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Social Security, in addition to state and local pensions, is perilously underfunded. The Washington Post recently criticized President Obama for ignoring entitlement reform; particularly Social Security.
Last year, the President's budget asked for a more accurate measurement of the inflation index – chained CPI. This year's budget omits solutions to the expanding Social Security debt, which is already negatively impacting other government programs and will severely affect our children and grandchildren. White House spokesman Josh Earnest used political-speak to explain the changed of position.
“The president is not going to be in a position where he’s going to ask senior citizens and middle-class families to make sacrifices in pursuit of reducing the deficit and not ask the wealthy and well-connected to do so, too. The second you bring up the prospect of closing tax loopholes, Republicans walk away.”
The Washington Post strongly explained the real-politics translation:
I don’t want to take any heat for pursuing a deal with the GOP, even if that would be difficult, and even if it would be the right thing for the country.
“The right thing for the country” – especially children and grandchildren – has long been ignored by most politicians in Federal, state and local governments throughout America. Ignoring the Detroit pension crisis has employees and retirees pleading to save and secure their pensions in bankruptcy court. Stockton and San Bernardino are teetering on bankruptcy with many other cities, counties and states perilously close to bankruptcy.
There are a few forward thinking jurisdictions, though. Rhode Island and San Jose are very liberal exceptions that had the foresight and political courage to adjust their pension systems. With changed pension plans come lawsuits from government-employee unions, and Rhode Island and San Jose are involved in complex, legal and constitutional court challenges. Sadly, making substantial government change, which was long ignored, is very difficult.
Illinois pension “solution” is also in enormous danger. In the recent past, the state heavily borrowed money hoping for a fortuitous bailout – a better economy and more tax revenue. Then, the state increased it's income tax by 66%. Now the legislature and governor have a enacted a law they claim will make the pension system solvent in 30 years, which is likely to be another ruse. Again, government employee unions are suing.
America's government pension crisis is enormously complex both legally and constitutionally. Few Americans have the time and interest to engage in a public dialog. However, every America will be affected. Workers dependent on Social Security will be directly impacted as will the pensions of state and local government employees. For Americans not directly impacted, there will be attempts to tax more Americans, which will reduce economic growth for our children and grandchildren.
Politicians, who have been long-passed aways, and many of our present leaders – Democrats and Republicans – are directly responsible for the ever expanding crisis. Nine years ago, Nancy Pelosi cleverly squashed President Bush's plan to convert Social Security into personal accounts. Bush purposed personal ownership, similar to the conversion from a bankrupt system to the workers-owned plan in Chile and copied by Australia and other governments. Nancy Pelosi's Congressional site continues to brag on how she out smarted “really a lovely man” - President Bush. The response is long and disjointed, but worth reading to better understand her political gamesmanship and thinking. Pelosi:
*Our plan … the private sector advisers said if you start saying: “well the that, the age, the tax, the this, you will be confused with what he is doing. You must not offer another plan. It has to be about his plan.” … on a weekly basis at least, Members would come in and say: “is it time for us to have a plan yet?”
And believe me, there were probably had 250 plans, House and Senate, combined. Is it time for us to have a plan? And I kept saying to them: “never, does never work for you?” In terms of the contrast - Social Security, privatize - and that's the beginning of the end. And because our Members trusted us, Harry and me, trusted the two of us, then we were able to keep people together. President Bush really a lovely man, really. We disagreed in terms of policy but he would say: “I'm going to 23 states in 23 days,” something like that, and I would say: “I want you to go to 46 states in 46 days and I'll pay your way,” because we're going to be there to inoculate against your message, to protect Social Security and educate as to what you said doesn't work. So, at the end of it, I said nothing. *
Today, President Obama refuses to lead. As the Washington Post wrote:
Translation: I don’t want to take any heat for pursuing a deal with the GOP, even if that would be difficult, and even if it would be the right thing for the country.
America's government-pension crisis is badly in need of consistent and honest political leadership. The President, congressional leaders, governors, state legislators, county commissioners, and city council members must clearly and continuously engage the public in an honest and thorough explanation of the crisis and alternative solutions. Of course, this an indictment of politicians at all levels of government. Universally, politicians select to maintain their elected positions of power at the expense of honest and fiscally prudent long-term pension policies. The impending financial crisis will force solutions, and part of the solution must be personal accounts. Similar to Chile, a worker, especially our children and grandchildren, will be much better protected by owning and controlling their own pensions. Politicians – Democrats and Republicans - have conclusively proved they are not trustworthy.
Jose Pinera, a Harvard PhD, is the master-mind for personal accounts in Chile, and cogently understands that market risk is much safer than political corruption and manipulations:
"They (worker in Chile) trust the private sector and prefer market risk to political risk. If you invest money in the market, it could go up or down. Over a 40-year period, though, a diversified portfolio will have very low risk and provide a positive rate of real return. But when the government runs the pension system, it can slash benefits at any time."
Nothing is more dangerous to democracy and the viability of America than our government debt burden, which is substantially a pension crisis. Only ownership can stop political corruption and malfeasance. Ownership is essential for freedom and prosperity.