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|Subject: Re: Proposal to end public pensions||Date: 7/11/2013 2:49 PM|
|Author: jdp245||Number: 428512 of 505818|
In my opinion, Social Security ought to be a life raft upon which hard working people should be able to depend.
I agree with that. My previous comment was a criticism with the way that it is funded, not with its existence. The government uses the Social Security trust fund as its own piggy bank, pulling out all the money that goes in and stuffing it full of IOUs. It is the most underfunded retirement vehicle in the world.
Let's imagine that a private company (we'll call it Pyramid Inc.) funded its pension the way Washington funds SS. Here's how it would work. Every month, Pyramid would make a contribution (let's say $500,000) to the pension to help fund its future obligations. Every month, Pyramid would also issue zero-coupon bonds. It then sells those bonds to its pension trust in exchange for $500,000. The pension trust ends up with the bonds and Pyramid ends up with exactly the same amount of cash in its accounts as when it started.
Would you consider that pension "funded"? And don't get any ideas corporate America... it is illegal for anybody other than the government to do this.
I, for one, think that Social Security needs to be invested in a diverse portfolio of investments. Countless other developed nations invest their sovereign retirement funds in private investments. And most states do so with their public pension funds. There is no reason why SS could not be operated in the same way, other than Congress's habit of tapping into that piggy bank.
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