less savvy investors will
be able to follow their leaders' guidance.  As an added benefit,
unlike Social Security, the wealth generated by them will transfer
to their heirs when they die.  Every investor, politician, and
educated person knows that when investing for the long term, the
stock market provides the safest and more rewarding vehicle for
growth and wealth building.  For every 20 year period since before
the great depression, the stock market has provided gains greater
than more conservative approaches.  During a stock market decline,
young investors would temporarily lose some gains or a portion of
their principal, but their long term strategy will allow them to
ride out those market lows by brighter future years.  For older
workers approaching retirement, losses will be from gains made
during all the earlier years; still, there will be many years to
recovers those lost gains, since once in retirement, money invested
will remain invested for the later years of retirement and/or for
leaving to their heirs.  Note that older investors would move most
of their market-invested money to more conservative investments,
a well-known and publicized strategy.  The increased savings and
investment rates that will follow the creation of Personal Retirement
Accounts will create an economic boom that will provide for higher
wages, lower inflation, lower federal budgets, and thus lower income
(or sales) taxes.

If the stock market were to collapse, there would be little or no
money that the federal government could use to finance retirement
benefits for retired workers.  In such an event, the government
would have to start borrowing huge amounts of money to cover all
those retirement benefits. With a funded system, at least, there
will be real capital invested in the economy providing a sound
economic foundation not a paper-based trust fund.  Privatization
is not going to leave American workers without retirement savings.
By law, workers will be required to save and/or invest a portion
of their earnings.  What it will do is remove the government monopoly
over those contributions.  In short, status quo supporters use
numbers that make absolutely no sense, rather than sound economic
data, as the foundation for the defense of a system that is critical
for so many people.  We have attempted to fix the current scheme
in the past using the same solutions that have gotten us into the
mess we find ourselves in at this point.  Payroll Tax increases
are in cruise control at this point in time increasing yearly;
still, the problem does not go away.  It is time for an about face,
the implementation of a fully funded system through the use of the
private economy and individual responsibility.  Under a private
system, not only will the workers own their capital, they will be
less dependent on the government in time of need.  As a regulator,
the government can provide a better service than our insurer,
investor, educator, etc...

Javier Jimenez