Social Security
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Position Paper on Social Security
Copyright 1992 by
Jay C. Wood
Libertarian for Congress
California 23rd District
As a Libertarian, I am opposed to the imposition of any tax on one group for the sole benefit of another group. That is not what
Social Security was supposed to be but that is what it has become. Social Security was supposed to be entirely supported by
workers’ contributions. But over the years, things have changed until Social Security barely meets its current obligations. The
contribution percentage has been made larger and larger. The tax increases and increases.
Social Security is a contract between workers and their government. In simple terms, a contract is made when parties agree to
do something. All sales are contracts. I agree to give you some money and you agree to transfer the ownership of your property.
When you buy an annuity, you enter a contract. You send contributions to a bank or an insurance company. When the time
comes, they, like Social Security, return your contributions plus an additional sum of money.
One major difference between the government’s Social Security and a private company’s annuity is how the contributions are
used. A private company invests your contributions thereby increasing the dollar value of your annuity. They must do this
because the contract calls for them to return more dollars than you originally contributed. These investments finance businesses
which provide jobs for workers. These jobs create new wealth which contributes to the general economy.
Social Security contributions are not invested. Instead, they are spent on the current obligations and lent to other government
agencies. No earnings are realized from these loans and no new jobs are created. Wait, that is wrong! There are new jobs
created. But these jobs create no new wealth because these are bureaucratic jobs.
Social Security is a contract because the U. S. Government has agreed to pay retirement benefits to all workers who make
contributions to the system. The courts, however, do not agree that Social Security is a contract.
It is possible that the courts have reached this conclusion because Social Security is not entirely voluntary. If you don’t like the
deal, you don’t have to take it. Social Security may not be a contract because workers have no choice. They must contribute to
the system.
Workers in the United States, with a few notable exceptions, must contribute to Social Security. If they work, they have no
choice. Contributions are deducted from wages and salaries. The self-employed are required to include their contributions with
their income tax payments. The most notable exceptions to the Social Security requirements are U. S. Government employees.
Not all Social Security system workers are covered by Social Security. That tells you something about the system!
Our problem is neither who is or is not covered by Social Security nor whether they are or are not volunteers. Our problem is
the Social Security system. Either we continue with the present system until it collapses under its own weight or we renounce
the system, complete its obligations and order its demise.
Social Security is a compulsory tax system. Also, Social Security does not invest workers’ contributions in wealth producing
jobs. Therefore, eventually the Social Security system must and will be eliminated. Either the government ends it or Social
Security will bankrupt the U. S. Government and all its taxpaying supporters.
Although many, many people have been involuntarily included in Social Security, it should still be treated as a contract and must
be honored! Parties to the Social Security contract, other than the government, may be divided into three distinct groups:
Retired
Contributors
, Current Contributors and Future Contributors.
Retired Contributors and their creditors depend upon Social Security checks arriving every month. When the Retired
Contributors
were still working, they entered a Social Security contract with the U. S. Government. Voluntarily or involuntarily,
they have made their contributions. They fulfilled their part of the contract and did so in good faith. Now is the time for the U. S.
Government to fulfill its part of the contract. The
Retired Contributors should and must continue to receive their monthly checks.
Future Contributors are people who have not started working. They have had no Social Security deductions from their earnings.
Their Social Security account must never be opened. After a given date, no more Social Security accounts should be opened.
That date is today! The system has to be closed. Government must get out of the annuity business.
Current Contributors may be further divided into three subgroups: About to Retire, Middle Working Age, and Just Starting to
Contribute
.
The
About to Retire may be merged with the Retired Contributors and receive their monthly checks as if no change had been
made in the Social Security system. Their contributions will remain fixed at the current rate until they retire. Changing the
system for them now would be disastrous to their finances. As disastrous as it would be to all those who currently depend upon
a monthly Social Security check.
Those in the
Just Starting to Contribute group should receive a full refund of their contributions and be removed from the
system. They should be encouraged, but not required, to endorse their refund check over to a private insurer.
There are two alternatives for the
Middle Working Age group. They may receive a refund and join the Just Starting to
Contribute
group or they may continue to contribute and join the About to Retire group. The choice will be theirs.
Where will the money come from? All the Social Security system’s current income barely pays today’s obligations plus the
bureaucratic overhead and payroll. The money for refunds and future payments must come from somewhere. Future
contributions will not cover the required future payments plus the bureaucratic overhead and payroll. If the Social Security
system continues at the current rates, future contributions will not cover the required future payments plus the bureaucratic
overhead and payroll.
All the money for future payments must come from some where. Taxes cannot be raised! This method of financing is currently
being used but only adds to the problem. Government must not issue bonds, bills or notes. This method of financing adds to the
national debt and must be repaid. The government can neither print more money nor otherwise create more money since these
methods of financing are inflationary and dilute the earnings of all workers, active and retired.
But the money must be raised and not by taxes, debt or inflation. Therefore, the government must sell something to provide the
money. There is a possession the U. S. Government owns that can be sold. The government owns land. Lots and lots of very
valuable land. If only some of this land is placed on the market at today’s prices, the Social Security system can be phased out.
Land sales will keep the Social Security system solvent until the last contractual obligation is competed.
Government owns thousands of acres of timberland, thousands of acres of grassland, thousands of commercial buildings and
thousands of houses. Government is in the timber business, the livestock business, the rental business and the housing business.
It should be in none of these and none of the several other businesses it operates.
To finance the end of the Social Security system, the U. S. Government should sell its land today at today’ prices. If it does not
sell today at today’s prices, the taxpayers will be forced to sell this land in the future to cover the ever increasing Social Security
obligations. Those future sales will be at bankruptcy prices.
Responsibility Leads The Way To Freedom
Position Paper 1
June 3, 1992
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