22. Social Security Reform

.... Social Security reform is a very troubling topic. No matter what we do, it cannot be sustained in its present form and therefore hard choices must be made. This is a very complex subject without a simple answer, but this posting will suggest at least a partial answer.
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.... Through the huge spending bills of late 2008 through today, the government has pumped trillions into the private sector. This should now be required back from those companies and institutions in the form of stock. While it's true that most of this stock will be fairly toxic, over the years it will hopefully recover and gain value.
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.... The government would use this stock to create an ‘opt-out’ package of stock portfolios for the purpose of privatizing social security. Initially, this option would become available to those who are already on social security or soon will be. They would live off the stock dividends with the government making up the difference, so that they receive no net loss of income over the present arrangement.
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.... Younger persons might also choose to opt out. Based on how long they've already paid into the system (their age), they would receive smaller stock portfolios and would continue paying into the system for a certain amount of time, after which they would pay social security no more, nor draw from it upon retirement. Instead, they must depend on this start-up portfolio and add to it over the years, and retire on the basis of that.
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.... The basic idea is to make lemons into lemonade. This concept would take a great deal of further thought, but in the end it would have the advantage of returning private companies and institutions to the private sector, rather than having state ownership of finance and production -- which is always a bad idea. This would scale back the size of government involvement in our lives and curtail social engineering.
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.... In the meantime, those who are already on social security, or soon will be, absolutely must be protected. By their payments in the past, they have created a contract with the U.S. Government which simply must be honored. Whether through straight payments or some other arrangement that makes up the difference, their payments cannot be scaled back except in case of deflation, and must increase in case of inflation.
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.... In any case, the goal would be to move the stock from the government into purely private hands, and it would be inherited by their descendants to help younger generations achieve a foothold as well. It is through capital accumulation, not through taxation, that wealth is born and retirement is secured.