Whether you think we are in a recession, depression, contraction, correction, or whatever, the key point is, our economy is headed for a complete and utter collapse in 5-7 years if we don’t act now. Bailing out companies that are built on worthless assets might stave off the trouble for a little while but it can’t fix the root problem. There are a whole host of things we should do as a country to restore our status as the best country on Earth.

1. Get back on a gold standard. This is essential to many of the other ideas, simply because it puts a limit on how much the government can spend (and waste). The government should be run like any other business, and at least attempt to spend within its means. Going to a gold standard would be a solid step in that direction.

2. Phase in the FairTax/phase out the IRS. There are several benefits to doing this. People traveling here from other countries (illegal aliens included) would contribute to our country. So would most, if not all, of the underground economy. Workers earning tips would contribute their fair share. Rich businessmen who shelter their money offshore would contribute. This is the best way to close all tax “loopholes” and to reduce the burden on honest taxpayers. It’s also very transparent, and allows savings and investment to grow faster. Plus it saves compliance costs and could allow us to eliminate the IRS and replace it with a smaller agency in charge of collecting the tax from retailers.

3. End the war on drugs. Clearly all the billions we are spending trying to decrease drug use is not working. People have a strong desire to use chemicals and substances to get high, buzzed, or just escape reality. The suppliers will always be at least a step ahead of regulation. Ending this war on drugs and legalizing them would clean up the streets and it could be treated similarly to cigarettes.

4. Privatize Social Security. People always get this one wrong, claiming that they don’t want to “gamble” with their life savings. The fact is, over a 30 year timeframe the markets have shown great returns. Anyone who can’t survive because their investments have gone down 15% in a year is too heavily invested in risky vehicles. As of now, there is no guarantee that you will get your money back if you pay into the system, so for younger generations, the better option would be simply investing their Social Security money in a simple savings account. The real “gambling” goes on when you allow the government to take your payments and use the money however the hell they see fit, which is what goes on now.

5. Eliminate the Department of Education. Our schools are a joke. We spend billions and the results are horrible. That’s what you get without competition. Funny how the government tries to break up monopolies in the private sector, but can’t survive without being one.

6. Privatize roads/jails/bridges. Our infrastructure is crumbling. We can’t afford to fix it, so maybe we should hand it over to private companies. There’s no sound reason the government builds our roads and bridges and there’s no reason they should manage the jails. All we get is waste.

7. End the Iraq/Afghanistan etc wars. Can someone tell me why we are in these areas, and who we are at war with? There will always be countries that don’t like us, but we can’t afford to just go to war with them for that reason. There’s no credible threat of another 9/11 style attack, and being at war with these countries might actually make us more vulnerable.

8. Get out of the UN. We don’t listen to them anyway, so what’s the point of belonging?

9. Eliminate the Federal Reserve. Clearly, free markets can set interest rates on their own. We don’t need rates set to protect us from inflation, deflation, recession, etc. by anyone except the market itself. When the Fed sets rates based on often faulty assumptions, it distorts the market and the economy as a whole.

10. Allow at least one other party besides Republican and Democrat at the debates. Setting the bar at 15% of the votes is insane. We need some fresh ideas and candidates to be heard. Without exposure, smaller candidates don’t have a chance.

11. Every citizen should be entitled to a report showing where their money goes. Any government spending over, say, $5m should be accounted for and listed on this report. Somewhere along the line we forgot that government works for us, that without OUR money they wouldn’t have any power at all. All the extra money the government would save by adopting the steps above would more than pay for such a report.

And that can’t be further from the truth. In reality, Social Security is…

• Morally questionable at best (forced labor)
• Unaccountable, as there is no clear separation between Social Security funds and other government expenditures
• Unsustainable, with the proportion of payees and recipients dwindling due to people living longer, illegal immigrants, and other factors

Social Security is Morally Questionable

Is there any reason I can’t save for retirement and old age on my own? Of course not. People did it for centuries before Social Security came about. Secondly, is there a legitimate reason why I could be forced to save for someone else’s “Social Security?” Again, no. The truth about Social Security is that it robs and enslaves Americans, and hinders economic growth while stifling freedom and liberty both now and in the future.

Social Security is Unaccountable and Unsustainable

Now, in the year 2008, the Social Security system is both morally and economically bankrupt. We are still forcing working Americans to fund the “golden years” for other Americans, with no real choice in the matter. However, not only is there no specific fund for Social Security, there isn’t even money to fund it beyond the next 15-20 years!

