Protect Social Security through existing investment law

Congress, in a rare moment of pragmatic lucidity, passed the 1974 Employee Retirement Income Security Act (ERISA). ERISA also established the Pension Benefit Guarantee Corporation that, among other things, defines the minimum annual actuarial returns private-sector defined benefit retirement plans are required to generate.

Most working folks’ monthly paychecks are net of roughly equal deductions, respectively, for Social Security and their private-sector retirement plans. Upon retirement, however, that employee’s monthly payouts received from Social Security are typically well less than 10 percent of the monthly payouts received from the aggregate payouts of their private-sector retirement plans.

This is because the Social Security trust fund is invested at a risk-free rate; hence its fund cannot possibly grow in real terms. Over the decades of this massive government mismanagement, Social Security’s dramatically underfunded liability relentlessly continues its unbounded growth.

Congress needs to have another long overdue moment of pragmatic lucidity: this time to remedy to Social Security’s dual problems of perfunctory retirement benefit payouts and periodic insolvency. This time, the solution is vastly simpler than, for example, crafting the 1974 ERISA; it’s a one sentence Federal Statute: The Social Security Trustee shall comply with ERISA.

If such a statute were enacted, the Social Security trustees would be required to comply with the same requirements of ERISA imposed on all private-sector defined benefit plan administrators. An even greater societal benefit derives from Social Security’s aggregate annual contributions in the same types of assets in which private-sector defined benefit plan funds are invested, effectively doubling the capital in private-sector equities and bonds.

Presuming Wall Street’s pragmatic side prevails, this doubling of available capital would, in turn, reduce the weighted cost of capital and nearly double the sustained rate of economic expansion generated by private-sector risk capital investments. Among other effects: a near doubling of the quantity of living wage jobs created annually; a near-doubling of the U.S. government’s tax revenues generated from corporate earnings and expanded payroll taxes. And all without increasing federal tax rates.

Everybody wins!

Congress must pass legislation that would requires Social Security’s trustees to comply with the ERISA Act in the next session!

John Fluke Jr.

Mercer Island

Talk to us

More in Opinion

toon
Editorial cartoons for Tuesday, Feb. 7

A sketchy look at the news of the day.… Continue reading

The Snohomish County Auditor's Office is one of many locations where primary election ballots can be dropped off on Tuesday. (Sue Misao / The Herald) 20180806
Editorial: Voting’s a duty, but should it be mandatory?

Legislation to require voter registration and voting needs more discussion among the public, first.

Marysville schools working hard to improve, help them with levy

As an educator in Marysville, I feel compelled to share how important… Continue reading

HeraldNet app allows me to keep up with news

First I was pretty miffed. I’m 76, my wife says I’m a… Continue reading

Ban net-pen fish farms in federal waters, too

As we go into 2023, we all want to start the new… Continue reading

Saunders: If Hunter Biden’s looking for cash, he’s in trouble

He hasn’t faced criminal charges before for his indiscretions, but that may be changing soon.

Herald columnist Julie Muhlstein received this card, by mail at her Everett home, from the Texas-based neo-Nazi organization Patriot Front.  The mail came in June, a month after Muhlstein wrote about the group's fliers being posted at Everett Community College and in her neighborhood.  (Dan Bates / The Herald)





(Dan Bates / The Herald)
Editorial: Treat violent extremism as the disease it is

The state Attorney General urges a commission to study a public health response to domestic terrorism.

Photo Courtesy The Boeing Co.
On September 30, 1968, the first 747-100 rolled out of Boeing's Everett factory.
Editorial: What Boeing workers built beyond the 747

More than 50 years of building jets leaves an economic and cultural legacy for the city and county.

Marysville School District Superintendent Zac Robbins, who took his role as head of the district last year, speaks during an event kicking off a pro-levy campaign heading into a February election on Thursday, Jan. 5, 2023, at the Marysville Historical Society Museum in Marysville, Washington. (Ryan Berry / The Herald)
Editorial: Voters have role in providing strong schools

A third levy failure for Marysville schools would cause even deeper cuts to what students are owed.

Most Read