Social Security: Our Sovereign Wealth Fund

As addressed in an earlier post, I felt that the Social Security is one of the main issues that would need to be given priority by the new administration. Now Social Security is percolating to the top of the issue docket. The recent news by the Associated Press that the system will see a $10 million dollar deficit in 2010 due to a number of older Americans seeking benefits as a result of layoffs and business closures in this troubled economy, will surely bring the issue to a boil. Add to that a recent discussion on MSN--money which stated that seniors will not see a cost of living increase in their monthly checks. Plus the mention of it in Steve Forbes Fact and Comment column in Forbes magazine. Social Security will soon be the lead issue in Americans minds.

Forbes in his excellent column states that things would be different now, had FDR accepted the Clark Amendment to the Social Security legislation enacted in 1935. The amendment would have given Americans a choice between the public option (Social Security) or a private insurance plan.

While Social Security has become the third rail in American politics, it merits robust discussion which will move it toward beneficial reforms. I once thought it should be a voluntary, private system. It seems to me that Social Security should be a requirement as part of our social safety net. With the recent Madoff scandal and greedy Wall Street bankers robbing and pillaging funds and their subsequent theft of taxpayer dollars in the form of bailouts, Americans are a little fearful of where they put their retirement funds. The financial mess we find ourselves in is one giant burr in the American saddle.

Social Security should be reformed and transformed into Our Sovereign Wealth Fund. Yes, it is a supplemental retirement fund. That was the original legislative intent behind it. Further steps need to be taken to strengthen the system.

Social Security is for all American citizens. All should be included without regard to income level. The following reforms should be implemented for a solid Sovereign Wealth Fund to be created benefiting us all:

1. Lower the payroll taxes to 5% for the employee and the employer. Self-employed Americans should pay no more than 10%.
2. Limit the payout (remember it is a supplemental retirement fund).
3. Similar to a 401K program, the system should allow people to select different investment programs to beef up their monies placed into the fund.
4. The Social Security Administration should not just invest in US Treasuries, but also invest in other debt, equities and real estate to provide growth and income in the fund. Congress should place strict risk restraints on the fund's investment officers.
5. Move the entire system out of the orbit of the Congressional cookie monsters. Put it in a "lock box" and keep the Potomac Pirates' mitts out of the cookie jar.
6. Everyone working in America should pay in. American citizens would receive benefits based on the funds they invested into the system. There should be no income level cut-off (currently at $106,000). Call this the Buffet tax, if you get my drift.
7. The payout from social security to retires should not be subject to federal income taxation. Retirees receiving social security payments should also be allowed to earn as much income outside of Social Security without penalty.

All of these reforms will strengthen Our Sovereign Wealth Fund: Social Security. Feds nailed Bernie Madoff on his Ponzi scheme, it is now our turn to nail the Feds on their Ponzi scheme. Lets takeover Social Security and create Our Sovereign Wealth Fund.