Tea Party-Two Party

Guilder’s Guide to Greatness: Part 1

February 24, 2010
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Hey readers, this was originally part of my post on the budget freeze, but I decided to post it separately to keep things short enough for one sitting. Hopefully you will see that my perspective is not that of a mere “ivory tower” theoretician, but someone concerned with the effects of policies on the day-to-day lives of average Americans.

Social Security Reform

Our current Social Security practices are quite frankly asinine. Our “pay-as-you-go” framework is glaringly vulnerable to population fluctuations, as the current baby boomer crisis has shown. Now that there are more seniors retiring and fewer working people to pay their Social Security dues, the system is becoming insolvent, and a generation of workers will be compelled to fork over unprecedented levels of income to the government in order to pay for a flawed system. Why? Because they happened to be born after the Great Society hysteria of the LBJ administration, the period during which the belief that the government could magically erase problems with giant, fiscally draining programs abounded.

A much better alternative to our system would be to expand our current 401k system, in which individuals are responsible for their own savings. The government’s 401k program works by automatically deducting a percentage of you paycheck into a tax-exempt savings fund. If the government offered a voluntary, expanded 401k system, it would not have to tax Peter to pay for Paul’s retirement, as each citizen would be responsible for their own savings. Those that chose not to opt for the system could save privately, but society would not be expected to support them if they neglected to save. The main advantage of an expanded 401k system is that it would be MUCH cheaper to maintain than the current Social Security System, as individuals would earn their funds over the course of their lives, rather than having them supplied by other taxpayers. For all the whining I’ve heard from liberals about Obama’s cuts for programs for the poor, education, etc., I’m irritated that they don’t realize that their policies (government intervention in the economy through bailouts/stimulus packages, and fiscally unsustainable programs like Social Security) have put us in this situation in the first place. It irks me when liberals refer to conservatives as being the voice of “No” when they plainly reject all alternatives and assume that anything that gets done is their own idea.

Continue to Part 2


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