How to save Social Security!

The first step to saving the Social Security System is to make changes so Congress can no longer spend the Social Security funds. The way to do this is to declare the system to be what it in fact is, a defined benefit pension plan.

When we declare the system to be a pension plan which, under our pension laws, must be prudently invested for the exclusive benefit of current and future beneficiaries of the system. We take the Social Security Revenues and Expenses completely out of the Federal Budget.

This action will result in the creation of an actual Social Security Trust Fund which will then invest the Social Security Funds.

When we move control, of the money, away from Congress. A number of changes will have to be made to the current system. These changes need to include the following.

1. The contributions to the system need to be collected by the states, and paid directly to the Social Security Pension Fund. The states already have the computer systems in place to collect these funds because they collect and account for unemployment benefits.

2. The Social Security System must be converted to a corporate entity in the same way the Post Office was changed to a corporation. This corporation would have the responsibility to invest the trust funds and pay out benefits.

3. After the Social Security system is changed so that Congress can no longer spend the money. Congress must direct that a portion of the properties held by our government (such as closed military bases) be sold and the proceeds be paid into the trust. Other properties such as drilling rights in ANWR (the Arctic National Wildlife Refuge), oil and mineral rights in the inter-mountain west, and the continental shelves should be transferred into the trust so the oil and gas revenues can be used to pay benefits. The use of these assets is needed to remove the Social Security liability from the Federal Books and make up for the money which Congress has been spending instead of investing.

These changes are necessary to restructure Social Security so that it will not violate the Constitution.

Cutting benefits ( now being proposed by both major parties ) or raising taxes will not be necessary. The potential revenue from the oil and gas properties, mentioned above, is more than enough to cover benefit commitments in excess of the current level of contributions. Details are available in my book A Call for Action.

Once there is an actual income stream from property in the trust as well as assets being invested at a reasonable rate of return. We will see the power of compound interest working to generate earnings which can then be used to pay for future benefits. A reasonable rate of return on the invested assets will go a long way to solve the funding problems of the system.

We must make these changes soon, or it will be to late.  My book contains illustrations which show the effect of compound interest. This book also shows ( computation at the end of illustration 3 ) that it will cost the taxpayers five dollars in benefits for each one dollar that Congress has pilfered from the Social Security Surplus. Eighty percent of the benefits in a pension plan like the Social Security System should come from earnings on invested assets. There currently is nothing in the so called Social Security Trust Fund except IOUs from the Treasury Department. The taxpayers will have to pay off these IOUs, as well as make up for any lost earnings which would have been available if there had there been actual investment assets.

This country's pension law is known as ERISA ( the Employee Retirement Income Security Act ). This law was originally passed in 1974 and became effective in 1976. The law ( which primarily applies to pension plans in the private sector because of it's many exceptions for public sector plans ) was passed in response to a problem which was occurring when major corporations, such as Packard Motors, went bankrupt and left thousands of retirees without their pensions. This happened because the companies tried to pay pension benefits out of current revenues, instead of properly funding a prudently managed pension trust where most of the funds to pay benefits would have been generated by earnings on invested assets.

ERISA required corporations to fund pension benefits over the working lifetime of an employee by paying each year's cost into the pension trust fund. The Social Security and Medicare System is similar in that employees and employers are required to pay into the system. They are different in that Congress immediately spends all if the money, and benefits will have to be paid out of current government revenue. Since it will cost taxpayers five dollars in benefits for each one dollar Congress has spent from the Social Security surplus, this country is facing the same situation which caused major corporations to go bankrupt when they didn't properly fund their pension plans.

It is interesting to note that the major Social Security reforms in 1983 were made after the passage of ERISA, and that Congress did not require an actual pension style trust because they wanted the money to go through the General Fund, where it would be available for Congress to spend. In a court of law this type of action would indicate a premeditated plan to embezzle the payments being made by Social Security participants and their employers.

We must stop Congress from spending the money and fund an actual Social Security Trust Fund. Any proposal which simply cuts benefits or raises taxes will not fix the problem. This type of "fix" will only serve to allow Congress to continue to spend the surplus for a few more years. We also need to be aware that some people are claiming that there is no problem, because the so called trust fund is full of government bonds. ( the preceding link is an example of this type of deception ). The Special Issue Securities held by the Treasury Department are not bonds, which can be bought and sold. The special Issue Securities are only issued to the Social Security and Disability trust funds.

There is currently a window of opportunity where we can fund an actual Social Security and Medicare Trust fund with income generating assets from oil and gas properties owned by the Federal Government. If we do not grasp this opportunity, our country will be looking at a national bankruptcy or tax rates so high that they will destroy our economy and our way of life.

I need your votes this November so that I can work to make these changes happen. Some campaign contributions would also be useful so I can promote my campaign for Congress.