For Immediate Release Wednesday, June 5, 2013
When the stock market drops, count on politicians to exclaim, ‘Thank goodness we didn’t privatize Social Security! Just look how much people would have lost in the stock market!’
‘So, after an almost uninterrupted bull market since March 2009 and six consecutive months of stock market gains, why haven’t politicians who are against any kind of privatization of Social Security apologized to the American people?’ asks William Redpath, Libertarian National Committee member and a former National Chairman, who is a licensed CPA in Virginia and a Chartered Financial Analyst (CFA).
Recent reports released by the Congressional Research Service state that the Social Security ‘Trust Fund’ will become insolvent within the next 20 years. With no accumulated assets, it relies on payroll taxes to make payments to today’s retirees.
‘More than two thirds of workers pay more in payroll taxes than the individual income tax. That is money that is forcibly taken from them by the government that they could invest to build real wealth over the course of their working lives, or money that could be spent to make their lives better today. Instead, workers are forced into a system in which their payroll taxes are immediately given to current retirees or spent by the government in other ways.
‘People should be free to keep their payroll taxes and use those funds as they see fit. If they choose to save and invest, it doesn’t have to be in the stock market. It could be in more conservative investments. However, the stock market has been the best investment over the long run, and attempts by politicians to demonize it harm the American people,’ Redpath said.
During any 20-year period going back to at least 1926, the stock market has never had a negative return. According to Morningstar, $1 invested in a basket of small company stocks at the end of 1925 would have been worth $18,365 at the end of 2012.
‘Social Security returns are paltry at best and negative for some people. But the big enchilada that no defender of the status quo will address is this: Americans have no personal property rights in their future Social Security benefits. All Americans are beholden to future Congresses for their benefits. And, benefits can’t be passed onto their children and grandchildren, as private accounts could be,’ said Redpath.
Whereas Social Security is broke, federal, state, and local government retirement accounts combined hold approximately $3 trillion in assets according to a USA Today report. Some of those funds are invested in the stock market.
‘If Social Security is such a great deal for the American people, why didn’t Democrat and Republican politicians put themselves and their fellow government workers on the same plan?’ asks Geoffrey J. Neale, current chair for the Libertarian National Committee.
Moving the $3 trillion now in government retirement funds — most of which was paid for by taxpayers — to the Social Security ‘Trust Fund’ would help to make the fund solvent enough to pay back at least some of the money that workers have been forced to pay in FICA taxes throughout their working lives. It would also facilitate full privatization of Social Security.
‘Libertarians call for phasing out the current government-sponsored Social Security system and transitioning to a private voluntary system,’ said Neale. ‘This will remove the looming threat of insolvency while allowing everyone — not just government workers — to be self-sufficient and prosperous in their golden years.’