USAGE: March 2009

Profile of Principal Author

Brent Green
Who am I to challenge billion-dollar foundations and economic experts committed to deconstructing the nation's social insurance programs? I'm not an economist, an accountant or a bureaucrat. I'm not a numbers guy. I am wise enough to understand that the nation's "unfunded liabilities" pose a challenge, but I'm also pugnacious enough to believe in the creative powers of a generation approaching the age of entitlement eligibility. I believe there are alternative narratives to be told about this future story of financial disaster, other than those being foisted by "generational accountants." This blog isn't dedicated to proving entitlement critics wrong, and therefore you should not believe them. I am suggesting they may be wrong, so think critically about their prognostications. Further, I'd like you to grow wary of their pronouncements that are ageist or oppositional to a generation. Inter-generational divisiveness will get us nowhere. I am someone who has had nearly 30 years of experience in the business world and as a community leader. I am a marketing practitioner who has successfully targeted and motivated members of my generation since the beginning of my career. I believe in the mature mind and the creativity that history’s masters have shown us is possible late in life. I believe in wisdom and sharing its lessons. I believe the western world is aging and, as noted author Theodore Roszak observed, has evolved beyond the values that created it. I believe titanic, mean-spirited forces are lining up to further diminish the nation’s growing population of elders in our wisdom and spiritual wealth, and I believe there is only one worthy Boomer reply: “Hell no, we won’t go.” This blog has only a few suggestions about what we might do to keep the nation's social insurance programs on solid footing. The issues are complex and demand interdisciplinary analysis. This blog does, however, raise important questions for responsible citizens to pose. It asks us to become more deliberate in our thinking and not just take the opinions of opinion leaders without serious thought, in-depth questioning and thorough investigation of their views.

March 18, 2009

Arguments of Entitlement Critics

Entitlements are fiscally untenable.

In four words, this is the essential argument of anti-entitlementism. The nation is currently experiencing unprecedented deficits, contributing to an existing U.S. public debt of nearly $9 trillion. Looking ahead about 40 years, anti-entitlement critics predict that the unfunded entitlement promises, plus the nation’s other debts through annual deficit spending, could place this nation over $52 trillion in the red. Some of their predictions reach the stratosphere with $75 trillion unfunded liabilities.

Social Security surpluses end in 2017 when the cost of the program exceeds payroll deductions for FICA. Medicare is already costing more than payroll deductions can counterbalance. Pete Peterson and Dave Walker estimate that your share of the federal debt burden is $175,000, the same as for every other U.S. citizen.

Generational Inequity

Further, critics see the larger issue to be one of intergenerational inequity. In other words, when today’s entitlement qualifying generations, particularly Baby Boomers, create so much future debt with their entitlement spending, this is simply unconscionable. This generation of spenders will leave the nation’s youth with unmanageable and unprecedented debts, in effect requiring our children and grandchildren to pay for our fiscal abuses. Ultimately, this will lead to a much diminished standard of living for today’s youth later in their adult lives with lesser chances to enjoy rich and rewarding American dreams. They’ll be spending their earnings to pay our bills.

One message not being directly communicated through anti-entitlementism is their perceptions of aging and the elderly. To them, old age appears to mean dependency, taking rather than producing.

Their targeted messages to the nation’s youth can have the effect of fomenting generational divisiveness and antipathy. Critics are hardly subtle about communicating this as part of their overt agenda, believing that children and grandchildren, duly informed and inspired, can strike with psychic vengeance and lay upon their elders the mother of all guilt trips.

Posted at 11:05 PM in Entitlement Debate | Permalink | Comments (0) | TrackBack (0)

The Challenges

CHALLENGE OF GUARANTEED RETURNS
Social Security is the only social insurance retirement program that the U.S. government guarantees as an investment. Since inception of the program, every qualified recipient has received every check promised. Now entitlement critics want to set up private accounts and make them mandatory by law. However these mandatory payroll deductions will be managed by private investment companies with no guarantees of return on investments. If the market loses, then you lose. It's going to be your risk, as are all your other investments. To those financial advisors who eagerly look forward to guaranteed fees for their investment services to manage private accounts, I say also make a guarantee. For all private accounts you manage, guarantee baseline performance such that investors will receive back, at a minimum, the principal actually invested plus cumulative inflationary increases of the investment principal for the total term of the investment. If you don't deliver on this promise, then agree to pay these shortfalls to investors for your failure to meet fiduciary responsibilities. Failure to make up investment shortfalls means you permanently give up your professional licenses.
CHALLENGE OF NO PERSONAL GAINS
Many serious critics are asking Americans to get serious about mounting national debts, principally due to future entitlement spending. One solution keeps cropping up in their writing and public comments: privatization. The typical proposal being floated is for 2% of your payroll check to be invested by private, for-profit fund managers, probably folks who are now tied to established retirement investment companies. If the serious critics are to be taken seriously, I challenge them to pledge in writing and through public communications NEVER to profit personally from privatization, not the critics themselves nor their families. Otherwise, we can assume their primary motivation is a drive for economic gain, not fiscal responsibility. Let's see who is willing to accept this challenge and go on the record.