Social Security is not a retirement program or a handout; it is a contract between the government and the people for the government to run a Social Assurance program.

  • This Social Assurance program sets up a system that workers, through contributions by them and their employers,
  • To provide protection for themselves, their children, spouses, parents, and grandparents.

A1982 funding change passed by Congress guaranteed the solvency of the program building up reserves for the time when Baby Boomers would be retiring.

  • The politicians have embezzled the funds collected for those future benefits, replacing the money with nonmarketable Treasury instruments.
  • The 1982 law passed outlawed the funds being used for the normal government operations.
  • The act of replacing money held in trust with an IOU would put any member of the Public in jail.
  • Senator Harry Reid said as much on October 9, 1990, as pointed out in this quote from Allen William Smith’s The Looting of Social Security.

The Social Security System has served the people well but needs radical change. The change necessary is to remove the system from the politicians’ control.

The politicians have violated the spirit if not the letter of the law they enacted in 1982 to protect the funds collected for future benefits (often falsely referred to as a surplus).

Social Security must be removed from the control of the government and set up as a freestanding Retirement Trust Bank, a member of the Federal Reserve.

  • A system controlled by a board of trustees responsible for protecting its integrity.
  • The funds collected to pay future benefits should be invested.
  • Utilizing the securities market, the solvency of the system.
  • Notably this is done with State employee retirement funds across America.

President Roosevelt did not want any money from the public Treasury involved in the Social Security System. In the long history of Social Security, no funds other than those provided by the employee and the employers have been used for benefits. FDR wanted it that way so the politicians would keep their hands-off.

Think of Social Security as an insurance policy.

  • The policy is to pay for your parent’s or grandparent’s needs,
  • your spouse’s or future spouse’s needs, and to provide for your children if something should happen to you.
  • As an added benefit, you will receive a modest retirement check.

It is Social Assurance; that is there to assure that a minimal support will be available. The contributions of each worker and employer provide society the assurance the young and old will not be without means of support.

This system, envisioned and, so ably created 70-plus years ago, has served our society well. But now Social Security needs to be rescued from the grasp of politicians. So it can continue servicing to our young and old for another 70 years and more.

Saving of Social Security is as Simple as 1, 2, 3;

  • Set up a National Retirement Trust, to handle Social Security
  • Remove Congressional involvement in operations of Social Security
  • Make the Nation Retirement Trust a Federal Reserve qualified most favored bank.

When separating the Social Security Trust from the Federal Government eliminating the games of politicians. Removing the threat of entitlement changes from the fear mongering of elections.

An organization managed by a Board of Trustees or Governors. Each appointed by elected branches of the Country and some other selection process which will ensure the Board is Independent of the ebbs and flows of political rhetoric.

The Board is mandated with the management of the Social Security System. Transplanting the current system, plus the 2.8 trillion dollars of Special Revenue Bonds issued by the U.S. Treasury.

Removing the politics of Social Security from the National Debate will provide peace of mind to American Citizens. The fear mongering of Politicians to use Social Security as a wedge issue is unconscionable.

Social Security is a self-funded employer and employee system. There are no Federal Taxes involved in the Retirement System.

The issue is the Federal government borrowed (illegally) the Trust Fund money to support the general fund.

The Government does not and will not have the money to pay back the trust,

  • calling for benefit cuts to hide this fact from the American People.
  • Deficit spending has been funded on the back of the seniors
  • by Politicians of both parties who now want to reduce benefits.

Removing Social Security to a formal trust sets up a firewall. This is the same philosophy used in Company pension plans to protect the assets.

Having the Trust as a Bank is a “having your cake and eating it too” solution. It would be funded by the 2.8 Trillion Dollars in US Treasury Bonds, the most secure investment in the world. Whatever interest the government now pays it would pay to the trust.

Let us bring all this into focus.

  • If the Trust borrows only half of the value of the 2.8 Trillion Treasury Bonds at the Fed Funds rate.
  • Then investing it at the rate of return equal to what the Public Employee Retirement Systems historical rate of 8%.
  • The Trust would create 100 Billion Dollars a year.

Warren Buffet when asked about whom would be overseeing his wife’s money after he died he said; “all she needed to do was put it into a managed market fund like Fidelity. It should see an average return of 8%”.

Now the “having your cake and eating it too” comment.

  • The Federal Government would only have to service the interest on the debt forever at the about 2% rate and never have to repay the principle.
  • Equity investments would generate 100 billion
  • Bond interest would generate 56 billion
  • a total investment return of 156 billion.

The projection is that the fund will go bankrupt in 20 years,

  • that is at a rate of 140 Billion a year.
  • So the fund will never be touched if it is generating 156
  • a year and drawing down the 140 a year; leaving a 10% fudge factor.
  • So that “is having your cake and eating it too.”