 The following three presentations by Ed Clark, Murray Rothbard and Bruce Daniel are intended to provide information to and serve as models for libertarians speaking and writing on the subject of social security, the current crisis and the libertarian alternative. Feel free to reproduce this material in whole or in part. And now, Ed Clark. Americans work at hundreds of different jobs. We are carpenters, bricklayers, salesmen, assemblers, cooks, and computer operators. But almost all of us have one thing in common. We are forced to pay social security taxes. The Social Security Program was started during the Great Depression of the 1930s, when high tariffs and government-induced inflation in the 1920s had destroyed the economy. The motivation for the program was simple. The government had destroyed the savings of American workers and had forced their children into unemployment. Without these resources, retired workers had no source of support. The new Social Security Program was patterned after the program of Charles Ponzi, who had spent several years in jail for implementing a similar scheme in the private sector. Both programs work as follows. Money is taken from a large number of people, held for a while, and then paid back. No investments are made, and the early beneficiaries get a lot more back than they paid in. In the case of Ponzi, contributions were paid back in 45 days with 50% interest. Like Social Security, that program lasted as long as its current income exceeded its current expenditures. Since Ponzi had to rely on voluntary contributions and not taxation, and since he had to pay high interest to get his contributions, his program lasted only a year. Social Security, like the Ponzi scheme, and unlike real private insurance and pension programs, has no savings behind it. Social Security does not own stocks, bonds, buildings, or property. It makes no money from its investments, because it has no investments. It is only a few weeks' worth of cash taken from the paychecks of the American worker. It uses this cash to pay present claims of retired workers. Social Security is not based on the benefits it offers. As real private insurance offers much better benefits for less money. Social Security relies on its physical power to tax workers and to imprison any worker who refuses to pay Social Security taxes. It has continued for 45 years because of this power to tax. Because until recently, the number of taxpayers greatly exceeded the number of people to receive payments. Because the number of workers who paid Social Security taxes grew over the years, because a larger and larger percentage of all wages was taken as taxes, and because the real, after-inflation wages of American workers increased over this period, and they were willing to pay these taxes. Now, however, Social Security faces the same problem that Charles Ponzi faced. The current income of the program is less than its current expenditures. And there are no earnings from investments to make up the difference. Instead of one claimant for every 16 worker taxpayers, as there were in the 1930s, there is now one claimant for every three taxpayers. Real wages of American workers have been dropping since 1977, and only 10% of the workforce is outside of Social Security. Thus, the fact is that kept Social Security alive for so long no longer exists. How did we get into such a problem? It started, of course, in the 1930s, when Congress tried to alleviate the misery that it itself had created. Then in the 1970s, Congress produced a new massive wave of inflation and then raised Social Security benefits to compensate and, in many cases, overcompensate for this inflation. Congress also added new beneficiaries who had not paid into the system. Social Security is a classic case of the incentives of politicians to promise and give special benefits to one group of voters at the expense of the larger group of taxpayers. But in the course of this political corruption, Congress sowed the seeds of the final failure of the Social Security system. Congress succeeded in convincing most workers that they will never be paid. Most workers believe and believe correctly that they will pay into the system during their entire working lives and receive little or nothing in return. Soon there will be only two workers to support every claimant and up to 45% of all wages will have to be taxed away to provide the present schedule of benefits. If you add all of the other taxes that workers pay, say 30% of their wages, then each worker will have only 25% of his wages left to support himself or herself, their home, their family, and their dreams. Clearly, the American worker will not stand for this. The need for change is clear. Now that the elections are over, the politicians are finally beginning to discuss the problem. High on their list of proposed solutions is a further increase in Social Security taxes. Present direct Social Security taxes for most workers is about 7% of their wages. Employers pay another similar amount. Really, all of this burden comes out of the pocket of the workers as the employer treats his tax payments as just another cost of providing jobs. No worker should stand for increased taxes. Since workers get little or no benefit from Social Security, why should they shoulder a new increased burden? In fact, to ask a more fundamental question, why should they be required to make any payments at all? It is their money. They earn their wages. The government