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Opinion

Social Security worth the risky business

Jason Richardson
Opinion Columnist

In his State of the Union address to Congress, President George W. Bush placed great emphasis on the centerpiece of his domestic policy agenda: reform of Social Security. Bush is continuing to promote his plan for instituting major changes to the nation's retirement entitlement program by barnstorming states in the mid-west with full campaign bravado.

Private investment plans have a track record of success, stability and security for retirees. For decades, public school teachers, civil servants and other government employees have had retirement and pension funds tied to stock and bond markets. A properly diversified retirement account will be one which can outpace the 2 percent rate of return that the current Social Security program provides for retirees, but also stays clear of high-risk and high-yield securities. 

Social Security is a bite-sized, easily digestible form of tyranny. The personal assets of one citizen are stripped away and redistributed to others who have been unwilling or unable to plan for their own retirement. Citizens are willing to tolerate this invasive subjugation of property rights because we believe that a small alteration to the social contract is worth the reward of a more dignified existence for our country's elderly. The process, then, of redistribution of wealth should be conducted in a manner which is most efficient at providing those who stand in greatest need of help.

There is no constitutional right to receive Social Security. There is no mention of government-managed retirement programs in the Constitution. In 1960, the U.S. Supreme Court ruled in Fleming v. Nestor that there is no legal right to Social Security benefits. Congress has taken it upon itself to provide this service for its citizens and has established a fiduciary relationship with the working population. Congress thus has the ultimate responsibility to provide the highest possible return on workers' contributions. By providing a paltry 2 percent return on contributors' investments, Congress has violated its fiduciary duties to America's workers.

When Social Security was first instituted, the qualifying age for receiving retirement benefits was 65. At that time the average life expectancy in the United States was 63. The program was set up to care for people who beat the odds by living considerably longer than expected. Today the average life expectancy is much higher. The situation has changed so drastically, using an outdated entitlement program will no longer effectively meet the needs of a much larger pool of recipients.

Allowing personal retirement accounts will reduce dependence on the government. By allowing individual citizens the right to take responsibility for their future, the expensive government liabilities that will have to be paid by the next generation of workers will be reduced greatly. Individuals will retain the dignity that comes with self-sufficiency and will benefit by accumulating real, bequeathable wealth. Under the current system, retirement contributions are lost at death. Private accounts would allow for family members and other heirs to inherit the retiree's investments.

The current Social Security program unfairly discriminates against minority and low-income workers. Currently retirement benefits are keyed to workers' contributions into the system, which is fairly meager for low-paying jobs, of which minorities make up a disproportionate share. Rich white males are able to reap much higher retirement benefits than poorer workers. By universally capping the annual private investment to $1,000, all workers are placed on equal footing.

There are many other advantages to allowing workers to divert the proposed $1,000 per year into personal accounts. The risks associated with private investments can be mitigated by appropriate diversification planning. Opponents of reform who use references to roulette tables, Enron stock and the dot-com bubble burst are ignoring primary principles of wealth management. Current federal securities laws, such as the proscription of unsuitability, can adequately safeguard the long-term security of private accounts.

The Bush Administration has yet to lay down a comprehensive and specific plan for review, so much of the real debate is yet to come. One can only hope our elected officials will lay partisan politics aside for the moment, and seriously consider the possible benefits that a reformed retirement plan can provide our nation's workers before they cast their votes.

Richardson an opinion columnist for The Daily Cougar, 
can be reached at jasonuhlaw@hotmail.com