The Libertarian Party of Alabama

Huntsville, Alabama     (205) 936-4010
The Libertarian Party, Washington, DC 1 800 682-1776

Craig Goodrich Candidate for US Congress, 5^th District

Uncle Sam Stole Your Lottery Ticket!

As we get closer to the November election, both the Republicans and the Democrats will start yelling that the other one wants to "destroy the Social Security system." But anybody who takes a close look at it can see that it's already destroyed.

• The so-called "Trust Fund" is really a "Slush Fund" - the politicians have spent all your "contributions" to this retirement fund on printing more food stamps, buying another bomber, paying another farmer for not growing something, bailing out Mexico, hiring more BATF agents, buying votes at the UN, or whatever else the elite special interest groups in Washington said would get them reelected. The "trust fund" consists entirely of IOUs, which the government will have to pay off out of tax revenues in the future.

• Using the fund this way hides the real size of the Federal deficit, since currently more money is coming in from the Social Security tax than is being paid out in benefits - around $60 billion a year more. But when the workers who are now paying into the system start to retire, the government will have to pay out more in benefits than will be coming in. That will happen in about 15 years, when the first "baby-boomers" start collecting benefits. The mass media frets about the system "going broke in 2030", but the crunch will come much sooner than that. A Federal Government that can't run itself now without piling up another quarter of a trillion in debt every year will have to start paying off those IOUs.

• Even if the government does manage to meet its obligations when they come due, the retiree benefits will be outrageously small compared to what they've paid into the system. The maximum annual benefit is now around $15,000 a year at age 65, and it's likely that the politicians will propose to "reform" the system by reducing benefits, raising the retirement age, or both. (Remember that "reform" in Washington always means "we have devised a plan to take more of your money and do less for you, so the problem we caused won't be noticed while we're still in office.")

Compare that benefit with an ordinary private-sector investment plan. If you make $12 an hour, you pay about $70 a week into Social Security. (Of course, only half of that shows up as a deduction on your paycheck, since the employer "matches" your "contribution" - but the full $70 is really part of your wages.) Now suppose you put that $70 a week into some private investment fund yielding 8% - which is about right; stock funds have returned better than 10% historically over the long term, bond funds about 7%. Over a 40-year working career you would accumulate more than a million dollars. If you started at age 20, you could retire at 60 with a dividend income of $80,000 a year forever, and be able to leave the million dollars to your grandchildren (if the politicians didn't take it all in inheritance taxes). Even if you decided to chuck it at 50 and go fishing, you'd have $450,000 in the bank and an income of $36,000 a year - enough to buy a pretty nice boat, anyway. And even at less than $5 an hour your whole career, you could have half a million by age 65.

Now, this may sound like more pie-in-the-sky from some politician. It isn't; it's just following through with the advice your grandmother gave you when you left school and got your first job: "put a little aside every week for a rainy day and for your old age." Your grandmother was right! Go check these figures with your banker or insurance agent.

So the Republicans and the Democrats will fight and argue over which one can "save" a system that takes your million dollars and gives you back a meager subsistence income, while the spaced-out Marxists in the Clinton White House fret that American industry isn't creating enough jobs because the economy isn't accumulating enough capital. How can the economy accumulate capital when all the money that a working person could put into savings gets taken by the politicians and poured down a rathole?

The Social Security system can't be saved, and it's not worth saving. Fiddling and diddling taxes and benefits won't work. What we have to do is cash out the benefits for those who currently are depending on it, and then end it. Completely and forever, before it steals the future from still another generation. Our Libertarian Presidential candidate, Harry Browne, has a plan for doing exactly that - a program that both makes sure current Social Security recipients continue to receive their full benefits and removes the Social Security burden from current and future working Americans.

We must get rid of this system, which is defrauding retirees, crippling the working man financially, and holding back the growth of the economy. Every American is born with a million-dollar lottery ticket he can cash in after his working career. The politicians in Washington have stolen that ticket. Only the Libertarian Party will do what has to be done.

Craig Goodrich for US Congress Mark Thornton for US Senate Harry Browne for President

Your representatives in Washington - Republicans and Democrats - will, once again during this 1996 campaign season, start talking about "saving the Social Security System", using rhetoric to frighten retirees and convince you that only your generous Federal Government can make sure you don't spend your declining years starving and homeless in the gutter, begging passersby for scraps of bread. They will take care of you by taking a 15% payroll tax out of your wages for your working career, then paying you a pension (currently about $15,000 annually maximum) when you retire. What a wonderful deal!

Or is it? Take a few minutes to see what your financial situation would be when you retire if you could decide how to invest your money, instead of turning it over to Washington bureaucrats:

This table shows the accumulated capital resulting from a deposit of $10 per week over various periods of years at common average rates of return. Consult a trusted financial advisor for details. Dollar accumulations are rounded to the nearest $500.

To use this table:

1. Calculate your total weekly Social Security "contribution" - take the amount deducted for FICA on your weekly paycheck stub and double it (to include your employer's "matching contribution").

2. Divide this amount by 10 (the table shows amounts for a weekly $10 deposit).

3. Calculate how many years you will have worked by the time you retire. For example, if you started working at 20 and would like to retire at 60, you will have worked for 40 years.

4. Pick a rate of return. Low-risk funds based on high-grade industrial bonds have historically yielded long-term returns of around 7%; stock funds - which are somewhat riskier and fluctuate more - have yielded 10% or more. Many investment advisors suggest a higher-risk fund early in your career, then a shift of your capital to a more conservative fund as you get closer to retirement. If in doubt, pick 8% or 9%, depending on how brave you feel at the moment. It's just hypothetical, after all, since the Federal Government is taking away all your investment money anyhow.

5. Look up the accumulated amount in the table above and multiply it by your contribution from step 2 above. This is your retirement nest egg. Your annual retirement dividend income is simply this amount multiplied by the interest rate you selected (.07, .08, etc.). If you think you can live on the annual dividend income (which you probably can), then you can pass your entire nest egg along to your children, grandchildren, church, or charity - unless the government takes it all in inheritance taxes.

Surprised? Should you be surprised that a government that can't keep your streets safe without destroying your rights, can't help the poor without destroying the family -- and can't even balance its own budget, though it takes almost half of your income -- can't manage your retirement funds either?

Government doesn't work. Freedom does.

Only the Libertarian Party is pledged to stop stealing your future. Call us.

Craig Goodrich for US Congress Mark Thornton for US Senate Harry Browne for President

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Goodrich for Congress
box 432
Elkmont, Alabama 35620