simply has no right to that. Furthermore, we workers could buy better and cheaper private retirement and health insurance with the same money we now pay in Social Security taxes. If we invested in real private health and retirement plans, there would be many benefits. First, real private insurance companies would pour billions of the dollars that they receive as premiums into investment in the American economy. Workers would, in effect, be creating their own jobs with their own savings. Authority no less than Martin Felstein, now chairman of the Council of Economic Advisers, believes that wages for the average worker would be $2,000 per year higher if such a program of private insurance had been put into effect in the past. Another benefit is that real insurance would provide workers with the opportunity to accumulate savings. With Social Security, there is no such opportunity. A minimum wage worker could accumulate about $180,000 in savings over his or her lifetime and still receive higher retirement benefits if he were allowed to purchase real insurance with the money now going into Social Security taxes. The final and most important benefit is that workers who bought real insurance would actually get paid. For workers, Social Security is a great hoax. For 45 years we have been told that the system is sound, that it is backed by investment, that we each actually have an account that draws interest. None of this is true. We have no legal right to anything. The Supreme Court has said that. The only thing that we have is a political claim on the taxes to be paid by future generations. And now it is clear that the future generations will not pay these taxes. The time for American workers to stop this hoax is right now before they lose billions of dollars more in Social Security taxes. The time to start individual retirement programs is also right now. Only the Republican and Democratic politicians with their belief that there is no such thing as a bad government program stand in our way. If we tell them through our votes, through our letters, through meetings, through resolutions of our associations, through letters to the editor, by joining the libertarian party or by other means, that we don't like the program, they will listen. For our sake, we should end the Social Security program immediately, following our some questions and answers that may be helpful to speakers on the Social Security issue. How are you going to take care of the people who are presently retired and who have no source of income except Social Security? I would return to them the amount that they have paid into Social Security, plus interest, and minus the benefits they have received. Will this provide enough for them to live on? For many people, it will provide the money needed to purchase an annuity to cover their retirement needs. Others will need further help. Since the taxes on their children for Social Security will be abolished immediately under my program, I would expect that their children would be the prime source of this support. Where will the capital come from to return the Social Security taxes to individuals? The sale of oil lands for one. The federal government gets billions of dollars a year by leasing oil lands. It would get much more by outright sale. The federal government owns one-third of all the land of the United States. Selling this would fund these payments. This would only be a beginning. The government should not only get out of the insurance business, it should also get out of the mail business. Selling off the post office and other government buildings in every city and town would produce billions more. Could these sales produce enough to pay back Social Security taxes, which now run about $160 billion per year? Over time, I think they could. And older workers would get priority of the funds available. Younger workers would be able to provide for their own retirement from private insurance so that if there were not enough of both older and younger workers, the older workers could get priority. Even if these sales could produce enough to pay back Social Security taxes over a period of time, surely these properties couldn't be sold immediately. There would have to be a time delay. Yes, there would be a short time delay. To deal with this problem, the individual claims could be bought and sold like stocks and bonds. And thus people who wanted their money right away could get it. What is the total liability of the Social Security system? The total liability is roughly $7 trillion. How much is paid out in benefits every year? Roughly $165 billion. And now, Murray Rothbard. The Social Security scheme is a cruel racket. It's a racket because the scheme was sold to the public on the ground. It was an insurance scheme so that people can contribute and save up for their old age and then money would then be paid out when they got to be 65 or whatever. It was originally sold in the 1930s on the theory that this could eliminate old age, old age pension, old age relief, which the government had been paying before that. The upshot, by the way, is that old age relief payments are now much more than they were in the 1930s so that excuses are fraught to begin with. At any rate, the Social Security system is a racket because as an insurance plan, if this insurance plan were a private insurance company, all the insurance executives would be languishing in jail for a very long time. Consider to yourself a plan where people contribute