The very word “entitlements” has plunged our nation into controversy fraught with fear, shame, and righteous anger. With respect to their entitlements, both retirees and current contributors now live with a feeling of unease with respect to Social Security pensions, or the impending lack of those pensions.
Mandated by President Franklin Delano Roosevelt as a safety net for American workers, Social Security was conceived as a sort of savings/pension plan, to which those workers contributed. Upon the retirement age of 65, workers were compelled to leave the workforce to enjoy the Golden Years, living — in many cases, primarily — off the funds paid into their Social Security accounts. Retirement at the age of 65 had an additional benefit: once the retiring workers had left the workforce, new workers would be hired. Those younger counterparts would, in turn, continue the flow of revenue into the Social Security system.
The amount that each retiree would receive was based upon the number of Quarters he or she had worked, with a maximum monthly payout of $1,000. If the employee had to leave his or her job early (for reasons other than retirement at the age of 65), payouts from Social Security would represent a reduced amount of money. In a sense, Social Security was an annuity paid for by the contributor. Instituted in response to the Great Depression of the 1930s that left many Americans jobless and penniless, Social Security was a brilliant, self-fulfilling plan based in logic and compassion.
And, it worked!
Since the inception of Social Security, the cumulative monies collected and held in escrow grew to a vast amount. And here’s where the system was corrupted, for apparently, the amount was too vast for a greedy and/or inept government (take your pick) not to misappropriate. We now hear that the system needs to be reformed because our government cannot continue payouts as more people reach retirement age. Although many wars and natural causes have resulted in a loss of contributors, these reasons cannot have been enough to empty the coffers. Avaricious and incompetent hands did that!
To the average American literally banking on Social Security on which to survive during his or her retirement, government killed the goose that laid the golden egg. The rhetoric now spewed by Washington, DC as to why the plan is foundering includes the following yammerings:
1. The plan was not designed to handle longer life expectancies.
2. Social Security is considered an entitlement we can no longer afford.
And the list of drivel goes on.
What our legislators failed to mention was the global economy that has created havoc in the American workforce, stranding millions without jobs and now, without hope of the respite via Social Security. Cheaper foreign labor and governmental regulation have outsourced jobs to foreign soil, through American corporations seeking higher profits and an avoidance of taxes.
Social Security contributions came from the American workforce. It also stemmed from the employers who’d hired and used that workforce to create fat profit margins for themselves. But as long as cheap labor exists elsewhere in the world, we can expect more of the same in the future. All of these elements sound the death knoll for a mandated government pension plan for the American people.
With the unemployment rate hovering around 9%, the latest government forecast has predicted that it will drop to about 5% in 2017 or later. Gee, that’s only six years from now! And if history teaches us anything, the dip in unemployment during the Great Depression did not occur until the Japanese had bombed Pearl Harbor, for The War Machine creates jobs.
Although the recovery looks glum, there still remain some industries that cannot outsource their labor overseas. These include mining, transportation, energy, and farming. However, regulation and a fixed minimum wage have hampered the ability of these industries to hire new employees. So I guess these things will be the next to achieve reform.
However, all is not lost. There are yet bright stars on the American horizon with respect to employment. These, of course, are governmental jobs, beginning with:
1. The President of the United States
2. All members of Congress
3. Employees of governmental agencies, bureaus, and departments
All of the above enjoy Entitlements Plus — entitlements not relegated to the scrap heap in resolving our financial problems. The entitlements include Congressional pensions. In January 1942, members of Congress voted to extend pensions benefits to the legislative branch under the provisions of P.L. 77-411. P.L. 77-411 was formerly limited to the Executive Branch alone. Two months later, the bill was repealed due to public outcry. After the end of World War II, and again in 1946, P.L. 79-601 extended pensions to the legislative branch, under CSRS. The justification was that a pension plan would attract younger members to the legislative branch and encourage older members to retire. But this, of course, never happened. Why would anyone wish to retire from a job with such great perks? Most of our lawmakers die in office!
Nevertheless, hope sprang eternal for those in Congress. The Social Security Amendment of 1983 required all members of Congress to participate in Social Security, beginning January 1, 1984. As Social Security and CSRS benefits sometimes overlapped, Congress called for a new, Federal employee retirement plan to compliment the former plan. Enacted in 1986 and named FERS, it placed all new members under its plan, while older members were free to remain in CSRS or enroll in FERS.
The amount received by retiring Congress members is calculated in a formula that considers:
1. The number of years served
2. The average pay for the top three years in term
For example, a member of Congress with a three, top-year average salary of $153,000, with 22 years served, would be eligible for an annual pension of $84,645. Not bad compared to Social Security!
This plan was not passed without contention from a few lawmakers who still clung to old-fashioned values and plain old logic. Longtime Congressman Ron Paul would not participate in the plan, publicly decrying it as “immoral and hypothetical”. North Carolina Congressman Howard Coble did not participate in the plan and actively campaigned against it.
And the controversy continued. In 2003, when James Traficant was expelled from Congress, several members tried to pass a bill that would prevent their expelled brothers from receiving their pensions. But the bill was stalled. It was later dropped altogether, after being sent to the House Administration and Reforms Committee.
This action led to the passage of the Federal Pension Forfeiture Act, also known as The Duke Cunningham Act. Introduced by Senators John Kerry and Ken Salazar, this law stated that members of Congress must forfeit their pensions as a result of one of more of the following crimes:
1. Bribery of public officials or witnesses
2. Conspiracy to commit an offense or to defraud the United States
3. Committing perjury while denying the commission of bribery or conspiracy
4. Subornation of perjury committed in connection with false denial or testimony of another
Provided the legislators toed the line with respect to bribery, perjury, and conspiracy, their Congressional pensions remained intact. These pensions featured tasty fringe benefits, not limited to healthcare and junkets, all at the taxpayers’ expense. They probably termed worldwide excursions “junkets” after the colloquial phrase, “Junk it,” which means that when it’s all used up, you junk it! Despite our founding fathers’ visions for a government devoid of royalty, our greedy lawmakers had other plans for taxpayer monies.
So, when it comes to Entitlement Reform, you can bet your bottom dollar … and it may very well be your bottom dollar — that CSRS or FERS will escape reform. Just plain old Social Security will be the scapegoat, as will the people who paid into the plan and were relying upon it to literally feed, clothe, and house them in their retirement years. Once again, it looks as if we’re going to bend over and take it. Doesn’t it?