Social Security, Medicare, and Federal Pension Programs

“It is incumbent on every generation to pay its own debts as it goes.” – Thomas Jefferson

Issue:  We have reached a point in time where our nation takes in over 1 trillion dollars less it spends, our debt is so high that the interest payment alone exceeds our total federal investment in transportation and education combined, and our working and unborn are unable to fund the promises that Social “Security,” Medicare, and Government defined benefit pensions made without their vote.   We discarded Jefferson’s advice, decided not to save for our retirements but to create programs which attempt to have future generations pay for us, and we now see the ramifications of such a choice.

“When one gets in bed with government, one must expect the diseases it spreads.” – Ron Paul

Our liabilities to our baby boomers now tops 100 trillion dollars of unfunded federal liability... and to pay them, we’re relying on some 2.5 trillion dollars in the Social Security Trust fund – all of which our government borrowed and spent.

“A lot of people in America think there is a trust — that we take your money in payroll taxes and then we hold it for you and then when you retire, we give it back to you, but that’s not the way it works. There is no trust ‘fund’ — just IOUs.” – George Bush

Although our businesses have gone through bankruptcy courts to address the issues of insolvency due to mounting costs of defined benefit retirement programs, our government has not.  As such, we are paying increasingly higher costs than originally forecast when the defined pension plans were created, and our working class and future generations are left holding the bill.  This is not the proper course forward for America.  Although the private sector has moved away from defined benefit plans and into 401k style retirements, the public sector has not.  As a result, you are now 4 times as likely to be in a defined benefit plan in the public sector as you are in the private.

“The only thing that saves us from the bureaucracy is its inefficiency.” – Eugene McCarthy

To make matters worse, our reaction thus far has been to try to raise FICA taxes to fund the unfundable, causing would-be employers to hire elsewhere.  Just this year, during this term, our outgoing social security obligations surpassed our incoming revenues and we now need to start drawing from the “trust fund.”  There is only bonds, only more debt, the crippling interest payments of which will only increase as rates rise – such math is unsustainable.

“The problem with Socialism is that you eventually run out of other people’s money.” – Margaret Thatcher

Solution:  We eliminate the Social Security and Medicare programs, eliminate government defined benefit programs, eliminate FICA and payroll taxes on our employers, and determine the proper buyout amount for all Social Security recipients and government retirees.  We move all current federal employees, to include Congress and Military, to a 401k style retirement plan that pays for itself as it goes rather than promising some future obligation that we are unable to afford.  We begin to do it right.

“I find the great thing in this world is not so much where we stand, as in what direction we are moving.” – Oliver Wendell Holmes

Going forward, the annual allotment provided to Social Security recipients and retirees will be the same as provided to every other American.  Your Health Savings Account will grow when you are young, healthy, and working, and deplete when you are retired and in need of care.  We will pay as we go, each generation paying for itself.  As we transition to this system, our current unfunded obligations will be distributed as lump sum payments to all participants as determined in a bankruptcy-style court proceeding.  The courts will determine appropriate buyout payments for any federal beneficiary, retired federal worker, and current federal workers on defined benefit retirement plans and transition the responsibility of retirement care to the individual.  The public sector will follow the private sector, and shed its unsustainable defined benefit programs.

This “buyout” will become the Health Savings Account (HSA) starting amount, with annual allotments of the same amount for every citizen going forward.  Recipients can then use this lump sum payment to plan for their retirement however they deem best.  Additionally, all federal employees, including military and Congressional officers, will also be paid a lump sum amount to a private retirement account.  Any and all future retirement benefits paid to government employees will be paid through 401k style retirement plans that are held and administered by the private sector.  Amounts of lump sum buyouts will be determined in court proceedings, money created by Treasury to pay off all debt obligations, and a Federal Balanced Budget Constitutional Amendment implemented going forward.   Health and Education Savings Accounts will be the only monies ‘guaranteed’ by government, and any banking institution wishing to hold these accounts will be required to maintain a 20% capital reserve and subject to financial audit and regulation.

“If we can but prevent the government from wasting the labours of the people, under the pretence of taking care of them, they must become happy.” – Thomas Jefferson

Leave a Reply

Your email address will not be published. Required fields are marked *