to their Social Security, contribute to their insurance, which is supposed to get back the age of 65. Instead of investing the funds, private insurance, of course, invests the funds so it gets a return and then pays an annuity out of the returns. Instead of doing that, the insurance executives spend the money and then when payments or benefits come due, they expect to get the pay, the benefits out of premiums being paid by new people coming into the plan, if private insurance executives did that, it would be in jail. It could be considered fraud, embezzlement, a Ponzi scheme, or a pyramid scheme where the benefits are only paid, the money is spent, the benefits are only paid out of funds being attributed by new suckers. How do you pay the benefits of the new suckers while you hope that still newer suckers will come into the scheme 20 years from now whenever the benefits are supposed to come due? In the case of social security, however, the funds are spent. They're spent by the government. All funds going into the plan instead of being saved and invested are spent by the government on all sorts of government, the usual government boondoggles. And then when benefits fall due, the government taxes once again, taxes out of the social security funds once again of new people coming in to pay the old benefits. Now, the result of all this, well, several results. One is that the original people, the first people who joined the plan back in the 30s and 40s, they were in great shape because they were newcomers. They had just paid into the plan for a couple of years and they were suddenly getting bonanzas, benefits pouring in out of newcomers that were coming in. So they felt, boy, this is a great thing. This is like Santa Claus. They pay in a certain amount and they get paid back a lot more. Now, however, after many years of this, after decades of this, of course, there are no new suckers coming in. As a matter of fact, quite the opposite since the population growth has fallen off. We now have a situation where more and more people are getting old and less and less new people coming in to be inducted into the plan and so that reality is now caught up with the Ponzi scheme. In other words, the new suckers have leveled off and the stark realities of the bankruptcy of the social security system are now admitted by everybody. Years ago, it was considered a subversive and a terrible deceptive and subversive thing for anybody to say the social security plan is essentially bankrupt. Now everybody admits it. Now this is general, almost common knowledge. But the reason for the bankruptcy is that is that the whole thing is a Ponzi scheme that's now been exposed. Even when the scheme is working normally, even without the bankruptcy, the result of the fact that the government spends the money and doesn't invest it means that the worker's return is very low. In other words, if a worker, there have been various studies of this by economists and statisticians that if the worker pays up, pays in the same amount of money pays in the social security, say, every year and then retires at the age of 65 in a private annuity scheme he would get about three times as much as he's getting now on social security plus in addition to the benefit, three times as much monthly or annual benefit, he'd be getting a huge capital sum like a trust fund or a capital sum which he could invest or do anything he wanted to pass on to his children. The average worker would be getting a private insurance plan would have gotten about $500,000 trust fund in addition to his annual benefits which would be about two or three times the amount he's getting now. So the average person, the average worker, the average person is being defrauded, being moated of his money because in a private annuity scheme he would have gotten an enormously greater amount of funds, both in capital investment and the benefits as he is now. Also no private insurance plan works the way this one does in repressing and restricting the recipient. For example, if a person dies now just before 65 he loses or his estate loses all the funds. The private annuity obviously doesn't happen. The estate gets it and the funds are passed on to his beneficiaries, his children, and so forth. Secondly, so in other words, if death means that you're out of the game, so to speak, you don't get your so-called insurance benefits. Secondly, no private insurance company. Can you imagine a private insurance company Metropolitan Life saying to the recipient of an annuity, well, I'm sorry, you're the benefits because you're working somewhere else. You're earning an income somewhere else and therefore we won't pay you. Only the government can get away with this sort of nonsense where they tell the recipient of a so-called insurance scheme that you can't get, we won't pay you unless you're not working in any place else. It's outrageous. And all sorts of other restrictions and tyranny that the social security system imposes in order to try to limit their liability under this fraudulent Ponzi operation. So the recipient, the social security people are being defrauded all along the line. It's not an insurance plan. It's not an insurance in any sense. It's a plan whereby the government taxes people twice. First they tax one person, one set of people, one person, let's say. They spend the money and then when his benefits fall due, they tax somebody else to pay for it. As I said, this is catching up. This whole thing is catching