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Welcome to the new Broadway hit: The Phantom of America, starring America’s debt.
The premise of the story is that America, falling just short of $15 trillion in debt, is being dragged down the path of unsustainability. The role of the Phantom is played by Social Security. Its true identity—massive unfunded liabilities and unsustainable growth—is masked by the rosy depiction of “security” for all generations that pay into the system. The antagonist—Washington—has shackled younger generations to the reigns of the social system.
What is separating younger Americans from crossing to the path of freedom? Weight capacity.
The increasing number of Baby Boomers entering retirement cannot be sustained by younger generations. Privatization must make its debut, remove the mask of this evil Phantom, and restore liberty and prosperity for the future.
What constitutes the system’s shortfalls are the following:
Privatization of Social Security would scrap these shortfalls and bring individual control back to the table.
Chile adopted this approach in May of 1981 and results have been more than exceptional. Individuals have direct control over their accounts—allowing them to switch between competing insurance companies, desired age of retirement, and plans that best fit their circumstances. Results from privatization include continual increases in economic growth, generated surpluses without raising taxes or interest rates, an increase in pensions by over 50 percent, and a 5 percent unemployment rate.
Critics to privatization in the United States say that it will create trillions of dollars in transition costs. These costs are derived by retirees currently supported by the public system. It is estimated that the transition would cost around $3.7 trillion.
However, there is a way to pay for it. Chile paid for transitions costs with unused government assets. “Suffice it to say that even though governments have enormous pension liabilities, they also have enormous assets. In Chile we had state-owned enterprises,” said Jose Pinera, Chile’s Minister of Labor.
America has assets too, and plenty of them:
These assets provide flexibility in transitioning to a new social security system.
Unfunded liabilities of the current system are upwards of $11 trillion—almost 4 times as much as the cost of transition. Directly paying off the transition costs would save taxpayers trillions of dollars in future unfunded liabilities.
Young America faces a future of paying off massive debt that they have inherited from a compulsive spending government. Social Security must be reformed before the curtain closes on younger generations.