Monday, April 30, 2012

Radical Idea #4: Limit Federal Campaign Fundraising Periods

Having run for a Federal office twice, I came to an obvious realization: not only is it hard to raise funds, it is totally unfair for challengers to do so against incumbents. Members of Congress are raising funds 24/7, a perpetual head start against anyone who would seek to challenge them to make it a competitive race. This is clearly not what the Founding Fathers intended for public service, especially those members of US House of Representatives.

This constant fundraising is also affecting how government business, especially concerning policy, is conducted. With members of Congress spending more time fundraising than making policy decisions, Congress has become the most unpopular institution in America. That has to change, immediately.

One way to do that is to limit fundraising to the year of a Federal election. During non-election years, incumbents members of Congress can acquire vast war chests that would discourage credible candidates from challenging them. No challenges, no debates, no new ideas in the public policy discussion. This is why we are still fighting battles that were started some thirty, forty and fifty years ago.

Instead, let's have two fundraising periods during the year: January 1st until April 1st and August 1st until October 1st. The first fundraising period would cover the majority of the party primary period and the second period would lead to the November General Election. Fundraising would be more challenging during the primary period but the primary process is suppose to be more challenging than the General Election, as the parties are choosing their respective nominees. The second period would be more beneficial to the candidates, as the fundraising period ends, giving them more than 30 days to make their final appeal to the voters.

If you are going to be asked to balance a $3 trillion budget, you need to show that you can have restraint during the campaign. Candidates need to set reasonable goals to raise and spend; I believe a restricted fundraising period will force them to do just that. I believe it will also drive down the market of politics, making them less expensive to run. I never had fundraising events prior to an election year during my time in the Mississippi Legislature because I believed my focus was to the people I was serving instead of the big money interests, that now have more power at the Federal level after the Citizens United decision.

I did receive funds from some groups during off years, but not because of solicitation and I never raised over $1,000. If my idea is ever implemented, those contributions, no matter how small, would have to be returned, if donated outside of the approved periods. The critics will say that free speech will be limited, but free speech is already limited. You still cannot yell Fire! in a crowded theater when no such danger is imminent, for example. Federal campaign contributions are limited for individuals and, supposedly, for corporations. Foreign nationals cannot contribute to federal campaigns, for good reason. So why not limit the time period in which campaigns can actually solicit funds? Besides aren't you tired of getting Obama or Romney e-mails by now?

Incumbents will still have an edge, but they won't be able to stockpile cash day after day prior to the election year. They will have to start their efforts at the same time as everyone else, and in a democracy, that is the way it should be. Maybe then, those who are elected can focus their energies on governing, instead of perpetually campaigning. Maybe then Congress will be respected again.

Saturday, April 14, 2012

Radical Idea #3: Diversify the Social Security Trust Portfolio

By 2032, I will be 67 years old. At that point, I will be able to draw full benefits from Social Security. Four years from that point, future retirees may not be so lucky. That is because it is projected that at the rate the Federal Government is borrowing monies from the Social Security Trust Fund to supplement the Federal Budget, the $2.6 trillion trust fund surplus will be depleted. If the productivity growth does not rise to the level needed to continue to fund the surplus, or if payroll taxes are not raised, this scenario will be a reality.

One radical idea to stop this from happening is to diversify the investments of the Social Security Trust Fund. Right now, the only investments the Social Security Trust Fund can make is with securities issued and guaranteed by the full faith and credit of the Federal Government, like treasury bills for example. So far, with a current 5.5 percent growth rate, these securities are profitable. However, the same government that is backing these securities is falling further into debt, hence the importance of the debt ceiling issue and the subsequent credit rating that was impacted by that decision. If the United States of America loses it high credit rating, the growth of US-backed securities will decrease, based on comparative bond markets.

If your pension fund or 401k only invested in one type of security in the open market, you would have limited growth toward your retirement. Furthermore, if you were allowed to borrow from it annually and not required pay it back at the rate of projected growth, you would eventually have a retirement fund that is empty when it is time for you to draw from it despite the monthly assets you put into it. That is the best explanation to break down what is happening now with the Social Security Trust Fund.

The best way to alleviate the pressure caused by these events is to allow the trust fund to invest 33 percent of the fund into more diverse, high growth portfolios. Congress needs to act to allow our Social Security Trust Fund administrators to pump over $865 billion into the open market to get the best return on that investment. A conservative, long-term high growth strategy will produce major yields and secure the trust fund beyond the 2040's.

That may sound risky to some, but when you consider that all 50 states offer retirement plans for their state employees and that the majority of their investments are in the open market and are solvent, it is not that much of a risk. Not to mention the fact that the US Government could recruit the best managers in the country to invest these funds in the proper way.

It would also help if that same Congress would stop borrowing from the fund at the current rate they are and balanced the budget, but that is another discussion for another day.