"Government is not reason; it is not eloquence; it is force! Like fire, it is a dangerous servant and a fearful master."
George Washington.
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" ... There will always be a party for giving more to the rulers, that the rulers may be able in return to give more to them. Hence as all history informs us, there has been in every State & Kingdom a constant kind of warfare between the governing & governed: the one striving to obtain more for its support, and the other to pay less. And this has alone occasioned great convulsions, actual civil wars, ending either in dethroning of the Princes, or enslaving of the people. Generally indeed the ruling power carries its point, the revenues of princes constantly increasing, and we see that they are never satisfied, but always in want of more."
-- Benjamin Franklin, in a letter to the Federal Constitutional Convention, as recorded by James Madison on June 2, 1787.
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Read Ayn Rand's book Atlas Shrugged
Los Angeles Times, Feb. 21, '99, by U.S. Rep. Christopher Cox, (R-Newport Beach), Chairman of the House Policy Committee
When U.S. Secretary of Labor Elizabeth Dole was pushing for consumer protections from pension plan underfunding in 1990, no one thought to extend those protections to Social Security.
After all, Social Security is run by the federal government. It must be safe. But the aging of the baby boomers is laying bare the fatal flaw in Social Security: It is a
People and businesses that operate pension plans which are merely underfunded go to jail. A completely unfunded pension plan - a true Ponzi scheme - is rarely to be found. Social Security, however, is a $20-trillion exception to this rule.
Today, the full amount of our Social Security payroll taxes is "invested" in U.S. Treasury securities. But because these securities represent money owed by the government, they really are not an asset at all, but rather a liability. With its trust fund composed entirely of liabilities, Social Security is forced to use taxes from today's workers to pay the entirety of its obligations to current retirees and beneficiaries.
The challenge of saving Social Security, therefore, is to convert it from an unfunded retirement plan to a funded one. The only alternatives to this conversion are higher taxes and borrowing or reduced benefits. In fact, the Social Security Board of Trustees has determined that keeping the program solvent for today's 35-year-old worker will require increasing payroll taxes to 18% of wages or cutting future benefits by 25%.
Because these are unacceptable choices, President Clinton has proposed that we begin to invest the trust fund in real assets, thus beginning the process of converting the entire system to a funded retirement program. But instead of permitting each Social Security taxpayer to direct the investment of his or her share of the trust fund, the Clinton plan calls for government-directed investment in the stock market.
This is a terrible idea. For the federal government to own stock in U.S. companies would be a stunning reversal of the global trend toward privatization and free enterprise.
Federal direct investment in American companies - more than $700 billion in Clinton's latest proposal - would blur dangerously the distinction between what is private and what is government. A system in which the U.S. government simultaneously invests in and regulates "private" business is fraught with conflicts. Would this or any administration resist the temptation to make regulatory decisions that could help its own bottom line?
Control over such enormous investment sums inevitably would be used to promote political agendas. The Rev. Jesse Jackson testified before the House Ways and Means Committee that he would use all of his political influence to direct investment away from non-union companies and firms that don't pay "fair" wages abroad.
To steer clear of these obvious political pitfalls, Treasury Secretary Robert Rubin has proposed yet another wrinkle: The U.S. government, he says, should direct its hundreds of billions in Social Security taxes into index funds. Using a well-known index, such as the Dow Jones Industrial Average, the Standard &; Poors 500 or the Wilshire 5000, the government would avoid picking individual stocks and instead buy a percentage of every stock in the index.
But this is an even worse idea, because index funds are concentrated in large companies. By directing such enormous sums exclusively to big business, the government would raise the cost of capital for small firms and entrepreneurs. And it would compound this unfairness by compelling workers and managers in small businesses to pay taxes to finance their larger competitors.
For this reason, government-directed investment in the stock market would expressly disadvantage Orange County. Our region is teeming with high-tech start-ups and small- to medium-size firms, but is home to only seven Fortune 500 corporations. Our smaller firms are precisely those that would be shortchanged by the Clinton approach.
But the president is right that investing our payroll taxes in real assets, rather than government IOUs, is central to saving Social Security. The key is to decentralize the investment decision-making so that excessive government control of the economy and of individual companies does not become an issue.
Guided by millions of investors motivated solely by market rather than political considerations, investment capital in a free market economy is allocated efficiently, fairly and rationally. If it is directed by the federal government, however, special interests would lobby as avidly for it as they now argue for pork-barrel spending, vastly distorting the market.
Proposals to allow the investment of payroll taxes in the stock market -
Clinton's included - properly are focused on replacing Social Security's
unfunded liabilities with real income-generating investments. By seeing
to it that these stock market investments are directed not by the
federal government but by individuals managing personal accounts, we can
ensure that the cure is not worse than the disease.