It is possible (although certainly not moral or economic), for 3 or 4 working Americans to support 1 or 2 retired people. Possible does not make it morally acceptable or desirous, but possible nonetheless. However, can you expect those same 3 or 4 working Americans to support an ever growing number of retirees? These working Americans have their own bills to pay, their own families to support, and now we are burdening them with an ever growing number of dependents?

And Then There’s Inflation…

This doesn’t even take into account the role inflation has on the Social Security scam (has a nifty ring to it, doesn’t it?) If we factor in inflation, we get this not so rosy picture of the future of Social Security:

Say I pay in $20,000 in my lifetime into Social Security. Not only do I not know where this money is going or if I will even get it back, if I ever do get paid, my money will purchase less and less than it would if I just took the cash I earned and stuffed it in my mattress. God forbid I put it in a low risk investment such as a CD, or (shhh!) my own personal 401k or Roth IRA.

So if you are under 50 and working in this country, you are looking at the following scenario: Forced labor, no transparency as to where your money is going, a broken system, and a repayment of your money that is less than what you paid in (in real terms).

The Government’s “Solution” Perpetuates The Problem

This would be hilarious if it weren’t so sad and true: There is no real push to eliminate Social Security! Some in the government actually want to increase the earnings cap and thus tax earnings even more to make up for the shortfall!

Only in government would this fly: We’re facing a huge shortfall, we have trillions in unfunded liabilities, so instead of even considering a different direction, let’s just tax and tax and tax and throw more and more money at the problem. Don’t even give people the option (there’s that pesky freedom thing again) of opting out of Social Security, just tax them some more and see where it gets us.

With our country’s finances stretched thin, our credit limit fast approaching, and our currency inflated to the breaking point, there is no indication yet of any urgency on the part of Congress to rein in spending. The predictable answer to the government’s voracious spending habits is this week’s proposal by some Democratic Congressional leaders for tax increases to pay for operations in Iraq . Here at home, however, there are promises our seniors heavily rely upon. We must keep these promises.

An analysis of the Social Security “Trust Fund” shows we are not doing a credible job of keeping these promises. Official reports show the trust fund having assets of $2.1 trillion. In reality, those dollars are just IOUs the government is writing to itself when it borrows from the fund to spend on unrelated programs. There are no real assets in the Social Security Trust Fund. This is similar to taking money out of your savings account, spending it, then replacing it with an IOU to yourself, and calling that IOU an asset. In addition, this money we owe to our seniors is not even included in official budget deficit figures. In fiscal year 2006 alone, $185 billion was borrowed from Social Security.

The official deficit was reported to be $248 billion. The actual deficit for 2006 would be $433 billion when combining the two. This sort of accounting would land private sector executives in prison for fraud. Yet this is done every year by the federal government. The truth is that while politicians in Washington differ about what programs to spend Social Security money on, they are united in wanting to spend it on something other than benefits for seniors. This approach can continue only until Social Security stops running “surpluses” the government can raid. Trustees of Social Security estimate this will happen in 2017. At that time, the amount owed to the Trust Fund will be between $4 trillion and $5.2 trillion, depending on the economy.

When that day of reckoning comes, there will no longer be “excess” payroll tax receipts available to prop up government spending, and the risk of financial crisis will be significant. Instead of forward thinking solutions, politicians are discussing alarming proposals, such as an agreement with Mexico to let their citizens collect social security money intended for our seniors. This would break the bank even sooner. But, current Members of Congress will no longer be in office to face the wrath of seniors and their families when the trust fund goes bankrupt. Instead, they will be retired and enjoying their own plush Congressional pensions. I have been working to reverse this trend. My Social Security Preservation Act, HR 219 would make sure this Trust Fund has real assets such as certificates of deposit in FDIC-insured institutions so that in 2017 and beyond, Social Security payments would continue for those who are depending on them. Congress must take action now, so we can keep the promises we made to our seniors.

Through a Freedom of Information Act Request, a private group recently obtained a copy of a 2004 agreement between the United States and Mexico that will allow hundreds of thousands of noncitizens to receive Social Security benefits. The agreement creates a so-called “totalization” plan between the two nations. Totalization is nothing new. The first such agreements were made in the late 1970s between the United States and several foreign governments simply to make sure American citizens living abroad did not suffer from double taxation with respect to Social Security taxes. From there, however, totalization agreements have become vehicles for noncitizens to become eligible for U.S. Social Security benefits. The new agreement with Mexico would make an estimated 160,000 Mexican citizens eligible in the next five years.

