William Larsen For US Representative
February 20, 2006
I grew up in Fort Wayne and graduated from Paul Harding High School in 1975. I am in scouting and earned my eagle rank in 1972. I enlisted in the U.S. Navy in 1977 and attained the rank of machinist mate 2nd class. I was honorably discharged from the U.S. Navy and attended Purdue University where I earned a Bachelor of Science in Mechanical Engineering. While in college I met my wife, Lenore. We have five children.
I have worked for companies dealing with components for the U.S. Nuclear Navy and high level radioactive waste to filtration products. I solve problems for a living. The key to good problem solving is to identify the root cause. Unless the root cause is identified, no problem will ever be solved. Does the US Government have problems?
National Defense: Those who serve our country need to be trained and be provided the equipment necessary to carry out the tasks assigned to them. We should never knowingly send our men and women into combat with out-dated equipment, poor training and poor planning. They are putting their lives on the line, the least we can do is provide them the training and equipment to carry out their assigned tasks.
Budget deficits: We hear a lot of talk about cutting the deficit in half. In fact they have talked about it as far back as I can remember. I am 49 years old and I simply cannot remember a surplus year, can you? Who has been running this country, the politicians or the voters? I hear people complain, but do we ever take action? There are only two methods available to cut deficits, cut spending and raise taxes. The general budget deficit was $726 billion in 2005, but it was reported as a $554 Billion unified budget. Our representatives say they are against using social security revenues to offset general budget expenses, but they continue to use the Unified Budget numbers. They do this to make the numbers look better. I will not do this.
Tax Reform: Americans and Business spend too much on determining their taxes. Why should one company profit at the expense of another simply because a politician wants to give your money away? Congress has given preferential treatment to companies groups and individuals. This is unfair, creates thousands of pages of code and is inefficient. Income is income, treat income as such. Treat all taxpayers fairly by not holding out carrots for preferential tax treatment. This will reduce the tax code to less than 50 pages, taking less than ten minutes to fill out without professional help. It will greatly reduce compliance costs and tax court litigation.
Energy reform: Congress has debated energy policy for decades and what do we have to show for it? It is time to stop subsidizing inefficient and wasteful energy programs. Wind power has now reached a level where it can compete with other forms of energy.
Personal Freedoms: Our personal freedoms are under attack. The Right to bear arms is being restricted. Religious freedoms are under attack. We need to restore and strengthen our personal freedoms.
Pension, 401K and profit Sharing reform: If you are laid off, you should be vested in company matching 401K, profit sharing and pension plans.
"On-us" check cashing reform: It is not honorable to charge a fee to a non-account holder at the bank the check is drawn on. The bank is providing a service to the account holder, not the endorsee. All employer paychecks need to be readily cashable in a local bank without fees and surcharges at the bank on which they are drawn.
Veterans: As a Navy veteran, I know the hardship that military life can have on families. I also know first hand that injuries sustained in the line of duty can take years to recoup from if ever. We need to maintain our VA hospitals and provide those who have been injured the best medical care available. I also support changing the index used for adjusting veteran's benefits from the consumer price index to the Social Security Wage Index. This change will maintain the same standard of living benefit throughout the veteran's life.
Smaller Government. I am for smaller government. Each person should be allowed to obtain their full potential and not be burdened by high taxes or regulations.
Wealth Creation. We need wealth creation and smarter use of available capital. Too many workers are being disenfranchised from participating in the benefits from owning a piece of America. The means is there for all to participate and make America strong, but taxes keep us from achieving our potential. We need to make a change.
Social Security Disability Program: I support the Social Security Disability Program covering the disabled and survivors of workers who die. This program unlike Social Security's Old Age Survivors Insurance Program is based on a covered loss and not based on living to a particular age.
Social Security Reform. The proposed change will leave no needy person behind.
For more than Thirty years I have studied and modeled Social Security's Old Age Survivors Insurance program (OASI). Though it was begun with good intentions, these intentions fell far short of what it would take to fund Social Security in a fair manner. Social Security has never once run an actuarial surplus. In every year since 1937, Social Security has run an actuarial deficit. I recommend reading:
Social Security: What Went Wrong?
Myths: The Political Tool of Choice
I support repealing the Social Security act pertaining to Old Age Benefits, not the Disability program. The reason is very simple: Social Security was designed to fail. Those who have retired since 1940 paid $2.5 Trillion in taxes. Social Security has paid $7.8 Trillion in benefits and before current retirees pass on they will collect another $5 Trillion.
My plan would use the current $1.65 Trillion in the Social Security Trust Fund to pay a means tested benefit of $1,133 a month to each senior in need. This benefit would be adjusted yearly by the change in the United States Average Wage, which is generally greater than inflation.
The social security trust fund would last about ten years at which time general revenues would be needed to pay this means tested benefit. It would take 37 years to reach equilibrium at which time about 9% of the elderly would need assistance at any given time. The many can easily take care of the few but not the other way around.