ANNUAL
WAGE/SALARY | ANNUAL FICA
WITHHELD plus
employer match | MONTHLY FICA
WITHHELD plus
employer match | ANNUAL FED
INCOME TAX
WITHHELD
1 exemption | STATE
TAX
2% | CITY TAX
.5% | ANNUAL
NET in your
pocket | SALES TAXES
7% OF NET |
| $10,000 | $1,530.00 | $127.50 | $1,500.00 | $200.00 | $50.00 | $7,416.67 | $519.17 |
| $15,000 | $2,295.00 | $191.25 | $2,250.00 | $300.00 | $75.00 | $11,125.00 | $778.75 |
| $20,000 | $3,060.00 | $255.00 | $3,000.00 | $400.00 | $100.00 | $14,833.33 | $1,038.33 |
| $25,000 | $3,825.00 | $318.75 | $3,750.00 | $500.00 | $125.00 | $18,541.67 | $1,297.92 |
| $30,000 | $4,590.00 | $382.50 | $4,453.20 | $600.00 | $150.00 | $22,296.80 | $1,560.78 |
| $35,000 | $5,355.00 | $446.25 | $5,853.20 | $700.00 | $175.00 | $25,355.13 | $1,774.86 |
| $40,000 | $6,120.00 | $510.00 | $7,253.20 | $800.00 | $200.00 | $28,413.47 | $1,988.94 |
| $45,000 | $6,885.00 | $573.75 | $8,653.20 | $900.00 | $225.00 | $31,471.80 | $2,203.03 |
| $50,000 | $7,650.00 | $637.50 | $10,053.20 | $1,000.00 | $250.00 | $34,530.13 | $2,417.11 |
| $55,000 | $8,415.00 | $701.25 | $11,453.20 | $1,100.00 | $275.00 | $37,588.47 | $2,631.19 |
| $60,000 | $9,180.00 | $765.00 | $12,898.20 | $1,200.00 | $300.00 | $40,601.80 | $2,842.13 |
| $65,000 | $9,945.00 | $828.75 | $14,448.20 | $1,300.00 | $325.00 | $43,510.13 | $3,045.71 |
| $70,000 | $10,710.00 | $892.50 | $15,998.20 | $1,400.00 | $350.00 | $46,418.47 | $3,249.29 |
| $75,000 | $11,475.00 | $956.25 | $17,548.20 | $1,500.00 | $375.00 | $49,326.80 | $3,452.88 |
| $80,000 | $12,240.00 | $1,020.00 | $19,098.20 | $1,600.00 | $400.00 | $52,235.13 | $3,656.46 |
| $85,000 | $13,005.00 | $1,083.75 | $20,648.20 | $1,700.00 | $425.00 | $55,143.47 | $3,860.04 |
 | FRAUD!!! |
J U L I E M O U G E O T T E
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| He Said,
She Said… |
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Let Americans save and invest their own hard-earned money without government interference. Anyone who really saves and invests 12.4 percent of their income can, over their working lifetimes, make themselves financially independent millionaire retirees, not poverty-stricken elderly of the "Social Security class," regardless of the job they choose.
Social Security is, in fact, the single tallest, most difficult hurdle standing between most working-class Americans and their hopes for security in their senior years. Let's recognize this fact, and let's end it now.
| "On Opting Out"
Alan Greenspan, Fed. Reserve Board Chmn.
"My own preference is strongly in the direction of moving towards a privately financed system."
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Edward H. Crane, Pres., Cato Institute
"Social Security privatization is, nowadays, the single most important step toward a society of liberty. It combines personal freedom with widespread property ownership, and those are the pillars of a free society."
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THE SOCIAL SECURITY TRUST FUND ACCOMPLISHES NOTHING, Heritage Foundation Backgrounder No. 1256, Feb. 22, '99 by Daniel J. Mitchell, McKenna Senior Fellow in Political Economy in The Thomas A. Roe Institute for Economic Policy Studies
TAKING SOCIAL SECURITY PRIVATE, Investors Business Daily, Mar. 17, '99, by Aaron Steelman
Stop the Social Security Poverty Machine, Deseret News, Mar. 8, '99, by James Ferrin, a certified financial planner based in Orem
WHY SOCIAL SECURITY IS BANKRUPT, Brainstorm Magazine, Feb. '99, by Ted Abram, American Institute for Full Employment
More short columns
CLINTON'S SOCIAL SECURITY SHELL GAME, Brainstorm Magazine, Feb. '99, by Charles D. Hobbs, Program Director for the American Institute for Full Employment, and Domestic Policy Advisor for Pres. Ronald Reagan, 1984-89
NORTHWEST COMMENTS ON REFORM, Brainstorm Magazine, Feb. '99
Short Columns, That should infuriate you and make you vote for anyone not democrat or republican
A Real Solution to the Social Security Crisis: Testimony of José Piñera, President of the International Center for Pension Reform, Co-Chairman of the Cato Project on Social Security Privatization before the U.S. House Committee on Ways and Means, February 11, 1999
THE SOCIAL SECURITY TRAP, Intellectualcapital.com, Jan. 21, '99, by James K. Glassman, the DeWitt Wallace-Reader's Digest Fellow in Communications at the American Enterprise Institute
SOCIAL SECURITY MEETS THE 21ST CENTURY, Cato Policy Report, Feb. '99, by José Piñera, co-chairman, Cato's Project on Social Security Privatization
SOCIAL SECURITY INVESTMENTS MUST BE MADE BY WORKERS THEMSELVES, Los Angeles Times, Feb. 21, '99 by U.S. Rep. Christopher Cox, (R-Newport Beach), Chairman of the House Policy Committee
FATAL CONCEIT IN SOCIAL SECURITY SUBSIDY, The Wall Street Journal, Mar. 2, '99, by Thomas J. DiLorenzo, Professor of Economics, Loyola College
PRIVATIZE SOCIAL SECURITY ... FOR THE CHILDREN, Investor's Business Daily, Feb. 22, '99, by Doug Bandow, a senior fellow with the Cato Institute
SOCIAL SECURITY REFORM URGED, Denver Post, Feb. 17, '99, by Steve Raabe
THE ADMINISTRATION'S BEWILDERING ASSERTION, Cato Institute, Feb. 19, '99, by Michael Tanner, director of the Cato Project on Social Security Privatization
NINTH-GRADERS WORRY ABOUT THEIR FUTURE, Binghamton Press, Feb. 22, '99, by Wyn Hornbuckle, Staff Writer
GOVERNORS OPPOSE SOCIAL SECURITY FOR STATE WORKERS, Reuters, Feb. 23, '99
A DIFFERENT SOCIAL SECURITY IDEA, The Chattanooga Times & Free Press, Feb. 21, '99, Editorial