up with the government and the social security scheme. So there is, and also in addition to that, many people think, well, the poor are benefiting from this plan. At least this is sort of a semi-welfare operation. Well, it's true there are some welfare elements in the social security system which would not be in private insurance. However, the poor are being hurt and helped overall by social security. This has also been demonstrated by various studies. There are various restrictions, again, the way the social security plan operates. The fact, for example, that single people are discriminated against in the plan and there are more single people who are poor than there are married people. And particularly also another point here is that the social security tax is I think the only tax in our system and our whole monstrous tax system which is deliberately regressive. In other words, it taxes poor people more heavily than it taxes wealthier people, more than proportionately. There is a maximum limit, of course, in social security income. Whatever the limit is, it keeps changing. Let's say it's $50,000. This means that the person making $500,000 a year pays exactly as much into the social security fund as the person making $50,000. This is, of course, a pretty peculiar kind of tax system. It's hardly a tax system designed to help the poor. Quite the contrary, it's a tax system which deliberately taxes the poor and the middle class much more than the wealthy. So the whole, and yet, even despite the fact that the social security system is probably undoubtedly the biggest single racket in the entire federal government apparatus, the entire structure of misconceived programs, despite that fact, social security is probably the most single beloved program among the public. And obviously it's beloved because the public has been sold a bill of goods. And I think that the education of the public is beginning now, especially with this spreading knowledge that something's wrong, that the system is bankrupt. There are several trillion dollars in the whole. And if you're several trillion dollars in the whole, the only way you can get out of it, is either to increase taxes to keep the policy operation going or else cut benefits. And then, of course, people think, well, the benefits are somehow due to them. All right, so this is the abysmal and terrible nature of the social security system. The libertarian program is to abolish it. We favor the abolition of the program. The sooner the better. For those people, what about those people who have been misled, the members of the public who have thought that they're owed something by social security and have been misled into thinking this and having claims against the government? Well, we believe that the libertarians believe that the social security victims of this fraud should not have their claims pay for out of the taxpayer because that's simply continuing this Ponzi scheme, keeping it going and also continuing tax oppression and theft of funds that people privately work for and legitimately own. So what we favor is that the social security victims be paid for as much as possible, the claims be paid for as much as possible out of sales and selling of government property. Federal government is a huge amount of property that owns most of the land in the western states. It owns many housing and parks and forests and all sorts of things. All these things should be sold. And as they're sold, the proceeds of the sale could easily pay the social security claimants. Pending or repeal, in other words, we would like to abolish and repeal the social security system forthwith. Pending that, at least what should be done is make participation in social security voluntary so that nobody should be forced into the system. That's the least that could be done at this point. I think that if a war may be voluntary, not too many people would join it, but that should be up to them. It's interesting, by the way, that the federal government, for example, exempts its own people, its own bureaucrats and congressmen, whatever, from the social security system. In other words, everybody else is compelled to go into it, but they're not. Now, this should tell you right away that something is fishy about the whole system. When Congress exempts itself and federal government employees from it, and indeed, of course, as we've seen, there's something very fishy indeed. I'll conclude by reading the platform plaque of the libertarian party on the social security system. It's very short and essentially sums up what I've been saying here. We favor the repeal of the fraudulent, virtually bankrupt, I would say now bankrupt, and increasingly oppressive social security system. Pending that repeal, participation in social security should be made voluntary. Victims of the social security tax should have a claim against government property. We note that members of the U.S. Congress and certain federal, state and local government employees have been accorded the privilege of non-participation, one which is not accorded the working men and women of America. Thank you. And now, Bruce Daniel. My name is Bruce Daniel. I'm a dentist and I live in Newcastle, California. I've been asked to be the national coordinator for the social security effort. Social security is a failure in fraud. It has been a failure in fraud since its very beginning. At last, it's promised to hand the mouth of poverty for everyone is beginning to become evident to