My Own Private America

By Joseph Johnson

There is nothing pretty about aging hippies. If you are one, please don’t take this the wrong way. I’m not here to hate on an entire generation of Baby Boomers, but to bring attention to a profound disservice that is being done to an oblivious younger generation. This is not a rant or a whine. That would be far too Boomer of me. This is a serious issue that needs to be actively discussed if we are to usurp the actions of a generation that has lost its way and create solutions for a sustainable future.

To put it bluntly, Boomers have given our country the single largest deficit in history and will likely check out with a convenient case of Alzheimer’s before they figure out how to fix it. That may be a bit harsh. I’m sure there are a few good-intentioned ones out there, like my parents, who truly care about future generations. But on a macro level, Boomers are stuffing their faces at the dinner table with no apparent intention of paying their portion of the tab. It’s a mistake to think that political affiliation excludes anyone from this issue. We don’t have time to play the blame game. Democrats and Republicans worked hand in hand in creating our current fiscal situation and the resolution will depend entirely on the ability of both parties to work together on a realistic, mutually tolerable solution.

Step one. Admit that we have a problem. If we were all a little more honest with ourselves, we would stand a better chance of pinpointing the personal issues involved in using privatization as a solution for our fiscal failures. Our desires are split between self-interest—our respective idealized futures—and the human belief that all people should be given an opportunity to make a healthy life for themselves. Personally, I often struggle with this, believing these motivations to be in direct opposition to each other. However, on the most basic human level, we have a palpable responsibility to ensure that these motivations receive a healthy balance in our own ideals, our Government’s legislation, and in our policy. As the most powerful democratic nation on earth, we have an undeniable responsibility to lead other nations with altruistic ideals and not simply military might. We all have seen how the latter is working out.

Does our nation possess the driving motivation necessary to offer solutions for our mortally flawed system? Right now the answer is still a profound NO! This applies to many areas of US fiscal policy, but for the sake of narrowing the discussion let’s focus on the US Social Security system, a centerpiece of countless recent debates.

Privatization. The word itself evokes a powerful response from both sides of the political spectrum. The Right claims that it offers hope of a sustainable future built on the tenants of hard work and self-preservation. The Left argues that privatization guarantees the rich will get richer at the expense of an already displaced lower class that cannot survive without the help of the federal government. As usual, both sides are partially correct but neither is willing to credit their partisan opponents as having merit. C’mon Boomers, isn’t that how we got here in the first place?

What I am proposing, or more appropriately “musing about,” is a complete overhaul of how we view, discuss, and tackle the Social Security (SS) problem. It should no longer be an accounting decision about who to screw, instead there needs to be a philosophical shift in the purpose of SS which in its current condition will reach unrecoverable deficits by the time I am supposed to be collecting my paltry check. We need a solution that doesn’t completely abandon the function, to provide for those that would not provide for themselves, but also bridges the gap between the thriving private sector and a faltering SS system. And most importantly, this new system needs to let people feel responsible for and vested in their futures. We need Post-Modern Retirement Accounts. For those not familiar with PMRAs, you’re not alone. I just made them up.

Here’s the breakdown:

• PMRAs are private retirement accounts which peel off a chunk of every dollar a participant makes into a self-managed account.

• A separate piece will be allocated for disabled benefits which will be handled through the federal government and the current SS system.

• Most importantly, this system will be entirely optional and will consist only of participants willing to give up whatever they have previously contributed to SS.

That’s right Boomers, you get to clean up your own damn mess all on your own. Let’s call it “teaching you responsibility.” Don’t worry. You’ll do just fine. After all the PMRAs get started, the market will soar for a good 10 years on the new flow of money into the free market. There will be plenty of time for you to raise taxes, cut spending, take one less prescription, quit a war, or any mixture of the four. And besides, as a realist I am giving up the SS from my entire professional career to do it. This is no paltry sum, but I realize that one must give something up in order to keep the rusty gears of reform greased. God knows I’ll probably never see any of it anyway. With nothing to lose, why not change?

For those of you griping that these proposed PMRAs are yet another guise for privatization, you are correct. But please do me a favor and forget all the negative connotations that word may have for a moment and let me explain how this scenario differs from the much-maligned Bush administration proposal. The primary difference is that PMRA participants would be permanently opting out of the current SS program. This would ensure the current system would not be left high and dry, and would in fact receive a huge boost from the benefits a PMRA participant would be giving up. The younger tax-paying generation would have a difficult decision to make. Are they willing to go it alone? For some, it will be too terrifying to try. For others, it’s the opportunity to build a future with the confidence that individuals are more capable of caring for themselves than the Government. After all, the government only knows me as a number. And it’s not numero uno.

Now let’s consider what the benefits would be to PMRAs. Most notably, they would change the Government’s philosophical view of the poor and actually start treating them as adults. By dissolving the enabling factors of SS, we give low-income citizens the opportunity to develop strong money management skills, something that has been elusive to millions under a system that says “Pay Your Taxes and Trust Us.” It is my firm belief that anyone capable of working is capable of learning the basic tenets of money management. Common sense plays a much larger factor than intelligence, regardless of what a brokerage house will try to tell you on a Super Bowl commercial.

PMRAs would provide a fatal blow to exploitive pension and employer contribution plans. As the past few years have proven, legislation loopholes have enabled the Almighty Corporation to disregard their employee pensions with vast under funding. In some extreme cases, bankruptcy legislation allows corporations to pass the buck to the Pension Benefit Guaranty Corporation with no consideration for the real lives affected and the larger impact on taxpayers. Once employees have the option of using their own PMRA, these faux-philanthropic programs will become a thing of the past. Corporations will be forced to offer retirement programs tied into the PMRAs of their employees instead of following the lead of SS and pretending to know what’s best for the individual. These plans represent the middle-class version of SS and are insulting in many of the same ways. I wonder if Boomers take the time to consider their legacy of Chapter 11s and joint custody.

The biggest obstacle facing the PMRA system, and SS for that matter, will be ensuring that the lower and lower-middle class will be capable of maintaining, building, and managing their futures. If this group does not participate in the program, all reform efforts are in vain. These people will rely on SS for their livelihood and they will need to make a sizeable shift towards fiscal empowerment to breed the financial security that every person in this fortunate nation can attain. With the privatization debate comes hypothetical horror stories of squandered nest eggs and a society of impoverished geriatrics. While I have a little more faith in humanity than that, there are countless measures that should be taken to ensure that PMRAs are managed properly. Everything from index and mutual funds, advisors and planners, and the PMRA Funding Test (like a driver’s test, except for dollars) can be used to ensure that citizens get the resources they need. With my own personal SS prospects looking like they won’t even be able to keep up with inflation, a simple money market account would be able to surpass the bar the government has set to play limbo.

PMRAs will not solve all of the problems attributed to the current SS system, but they will trigger a shift in our thinking which is the first step toward a sustainable solution. Thus far the privatization debate has had the misfortune of being presented by an administration that has proven itself less than trustworthy. My own hope is the emerging generations of voters will take the time to consider this nation’s collective future and refuse to continue to complain idly with our heads cut off. We need people to start owning their own futures, and we need our current leadership to take responsibility for the epic problems they have created from not recognizing that both sides of the debate have valid points. Working toward a solution will require us to separate good ideas from the mouthpieces that abuse them, and remove these people from their positions of power. Let’s end the cycle started by a self-indulgent generation. This time, we can’t afford to boomer it.