Ultimately, the bill for Mexicans working legally in the U.S. could reach one billion dollars by 2050, when the estimated Mexican beneficiaries could reach 300,000. Worse still, an estimated five million Mexicans working illegally in the United States could be eligible for the program. According to press reports, a provision in the Social Security Act allows illegal immigrants to receive Social Security benefits if the United States and another country have a totalization agreement. It’s important to note that Congress, like the American people, heretofore had not seen this totalization agreement. This decision to expand our single largest entitlement program was made with no input from the legislative branch of government. If the president signs it, Congress will have to affirmatively act to override him and in essence veto the agreement. This is the opposite of how it’s supposed to work. There are obvious reasons to oppose a Social Security totalization agreement with Mexico.

First, our Social Security system already faces trillions of dollars in future shortages as the Baby Boomer generation retires and fewer young workers pay into the system. Adding hundreds of thousand of noncitizens to the Social Security rolls can only hasten the day of reckoning. Second, Social Security never was intended to serve as an individual foreign aid program for noncitizens abroad. Remember, there is no real Social Security trust fund, and the distinction between income taxes and payroll taxes is entirely artificial. The Social Security contributions made by noncitizens are spent immediately as general revenues. So while it’s unfortunate that some are forced to pay into a system from which they might never receive a penny, the same can be said of younger American citizens.

If noncitizens wish to obtain Social Security benefits, or any other U.S. government entitlements, they should seek to become U.S. citizens. Also, totalization agreements allow noncitizens to quality for Social Security benefits by working in the U.S. as little as 18 months. A Mexican citizen could work here for only a year and a half, return to Mexico, and retire with full U.S. benefits. This is grossly unfair to Americans who must work more quarters even to qualify for benefits– especially younger people who face the possibility that there may be nothing left when it is their turn to retire. Those in favor of sending U.S. Social Security benefits to Mexican citizens argue that crushing poverty in Mexico demands some form of U.S. assistance to that country’s aged. While poverty in Mexico truly is deplorable and saddening, the fact remains that Congress has no constitutional authority to enact what is essentially another foreign aid program.

During a speech in Washington last week, Federal Reserve Chairman Ben Bernanke warned that the coming retirement of the Baby Boomer generation will place tremendous strains on the nation’s budget and economy. He stresses that Social Security and Medicare must be reformed sooner rather than later, because demographic trends make the current system unsustainable over time. In future decades there will be too many retirees and not enough younger taxpayers. Still, the problem seems vague and faraway for most.

Today’s seniors hope the system will hold together for the remainder of their lives, while younger working people hope government will somehow fix things before they retire. Not surprisingly, Congress doesn’t want to face the problem until it becomes an acute crisis. It’s hard to sell voters on austerity today to avoid a relatively distant problem. Politicians usually operate on the opposite principle, by promising great things now and leaving the bills for others to pay later. The only honest solution to the future insolvency of Social Security is for Congress to stop spending so much money. When Congress outspends federal revenues, it raids Social Security funds to cover the difference. Unless Congress makes real cuts in spending– and stops spending Social Security taxes on completely unrelated programs– millions of Americans simply will not receive even a fraction of the money they paid into Social Security. Ignore the rhetoric about tax increases and cuts in benefits, as though you are to blame for the problem!

All Social Security obligations could be met if Congress did not spend so much on other things. Congress can begin addressing the problem immediately by cutting at least 5% from other areas of the federal budget every year for the next five years. The budget has nearly tripled just since 1990; surely Congress can find 5% worth of fat to cut each year. When members of Congress vote for bigger and bigger appropriations bills each year, they threaten the very solvency of Social Security. That’s why I vote against every wasteful appropriations bill. Social Security contributions are supposed to be set aside from general revenues and placed in a trust fund. The truth, of course, is that your contributions are not put aside. Over the decades Congress found itself simply unable to sit on a big pile of money, so it began treating Social Security contributions as general revenues to fund the ever-growing federal government. Today your Social Security account is nothing more than a ledger filled with IOUs.

I introduced legislation to end this terrible practice. Under my bill, HR 219, your Social Security contributions are set aside in an interest-bearing account and cannot be spent. In other words, your Social Security account would be treated as YOUR account and not a slush fund for Congress. This is the simplest approach to Social Security reform, and it has the added benefit of making it harder for Congress and the administration to mask the deficit spending that is the real cause of our problems.