By Harold Pease, Ph. D
With our national debt growing by $3 billion a day and Congress giving up offering any real solutions, we are a speeding train heading for a cliff. Most pretend the problem is not real or will just go away. Almost no one is ready for the hyperinflation and street crime that could follow if we do not act quickly and responsibly.
The Tea Party Debt Commission was formed some time ago to provide the federal government a solution. Its final report summarized the problem, “Our government is doing too many things it can’t do well, or shouldn’t do at all, with money it doesn’t have. We are borrowing 43 cents of every dollar we spend….” They note that the “Government Accountability Office counted no fewer than 47 job training programs, 56 financial literacy programs, 80 economic development programs, 18 food assistance programs, 20 programs for the homeless, 82 teacher-quality programs spread across 10 agencies, and more than 2,100 data centers. All told, we have nearly 2,200 federal programs.” Government is bloated, inefficient, and wasteful.
A federal diet is long overdue, but what should we keep? The Commission’s assessment criteria hinged on four basic values: fiscal common sense, Constitutional limits, economic freedom, and personal self-reliance. For a program to remain, they reasoned, it needed to pass two questions: is it constitutionally authorized, and is it best carried out by the federal government, as opposed to states or private entities? Much of what the federal government does, the Commission found, unfortunately, does neither.
Boldly they opened the unfunded liabilities door, the door neither party dares to open as potentially it could destroy career politicians and political parties. They concluded that they could make Social Security “sustainable and actually improve benefits by harnessing the power of compound interest.” They noted, “Three decades ago, Chile embarked on a bold transformation of its retirement security system. Today, that system [SMART Accounts] is the envy of the world, giving seniors far better benefits than the old, government-run system ever did.”
Shortly thereafter three counties in Texas adopted the SMART Accounts program in favor of personal accounts and thus those retiring today do so “with much more money and have significantly more generous death and disability supplemental benefits than do Social Security participants.” Moreover, they “face no long term unfunded pension liabilities.” The Commission recommends that, “all state and local governments should have the option of opting into the ‘Galveston model.’ ” Learn more about this aspect of the Tea Party Debt Commission’s recommendations by visiting FreedomWorks.org/the-tea-party-budget.
The Tea Party Debt Commission suggests that “new workers born after 1981… invest one-half of their payroll taxes (7.65%) in a SMART Account, which they can use to fund their retirement and health care costs in retirement. If they prefer, they can give up their account and opt back into traditional Social Security at retirement.” The result of this modern approach to funding retirement embraced by the Commission, is that, among other things, it: “improves benefits, doesn’t increase the retirement age, doesn’t cut benefits for people in or nearing retirement, and doesn’t touch the existing Social Security Disability insurance program.” It also “reduces federal payroll tax receipts by about $500 billion over the ten-year period.”
The Commission also opened Medicare, the second major Pandora’s box of unfunded liabilities, but Tea Party recommendations giving Medicare seniors the right to opt into the privileged Congressional health care plan will require space not permitted here.
So far, neither party has offered other ideas and the Tea Party solution has been virtually ignored. The speeding train does not have to go over the cliff. There are great thinkers and solutions that can save us because they are not forced to do so within the parameters of self-interest and political parties. Fortunately the Tea Party works successfully outside these restrictions. Please tell your Congressman to seriously explore these recommendations especially in light of the fact that their plans have not worked. This train must get off the track that it is now on while there is yet time.