Viewpoint: Why not invest in the national deficit?
By Ron Jaenisch
For years America has been following Plan B. This is where Congress spends more and every once in a while modifies the various taxes it collects in order to pacify the ever-growing number of lobbyists in Washington, D.C. We all know this can’t go on forever, especially with a national debt that is at least $14 billion and growing.
Then there is Plan C. Ron Paul communicates this one well, with his message to maintain national sovereignty. He realizes that we give up our national sovereignty when we borrow from other countries. His program would cut pretty much everything. He advocates huge cuts in government, foreign aid, the military, Social Security and anything else that increases the necessity for the government to borrow.
For one reason or another, most Americans can’t totally support Plan B or Plan C.
So what about a Plan A? — a plan that would solve the largest problem of all. This is the financing the national deficit for the next 50 years.
Regardless of where one stands on Plan B or Plan C, it’s easy to acknowledge that the average American paid into Social Security as a guaranteed government retirement insurance fund and expects a monthly check.
Even if there is some type of means test, Social Security will need to borrow money in order to survive. For Americans to believe that this money will continue to come from other countries like China at bargain interest rates is pretty much a pipe dream.
So what is the answer? What can we learn from Japan and other countries to fix this problem?
Plan A has been staring us in the face. There are trillions of dollars in 401(k) plans and 529 plans. The one thing that these plans do not have, in nearly every case, is a safe harbor investment option.
This is one where the principal is 100 percent guaranteed, like a bank account or a capital preservation fund that invests only in very short term U.S. government securities. For these plans to have a safe harbor option, would be fantastic. It would make trillions available to the U.S. government that would come from Americans rather than governments overseas. It would increase participation for those that find stocks and bonds too risky and give the U.S. government a reliable source to borrow from.
Of course the Congress would still need to tackle all of the problems that supporters of Plan B and plan C point out, but it could be done without the threat of overseas investors.
Jaenisch is a Rancho Bernardo resident and occasional Opinion page contributor.
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