anyone who cares to observe. The President's Select Commission on Social Security has failed in its task to propose a solution to dilemma after a full year of work. The commissioners would have had a proposal prepared by the end of 1982. They didn't make it. Their failure has been announced for all to know because of their appeal for more time and political assistance from President Reagan and Speaker of the House of Representatives, Chip O'Neill. The commission was granted a two-week extension until the middle of January, where it would deny any political guidance. It is obvious that politicians have refused to assist because in order to save social security and I'm using their term, fundamental and profound changes of a permanent nature must be made that will for all practical purposes destroy the intent of a subservient government proclaimed in the Declaration of Independence to that of an all-powerful, dictator state. Liberty will have gone full circle in a little more than 200 years. Of necessity, they must realize that the philosophy and basic thrust of Liberty in America must be swept aside in favor of the total welfare state. The President and the Speaker don't want to be blamed for that, so the commission then will be held responsible. One can be absolutely certain that in the absence of an outside force, the social security will not be allowed to go bankrupt as it will most positively do by this summer. Congressman Dan Rostinkowski, Chairman of the House Ways and Means Committee, plans to have a bill through Congress by Easter. Congressman Claude Pepper, the Agent Incoming Chairman of the Powerful Rules Committee, will be doing everything in his power and whatever the cost to maintain the solvency and endurance of the social security system. There are bound to be many variations of the basic theme that will be considered, but the essential are that there will be an enormous increase in the social security tax, a significant reduction in benefits to those who have been paying social security taxes to their adult lives, and finally forcing the last 10% of the working population that is not now required to pay the social security tax to do so. This will include the non-profit organization employee, such as a Salvation Army worker or a private school worker, local state and federal government workers not now covered, perhaps the military and even the present social security recipients. Today it takes just under three workers to support one social security beneficiary. Because of the realities of our aging population and the almost zero population growth of our country, this immoral, gigantic Ponzi scheme will shortly, after the turn of the century, reduce the ratios of tax workers to the paid beneficiary almost to one to one. Let me remind you that the turn of the century is only 18 years away. Will this land dedicated to the liberty to be enslaved in the name of social security? Will a saving of social security be the beginning of the final decisive assault in Armageddon of Liberty in America? Who will counter this thrust? Who will speak and fight for liberty? Will it be the Democrats and Republicans who have sold the principles of liberty so ringingly stated in the Declaration of Independence and Independence for the welfare state? Is it not obvious that they would gladly trade liberty in America for a few more years at the public trough? Whether we like it or not, the task is ours. We have identified ourselves as libertarians. In creating and being members of the libertarian party, we have accepted the responsibility of being the defenders of liberty in America. We cannot fail to join the conflict and maintain even a shred of credibility with those who know of us and know what we stand for. More importantly, we could not even maintain credibility and respect for ourselves. The task is ours. The party has been 10 years in preparation to join the battle. It is time to engage the enemy of liberty. Our numbers are few and we are a thinly spaced. But we have the strength and organization to carry the conflict to completion. The people will be with us and we will prevail. We must be bold. We must be decisive. We must be determined. Unlike the President's select commission on the Social Security, the President himself, the House of Representatives, the U.S. Congress, the Democrats and Republicans, Ed Clark's 1980 white paper on Social Security prepared by Peter Ferrara contains the answer. It has been updated and refined to become the libertarian alternative. Unfortunately, the American people will not hear a word of it if we do not carry it to them. The libertarian alternative is fair, practical, completely libertarian in nature. It keeps the promise made to the retired senior citizen within a few years of retirement. Terminates the enormous male investment of individual assets. Places the Social Security in the federal budgetary process. Prioritizes the Social Security against all other federal programs. Reduces federal ownership of vast holdings of land and businesses that are in competition with free enterprise. Develops a mechanism for the eventual disappearance by attrition. The Social Security program in its entirety over a reasonable 20 to 25 year period. And sets the stage with a radically liberalized, no taxes ever, individual retirement account that will usher in because of vast amounts of freed up money a new American golden age. With the individual in control of the money consumed by the Social Security and invested at 6% annual interest and constant 1980 dollars, the average young low income worker could retire at age 65 with one quarter million dollars. The average medium income worker could retire at age 65 with a half million dollars. The professional could retire at age 65 with almost a million dollars. In comparison, the Social Security at present projections will provide an annual meager income of 10,080 dollars for the low income worker. 