The Great Litmus Test For Social Security
by John D. Lofgren, July 7, 2003

There is great outcry in the media over Enron's and Worldcom's shady
accounting practices that led to a mismanagement of funds, over the CEOs'
stock options which allowed them to bail out profitably before the stock
prices fell.  Questions abound about insidious plots to boost short term
stock option values at the expense of the future health of the company.

For those of us who see through the sham that is Social Security, the
surprise is ironic and totally unexpected.  How could the same people
who accept Social Security -- with all of its shady accounting practices, and
with all the politicians that reinforce this Ponzi scheme in exchange for 
short-term gains in votes -- be appalled when executives display the same
tendencies as private citizens have for years?

Well, I maintain that a CEO who exercises a contractual right to sell options
is not as sinful as a person who sells his vote to some politician in order to 
coerce the politician into transfering someone else's dollars into his pocket. 

Many people are upset, especially those with the most investments: The
older people in this country.  They are upset because stock prices have
fallen, the moral fiber of the country is eroding, regulations aren't good 
enough, and so on.  What's a retiree to do?

Well, anyone with a lick of sense can review economic data from around
the world that plainly indicates more freedom in the markets produces more
per capita income, not less.[1]  And more market controls increase the gap 
of money and individual rights between the powerful and the weak; there's
strong evidence of that as well.  That is to say, the freest markets in the 
world have the largest middle classes, so this is clearly a proven trend. 
Why are we so quick to request more regulations?

Making some tighter accounting rules might be prudent, but making
additional regulations on corporate compensation plans will hinder all the 
companies and executives who handled their similar CEO compensation
plans just fine, so these regulations should be reviewed with great concern
and wariness about over-regulating and encumbering a fragile free market 
that functions best when finagled the least.

But let me get on to my central challenge.  I propose a test: If social
security supporters and politicians are so fed up and want more regulation 
of private industry, let's apply the standards they're crying for to THE 
largest retirement fund in the U.S. right now: The Social Security fund. 
That's right: Let's take all the current and new regulations to be introduced, 
and apply them to the Social Security fund for a few years just like a bank 
has to do. After all, it is a security fund, right?

Surely seniors will rally around this cause, as it only makes sense that the 
rules for private and government organizations live up to good accounting 
practices. Hire an independent, private organization to review the SS books. 
Stop co-mingling funds with the general budget, and put the SS budget 
back as a line-item budget.  Show what debts we're leaving for our children. 
Show us what we are paying for today, and what debts we're leaving for 
them tomorrow.

Let the ants see the grasshoppers as they eat the winter stores.

Or, as my relative said, maybe we should just stop asking questions.
Our kids will have to figure out how to clean up the huge debt, so why
worry about it?

Hogwash. Let's stop fooling ourselves. America is all about special rules 
for special people these days.  Every block of voters wants a tax break or a 
handout so congress gladly obliges when each lobby approaches them in 
the votes-for-handouts scheme called the federal government.  Our huge 
tax code is proof enough of that: there's a break for everyone.  And then 
there's the 60% (and rising for the last 40 years) of the budget devoted to 
handouts. Is there any doubt?

We were all supposed to be equal, weren't we?  What happened to that
notion?  Why aren't citizens screaming about these unequal policies of
government, where the workers and savers are punished and spenders are
rewarded to the tune of 60% of the budget, way up from the 5% we handed
out in the 50's?

Let the senior citizens, America's greatest generation, who won WWII
with their valor and heroism, start the charge to becoming a wholesome
nation again: Call for Social Security to be scrutinized using corporate 
accounting practices.  Document the huge debts we're leaving our children. 
Publish the books of this "enormous unfunded liability"[2] we're leaving 
for our kids in the greatest rip-off in American history.

[1] http://www.fraserinstitute.ca/economicfreedom/index.asp?snav=ef
[2] Treasury Secretary Paul O'Neill, after the Enron announcement,
stating how the SS fund was in the same boat as Enron.


See how Section 162(m) of the Tax Code -- passed in 1992 -- created a Congress-caused explosion in stock options offered to executives -- giving them a huge incentive to work on the stock price, rather than long-term health, of their companies HERE  (and remember Ann Coulter's famous saying, "Whenever you come across a screw-up this big, you know the government is behind it.").

Click on the cartoon to see the full-size version:

Also see:  FAQs about Social Security Privatization  and

About that "Gap" between rich and poor