Don't Want To Be An American Idiot

Well, for years and years we've been hearing about how American students score down around the bottom of the international barrel in math and science, and it looks like the chickens have finally come home to roost. No wait, before you start labeling me an anti-american reactionary just let me explain myself and what I'm talking about. I'm talking about Social Security reform.

Yeah, I know, I know, just reading the words 'Social Security' is enough to make most people hit that back button and look for another blog to browse, but I think it's worth talking about if only to illustrate just how math deficient we've become in this country today.

Here's what I mean.

As I understand it, we've currently got a Social Security program where working people contribute a portion of their earnings into a large pool of money that retired and disabled people can draw benefits out of it. Then, when those working people get ready to retire they will take their turn and draw benefits funded by the contributions of younger workers, just as those younger workers will someday live off the contributions made by the even younger workers that follow, and so forth and so forth, etc..., etc..., etc...

Now that's a great system so long as there are enough workers entering and contributing to the system to support those leaving and drawing their benefit. Trouble is that's not happening today, and it looks like the poor old Social Security system is going to run out of money around the year 2042. So, with that in mind, here comes the president's plan - The PSA, or Personal Savings Account.

The PSA is also called a privatization plan because under the proposal workers will contribute 10% less into the Social Security pool, and take that 10% they are saving and give it to high-commission, high-fee financial advisors who will then invest that money for them and earn far better returns on that money (before commissions, fees and expenses, of course) than they could have gotten had they let it to rot away in the current broken down Social Security system. That sounds pretty good but I think there's something wrong with the math.

Let's review, shall we?

We have a pile of money. The pile of money is shrinking because there isn't enough money coming into the pool to cover the money going out of the pool. So, according to the president, to fix the situation you simply reduce the amount of money going into the pool by 10%. Now I was educated in America so you'll please excuse me if my math skills aren't quite up to world standards, but if the pile is shrinking because not enough money is coming in and you decrease the amount of money coming in, won't the pile get even smaller? I know that can't be right because the president wouldn't propose something so mathematically 'challenged', but it seems to me if you want to save the pile then you have to decrease the amount of money going out, not coming in. But then I've never been very good at math.

Or could it be, might it be, say, wait a minute, you don't think this is some kind of political smoke screen, do you? You don't think the president is trying to dazzle us with visions of stock market riches just to conceal the fact that he's really just setting us up for drastic cuts in benefits? No, why would he do that? Just so he could deliver some fresh meat to those fat-cats over on Wall Street, a few tens of millions more fish to fry. No, that can't be right.

No, of course not. He's doing it because he knows that we the people are much savier, much more prudent when it comes to our money than those bureaucrats over in Washington. At least that's what he's said, and you know it's true. Why just think about it. I can't remember all the times Grandma Jean, Aunt Velma and I sat down on the porch discussing the best strategies for optimizing our portfolios, can you?

"Long term corporates" I remember Grandma saying.

"Oh, heavens no" Aunt Velma would reply, "not in this interest rate environment. I'd be hedging if I were you. Buy some puts and short the financials."

Then Uncle Barney would walk by.

"Honey bees", Uncle Barney would butt in, "that's the future. I heard this fella on the radio say in a couple of years the world's gonna run out of honey. Said 'buy honey bees' and in a few years you'll just watch that money roll in."

"Oh for goodness sake Barney, the world ain't gonna run out of honey. Who ever heard of such a thing?"

"Fella on the radio said so. Said that terrorists were secretly targeting beehives and killing off all the bees. Said in another couple of years there wouldn't be any of 'em left. Said now was the time to start buying bees cause they're cheap and in another couple of years they were gonna be worth their weight in gold."

"And how do you know" Aunt Velma would ask "if you bought those bees that the terrorists wouldn't come and kill you?"

"Hmmm, didn't think of that" he'd say." Still got my old 12 gauge, though. Yes sir, still got that. Guess if any terrorists come around a couple of blasts of buckshot ought to make 'em think twice. Guess they won't be wantin' to mess with my bees anymore. No I guess they won't want to do that, will they?"

"Ok, Barney, whatever you say. Why don't you go back in the house now and get ready for them terrorists. Me and Grandma Jean got to get back to our discounted cash-flow projections."

Anyways, that's how the president's going to save Social Security. Now it's up to Congress to do the math and contrast it with the democrats plan which I call "Problem? What problem? I don't see a problem here. Why are you trying to scare everybody." Unfortunately the democrats aren't any better at math than any of the rest of us, at least not on figuring out how the system is going to remain solvent when we reach the point where we have 2 workers contributing for every 1 retiree drawing benefits. Hey, no problem.

But rather than just criticize I think it's high-time I offered a few solutions of my own, don't you? Well it just so happens that I have some.

The first thing to do, as I see it, is attack the revenue portion of the equation. In other words, get more money flowing into the system. To achieve that I propose of a 'lobby' tax. In other words, a simple flat tax on all the campaign contributions and perks that Washington lobbyists so generously lavish on our representatives in Congress. I mean if we can't get rid of them then we might as well tax them, right? Of course we should and I think something like a 50% tax going directly into the Social Security fund ought to raise a couple of trillion dollars, at least. That in itself would be enough to pay for the president's reform.

However, I'm not naive enought to think that just increasing the revenue stream will be enough to save Social Security. No, to go along with the tax I'm also proposing cuts to the expense side of the ledger as well - what I call the 'Celebrex' plan. Again, a simple proposal to give massive dosages of 'Celebrex' to all our seniors over the age of 62 and then sort of let Darwinism take care of the rest. A brilliant idea if I do say so myself that would have the twofold benefit of reducing the size of the outlays from the system as well as answering the question, once and for all, if Celebrex is really as safe to use as Pfizer says it is.

Yep, increase revenues, cut expenses and Social Security will be solvent. At least I think so. You do the math.