Politicians Need to Catch Up When It Comes to the People’s Money


President Obama in his inaugural address made it clear he intends to protect the nation’s entitlement programs. In the world of Washington politics, this amounts to a pledge that the president will make sure that no changes will be made to programs like Social Security and Medicare.

Republicans in Congress won’t challenge him because just about everybody in official Washington shares the president’s views that changing such programs would be political suicide.

The reality, however, is that only the foolish options offered by Washington politicians are unpopular. Cutting benefits or raising taxes are unpopular. Giving voters more control over their own lives makes sense just about everywhere except in the halls of Congress, however.

A simple example is Social Security. Two out of three voters (65 percent) support a proposal that would let them choose their own retirement age. Those who want to retire earlier would pay more in taxes. Those who plan to retire later could pay less in taxes.

Polling shows that that with such a system in place, most younger voters would push back their retirement a few years and use the extra cash flow to help raise a family and meet other needs. A sizeable number of people in their 50s also would be willing to take home a little more pay today and keep working a bit longer.

In stark contrast to the public support for this flexibility is the opposition many feel toward congressional plans to raise the retirement age or make other adjustments.

Why? Because we are no longer in a one-size-fits-all world. Nobody trusts Congress to determine the right trade-offs between an individual’s retirement age and how much he or she pays along the way. We’d all feel more comfortable if we could make those decisions around our kitchen table with the help of family, friends and financial advisors.

Bluntly, we have more confidence in our own ability to make rational decisions about things that impact our lives. At the same time, we have little or no confidence that voting for one politician over another will make any difference. That’s why any policy that shifts decisionmaking authority away from Washington and into our own hands is potentially popular with voters.

The steps necessary to make this simple concept a reality are outlined in my latest book, “The People’s Money.” A working approach would make sure people have the right to change their minds as they age and include protections to ensure that the system remains solvent. It’s even possible to make the trade-offs work so that they eliminate the entire unfunded liability in the current Social Security program — a liability currently approaching $20 trillion.

It’s worth noting that the concept did not originate with me. Credit for a flexible approach belongs to President Franklin D. Roosevelt. In his first message to Congress about Social Security, he envisioned a program with basic benefits but also thought that it would be so popular that voters would want to pay more for additional benefits.

Social Security is only one area where voters are ahead of their politicians. “The People’s Money” details many others, including support for a more focused military mission, an end to corporate welfare, and more consumer choice and competition in health care. Hopefully, the politicians will catch up sooner rather than later.

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