The worker would be required to open an IRA style account at a financial institution of their choice where the employer's share of the social security tax would be deposited. The employee's tax would never be taken out of the check so that the employee could use these wages for debt reduction, retirement, education, health care, etc. The total controlled by the employee would be about $3,600 per year ($1,800 in the IRA style account and $1,800 left in the paycheck).
If we want to save social security, then each adult worker must send a check today to social security for $87,000, or cut benefits by 40% or raise taxes by 85%. There simply is no painless solution. How firm are you on saving social security?
I am an Eagle Scout and have tried in vain to be fair. However, Social Security is not fair, never was fair and cannot be made fair. I am not going to lie to you about this being painless. This mess we have inherited should have been taken care of decades ago.
A program that pays those born after 1985 just 29 cents back for each dollar of taxes and credited interest is not fair. Americans want value for their dollar. You can buy a value meal at about any fast food chain consisting of a sandwich, fries and drink for about $4.00. If Social Security were a value meal, it would cost $13.79.
Mark Souder spoke to Prime Time 39 on 3-12-2004 and referred to Social Security as a "shell game." He stated, "For people under 30 its probably going to be income based. I am not saying we're going to pass that. It will probably be passed after I am dead." He continued "If you're 40, you might make it through the system. But if you're under 40, and certainly under 30, you had better start planning because if you want to have a decent retirement you’re going to need supplemental funds." Mark supports Social Security Savings Accounts. Tax-free savings is an oxymoron. We have an $8 Trillion national debt and ran a $726 Billion deficit in 2005. This is no different than you borrowing money to pay for retirement. Tax credits reduce federal income taxes; increasing the deficit.
How do workers save when 90 to 100% of their potential savings is taken from them in the form of FICA taxes?
During your lifetime has the Social Security tax ever been cut? If you think Social Security is not fair to you, will it be fair for your children?
I am compassionate and will do my utmost to make sure no needy senior is left behind. However, we need to make a very painful decision now. You can either declare your independence from Social Security and over spending by voting for William Larsen May 2nd, or continue with the same old scam.
For the past two hundred years, birth rates have been declining. There have been boom and bust years, but the trend was always decreasing. The baby boom generation (1946 to 1961) did have a few more babies than normal, but then they were the off spring of a previous baby boom after WWI. The baby bust, which began in 1962 and magnified in 1973 are magnifying the flaws of the Social Security program. As the number of births decline, the population of the United States gets older and begins to stabilize. A pay-as-go program relies on taxes instead of investments to pay benefits.
The saddest fact of this is that it has been known since passage of Social Security Act, in the 1930's, that pay-go Social Security, as we know it - could not work indefinitely.
Knowledge of the inadequacy of Social Security is not a recent phenomenon.
And we, the American public have been lied to about this truth for all our lives.
Contrary to what we have all been told, Social Security's problem and its failure is not due to the baby boom generation. Without the baby boom generation, Social Security would be unable to pay full benefits today instead of in 2041.
Nor is Social Security's problem and failure due to increasing life expectancy. Life expectancy in 1940 at age 65 was about 14 years. Today it is about 18 years, only about 4 years longer. Legislative increases in the retirement age to 67 have already compensated for this increased life expectancy on an actuarial basis.
Based on life expectancy at age 65 (19 additional more years), the US Treasury Rate of 6.5%, an inflation rate of 2.75% and a retirement age of 65, the tax rate required to fund Social Security on an actuarial basis, is around 5%. The question every worker must ask themselves is "why do I pay 10.6% for a benefit which costs only 5%?"
Its problem does not stem from high inflation.
Its problem does not stem from a low rate of return on its trust fund.
Its problem stems from an inherent flaw in the concept of Social Security.
It began with an unfunded liability and has run actuarial deficits each and every year.
With each passing year the liabilities increase at a rate far faster than the trust fund.
What can we do to save Social Security? We could save Social Security, but it would require over $14 Trillion in benefit cuts and/or tax increases to be enacted this year. This amounts to about $87,000 per worker in terms of additional taxes to be paid this year. In terms of benefit cuts, it is about a 35% benefit cut, but still requires the same 10.6% payroll tax on all future workers.
If we cut benefits, the worker would be paying 10.6% for a benefit, which has an equivalent value of 3.5% of wages. It is now time to solve this problem once and for all. For twenty-five years I have seen my taxes increase in the name of saving Social Security. I have heard politicians claim they will save Social Security. Social Security has informed me and all other workers for the past eight years, they cannot pay full benefits unless changes are made, but they do not identify these changes.
The recent collapse of Enron showed how accounting can make an entity look great, but in reality is near bankruptcy. Enron showed great cash flows, but hid its liabilities. Social Security shows a positive cash flow, but hides its liabilities. Since 1983 the unfunded liability has doubled in real dollars. I do not want my children to inherit a failed program. We should leave this country in a better condition than when we inherited it.
Please read The Larsen Plan for a detailed analysis.
I ask for your support and vote this May 2, 2006. Thank you.
Written, distributed and paid for by William Larsen for U.S. Representative, Indiana's 3rd District
