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The chances continue to shrink that young workers will realize a return on their forced investment in social security without reforming the current system.

Monday, November 8, 2004

 By Ralf Seiffe

George Bush’s reelection ensures there will be a real debate on the future of Social Security.

Here’s a suggestion on how to present the case to the young people who will most benefit from honest reform but who appear uninterested.

Imagine a sound stage set for an infomercial with a half-dozen, tall stools facing a studio audience.

The scene opens with canned music as an eclectic group of twenty-somethings take their seats; the group ranges from a blue-suited woman who looks like an accountant to a black man with an obvious attitude.

Off to the side is a table set with the subject of the infomercial but instead of some new wrinkle crème or miracle pots that make you lose weight, there is a stack of one-dollar bills the size of a refrigerator.

The music crests and onto the stage bounds the host, the camera tightens for a head shot.

Directly into the camera he earnestly asks "Which would you rather do? Spend your entire working life paying Social Security taxes and then, just as you retire, have the trustees declare the system insolvent or..." --the camera pulls back and our host points to the pile of money-- "Accumulate a $1.5 Million nest egg to spend any way you like?"

The camera pans to the on-stage guests who are talking excitedly among themselves.

The infomercial rolls on with the required “But wait, there’s more! Not only can you accumulate a huge retirement savings account” the host intones, “you can do it without spending any money.

That’s right! With just the money you and your employer already pay to the federal government, this staggering pile can be yours….painlessly!”

It’s time for the long shot of the audience. These are older folks whose gray hair signifies experience and wisdom about such matters.

They look suspicious as the opening teaser claims sweep across the screen. “Stay Tuned For An Important Message. Do You Want To Become A Millionaire----On Just The Money You Make Today????”

“This is not a trick question” our host tells us.

“In fact, it is just the choice young Americans face as we begin the debate on reforming Social Security. The assumptions supporting this infomercial are simple. Right now, almost any 25 year and his employer pay 15% of his salary to the Social Security system. That’s about $3,750 per year on an income of $25,000. If that money were invested into the American economy---instead of the federal government----an average rate of return would produce a $1,489,890 nest egg by the time our on-stage guests turns 65. If they wait until 67, the “new” retirement age, that chunk will grow to nearly $1.8 million!”

The host has taken his seat in the obligatory living room set, stage right. There he begins to interview a Social Security trustee.

Waving a copy of their 2004 Annual report he asks “Tell us what the trustees mean when their message to the public says, and I quote “The growing annual cash deficits in both programs will lead to exhaustion in trust fund reserves for[Medicare Health Insurance] in 2019 and for Social Security in 2042.?” After an uncomfortable fidget, the trustee explains that the baby-boomers will use up all the “pay as you go” taxes collected from their children and they will consume all the reserves the system has managed to accumulate since the 1930’s.

“How will you fund the retirements of our studio guests, then?” the host asks as he jumps up, cordless microphone in hand, to confront the twenty-somethings with this “news”.

“I’m Bill” says the burly guy in a plaid shirt. “I make $12.57 an hour but with overtime, I’ll make maybe $30,000 this year. That extra five grand sure helps!”

“Have you ever hought about being a millionare?” the host asks, thrusting the mike into Bill’s face.

“On my salary? You must be kidding!! You should see how much they tax my overtime!!!”

“That’s just it Bill. You are already a millionaire and just don’t know it.” Pointing to the pile of greenbacks the host says “You are paying enough to accumulate all that money with just the social security taxes you pay now.”

Then, to the guests, our host contines “Bill, here, can become a millionaire by systematically investing in America even if he never gets a raise! If he does manage to improve his situation, then he’ll invest more and have more when he reaches his golden years.”

Turning back to Bill he asks “What do you think about that?”

“Uh...well...um,” Bill fumbles. “What do I have to do to get it?”

Camera pans to the host with the studio audience behind him. He turns and points out to the audience. “Just convince them that it’s your money!”

Stay tuned for nest week’s Social Security infomercial especially if you are a baby boomer.

It’s titled “If we owe it to ourselves, why can’t we have it now?”

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Ralf Seiffe advises business start-ups and product launches from Chicago, Illinois and is a political analyst and columnist for the Illinois Leader.