Social Security Hurts Working Americans

Personal Freedom and Prosperity 103

….private property, production, and voluntary exchange … are the ultimate sources of human civilization. —Hans-Hermann Hoppe

Social Security Hurts Working Americans

Most working Americans pay 12.4% towards Social Security; the employee pays 6.2% as does his or her employer. So, nearly one in eight dollars earned goes to the government for Social Security. Think about the magnitude of how this negatively impacts our hard-working Americans. Then think, would the American worker be more secure if they invested in a tax-free investment account, which they own and control with the help of an investment advisor? The answer is clearly yes! For 30 years, Chile has proven personal ownership and investment creates prosperity and freedom for its citizens.

Jose Pinera, a Harvard PhD in economics, created Chile’s personal Social Security account system in 1980. Spectacularly, the private-ownership of retirement accounts by workers in Chile has greatly improved their lives as well as the economy of Chile. Recently, Jose Pinera revealed that in 1999 President Bill Clinton strongly supported private-ownership Social Security in America, and as early as 1996, Mack McLarty, Clinton’s former Chief of Staff, went to Chile to observe the transition to ownership. In 1999, Clinton’s State of the Union speech proposed "USA accounts" for every American worker.

“USA accounts,” universal savings accounts, funded by close to 11% of the then-Social Security surplus as a means of taking pressure off the Social Security program, which was approaching insolvency then. According to the plan, every American would have had a private savings account, funded by a portion of his or her payroll taxes.

“USA accounts will help all Americans to share in our nation’s wealth and to enjoy a more secure retirement,” Clinton said. He was right.

Clinton, the most-capable president since Reagan, recognized the value of owning the product of a person’s labor – property rights. Enormously beneficial, saving and investing promotes economic growth and the advancement of civilization. Unfortunately, Clinton wasn’t able to make his vision come to life. Around the same time, Clinton and Monica Lewinsky’s affair was exposed, and the Republican Party impeached Clinton for being dishonest under oath. He needed the Democrats to vote against being found guilty, and, as always, the Democrats oppose property rights and ownership. So, Clinton dropped his quest for USA accounts, and, harmfully, the Social Security continued to be a Ponzi scheme decreasing a worker’s income and the income of our next generation.

Worse and foreseeable, eighteen years later Social Security is insolvent. In 2014, it spent $63 billion more than it took in, and its future liabilities today exceed $26 trillion. Recently Investor’s Business Daily explains the benefits of the proposed savings accounts.

Again, the biggest negative impact is on the American worker. Instead of having 18 years of investment, we have an unpaid tax bill of $26 trillion while Chilean employees have their investments and a growth of 9.23 percent above inflation over the first 30 years. Plus, Chile has weathered the last 10 years of very difficult world-wide financial downturn better than almost every other country.

Its a huge lesson to the American worker. Public policy impacts everyone’s life. The Clinton/Lewinsky tryst destroyed excellent, public policy. Then a second opportunity appeared for Social Security reform with President Bush strongly supported personal accounts in 2005, which was thwarted Sen. Nancy Pelosi (D-CA), who bragged about defeating the “sweet man.” Immorally, her political gamesmanship has hurt millions of Americans.

Wake-up, Americans! Policy that promotes ownership of your work, promotes freedom and advances civilization. Government-ownership only creates debt and destruction. We need to listen to Jose Pinera.

"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."

Workers arise. Demand ownership of the product of your labor.