Greedy Geezers, Stop
Endangering Our Future Prosperity El Mirage, Arizona is in the middle of a generational political war between young and old. According to a story by the Associated Press, students in this Phoenix area suburb are short of textbooks. Courses such as music, art and physical education have been eliminated. The worst part is that testing indicates that the students' academic performance is declining. The budget squeeze is occurring because the majority of people in the district are greedy geezer retirees who dominate the school board and refuse to allow any increase in school spending. Local funding for the district comes from property taxes that the greedy geezers won’t raise because they have much of their wealth tied up in expensive homes. Now, the geezers are threatening to remove the retirement communities from the district, which would further slash the money available for the school district. Now, I am all for low taxes and fiscal responsibility. Also, I feel many public school districts waste a lot of money. In addition, I generally have great respect for older people. However, in this case, the old geezers seem to be acting selfishly and out of greed when I see the cutbacks begin to truly hurt the learning process. Normally, I would just pass off this story as a bunch of whining educators who never think they have enough money; but the "graying" of America is no laughing matter, at least for those of us young enough to not have seriously thought of retirement. For the federal government, funding social security will become a serious problem in about 10 years when the baby boomers start retiring. Without changes, social security will either go bankrupt or the rest of us will be enslaved by a tyrannical rate of taxation. Without a major overhaul of the system, those are the only choices. When social security was enacted in the 1930's, retirement age for social security was 65, and the life expectancy was 63. Today, you can retire at age 62, and the life expectancy is 76. That means that, on average, people live 20% longer today while the retirement age decreased by 5%. This doesn’t even include all the other people with disabilities of one sort or another that have been extended social security benefits at an even younger age. To try making up for this changing demographic in the population, Congress has passed numerous tax increases. In 1950, only 3% of the first $3,000 of income was taxed for social security. Today, a rate of 12.4% is imposed on the first $62,700 of income, which is the entire income for most of the population. To just break even, the Congressional budget office estimates that the payroll tax will have to be increased an additional 14% in a few years. Most everyone acknowledges the problem. However, social security is the holy grail of American politics. Any attempt to change it can be political suicide for a politician. The AARP -- which I unaffectionately call, "the geezers from hell" -- is one of the largest, well-funded, and powerful special interest groups in the country. They are so powerful that they get an 80 million-dollar per year kickback taken out of our back pockets. Every plan that offers a change in the status quo of big government is heatedly opposed by the AARP. Their lobbyists pop a few extra Geritol and go into overdrive to protect the current system. Fortunately, many political figures from across the political spectrum, from Steve Forbes to Bob Kerrey, are having the courage to speak out and call for needed changes. Also, many young people are starting to organize to fight the AARP and bring responsible change for the future. Even many senior citizens, like my mother-in-law, have withdrawn support from the AARP because of their greedy, self-serving policies that turn a blind eye to the reality of the situation. Despite the paranoid claims of AARP, few people want to get rid of social security. The best solution is to start phasing out the current system and replacing it with a privately funded system. It is a myth that there is a social security trust fund. The money goes into the general fund and is not wisely invested. A private system would still require participation, but would produce a much higher rate of return, which would lead to a better, more stable retirement fund. If we start now, we still have time to gradually phase in the change while still protecting those in the current system, without tax increases or cuts in benefits. Many other countries have moved in this direction. In Chile, they moved to a private system in 1981, based on a plan by American Nobel Prize winning economist, Milton Friedman. People had the choice to stay in the old system or join the new one. Almost everyone has now opted for the new system. Everyone must contribute a minimum of 10% of income to the retirement plan. People can contribute tax-free up to 20% of their income. A person can retire at any age when they feel they have enough money to support their desired lifestyle. Then, they use the money that they have invested to buy an annuity from a private insurance company. Today, the new system pays 40-50% more than the old system. The overall economy has grown at a hefty rate of 7% per year. Yes, the time has come for the greedy geezers of the AARP to stop endangering the prosperity of future generations. They need to step aside and let us develop a new plan that will assure future generations the financial prosperity they have known. |