15,403 dollars for the average income worker and 23,326 dollars for the professional. The promoters and defenders of Social Security claim that it is a superior retirement program for the low income worker. However, in their self-interest, they take great care not to tell him that he would have total ownership in an annual interest income of 17,268 dollars from his individual retirement account rather than 10,080 dollars with Social Security and no ownership. He would be controlling his own account and not being manipulated by a devious, unreliable, irresponsible government. His retirement account would be his property to do with it as he chooses. Needless to say, this is just a fragment of the Libertarian alternative for the Social Security problem. There is much, much more that cannot be mentioned now that you will receive a kit of materials that will go into considerably more detail. The purpose of this tape is to introduce you to the Libertarian Party's first national effort on a subject other than ballot drives or the support of a national candidate. This is the opening phase of a planned and coordinated effort to bring the Libertarian alternative to every corner of the country. It is designed to reach into the grassroots for something that they are intensely concerned about and offers them a solution that they would want to hear. It is the Party's plan to focus that grassroots concern into intense and concentrated pressure on the individual congressman in each one of the 435 congressional districts of the country. Our thrust is intended to be entirely local and objective with you and your activists bringing the Libertarian alternative to your friends and neighbors in your own communities using your local news media arranging visits of various interest groups and delegations to visit frequently with your local congressman or his staff, distributing Libertarian alternative flyers at local population centers and among many other things too numerous to mention staging demonstrations at a local congressman's office or home. Your congressman is intensely concerned about having quiet and docile voters in his district. The very last thing that he wants to see is large numbers of voters all worked up about an issue that he does not particularly want to support. Where is the congressman who will deny this sustained pressure of a significant number of determined constituents? They just don't have the guts. It is our job in our own hometown and congressional districts to see that their feet are held to the fire and well roasted. All of the party effort will be broadly national in scope and will be mostly local in effect. The effort in Washington, DC will be purely symbolic and nationwide. It is planned that the kickoff news conference in Washington on the 31st of January will be duplicated in every major city of the country on the same day. Ideally, every newspaper in the country will receive a news release and time to be printed on the date of the kickoff or shortly thereafter. As the effort progresses, other coordinated and unified activities on the social security issue are planned so as to demonstrate the national organization of the party and the deadly seriousness of our intent to promote a truly libertarian society. Needless to say, this will generate great credibility for us and most definitely will change the direction of politics in America. As the national coordinator on the social security issue, I shall be contacting you soon by telephone to encourage and to help coordinate those activities that will be national and school. May I suggest that you immediately begin the process of identifying your activists, alerting them of the effort, streamlining your communications, identifying target areas and newspapers in your local area, and planning for an intense and hopefully fruitful campaign that will end when the Congress votes on the social security issue about Easter time. Ten years ago, the libertarian party was but a handful of idealistic people. Today, we are seeing that idealism bear fruit. We are considered as a new and growing force on the national political scene. There is no disputing our status and increasing thrust. Now is the time to break for the top and demonstrate an undisputed leadership on the social security issue. It is ours. With it, we have all of those who are concerned and worried about their retirement future, plus all of those who can visualize the investment potential of the social security pigeons on our side. We would be foolish and might even lose our chance for a major party status if we let this opportunity pass us by. This one is ours. Let's not fail. I urge you to help in this important project. Thank you. The four going three presentations by Ed Clark, Murray Rothbard and Bruce Daniel were intended to provide information to and serve as models for libertarians speaking and writing on the subject of social security, the current crisis and the libertarian alternative. Feel free to reproduce this material in whole or in part.