Entire contents copyright 2020 by Terry E. Nager, CFP®
1. Why is a contract needed to protect the interests of “We the People”?
We need a contract to protect us from the government.
The government has the power to pass laws and repeal them. If we put a plan in place that solves America’s retirement, health care, and debt funding problems, we must protect it with a contract. Otherwise, the government could come in and repeal the whole plan.
A contract is a legal agreement that has penalties for violating the terms of what each side has promised to live up to.
A contract will be long-lasting if it is of benefit to everyone concerned. So let’s look at the three parties involved:
- “We the People” — represented by the For America Security Trust (FAST)
- The Federal Government — represented by Uncle Sam
- The 50 States — represented by “The Statesman”
“We the People”
Benefits (what do “We the People” get out of the deal)
- America will have a retirement and health care trust (FAST) that is independently funded not depending on the government or the politicians.
- America’s retirement and health care benefits will be secure and fully funded rather than heading toward collapse and bankruptcy.
- Retirement and disability benefits are guaranteed to be at least equal to what Social Security presently provides but in most cases will be far greater.
- Health care benefits will be comprehensive and far greater for every U.S. citizen than what is being offered under Medicare, Medicaid or ObamaCare.
- Pre-existing conditions will be covered as well as there being no ultimate cap on the amount of health care benefits that will be paid. Also, children can remain on their parent’s health insurance plans until reaching age 26.
- No government health panels — all health care decisions will be made by the doctor and the patient.
- All health insurance policies will be individually owned and can be obtained and used anywhere in the United States.
- Health care will be truly affordable and interest-free loans will be available to those with lower incomes. The interest-free loans do not have to be paid back with out-of-pocket funds; they can be repaid from the excess returns on the individual’s FAST account.
- Under the Standard Plan offered through the FAST, the $1200 annual health savings account would equal the maximum total of the deductible plus the co-pay so that there would be no out-of-pocket health care cost other than the premium.
- Under the Plan For America, no one (meaning the taxpayers) would have to pay for anyone else’s health care.
- There are numerous tax savings for almost every working American.
- All retirement benefits paid by the FAST will be 100% tax free and when the benefits pass to the heirs they will be estate tax and income tax free.
- All insurance benefits — health, life, and disability- will be tax free and any of the health savings account that is not used on deductibles or co-pays can be withdrawn tax free at the end of the year.
- All FAST retirement contributions and insurance premiums will be 100% tax deductible on a federal and state basis.
- Each year over $1 trillion will be injected into the U.S. capital markets — millions of jobs should be created on an ongoing basis.
- The Millennials and Gen Z (those born after 1980) can be confident that the money that they are paying in (15.3% of earnings) for their retirement and future health care will be there for them in their own account unlike now, where their payroll taxes are only going to support the older generations. These generations realize that Social Security and Medicare will not be around by the time they need it.
- The 15.3% contributions enjoy the best of both worlds — that is, stock market returns (with a 4% minimum guarantee) and backed by the “full faith and credit” of the U.S. Government.
- The Plan For America will make a basic financial plan available to every U.S. citizen, even those with very low income. This financial plan would include: health insurance, disability insurance, life insurance, retirement benefits, tax benefits, and an estate legacy for even the lowest income wage earner.
Costs (What do “We the People” have to give up?)
- Zero — Nada — Nothing!
“We the People” reaction to the deal —
So, what’s not to like? All pluses and no minuses, massive job creation, a federal government moving toward fiscal responsibility instead of bankruptcy, tax reduction, secure and increased retirement and health care benefits, and no longer having to live in fear that everything is going to collapse in financial ruin. Give us the contract, we’ll gladly sign!
Benefits (what does Uncle Sam get out of the deal)
- Being relieved of an estimated $120 trillion of what are called unfunded liabilities — this is the amount of money that will be needed to pay for all of the promised benefits from Social Security and Medicare.
- Being relieved of the yearly Federal Medicaid costs — it is estimated that the Federal Government spent $406 billion in 2019 on Medicaid. It is expected to grow at 5.4% each year and reach $557 billion by 2025!
- Between 2059 and 2079, the FAST will have paid off all of the unfunded liabilities and will give the Federal Government 50% of its yearly surplus which is expected to be trillions of dollars each year to pay off the national debt.
- After the national debt has been fully repaid then the 50% of the annual surplus trillions from the FAST would be used to reduce taxation and eventually become the main funding source for Federal Government operations replacing the need for taxation.
Costs (what does Uncle Sam have to contribute to the deal)
- The Federal Government must allow any and all citizens that want to opt out of Social Security, Medicare, Medicaid and ObamaCare and join the FAST to do so.
- The U.S. Government must get out of the retirement and health care providing businesses (with the exception of those not opting out of Social Security, Medicare, Medicaid, and ObamaCare).
- The U.S. Government will not take equity in private enterprise.
- Repeal the payroll taxes for all who join the FAST.
- Make the contributions to the FAST tax-deductible. The 15.3% of earnings — FAST contribution (which matches the present level of the payroll tax is calculated on earnings up to $137,700). At the option of the one contributing, if he/she has earnings over $137,700, then the tax-deductible contribution could be increased to 15.3% of total earnings.
- In addition to the 15.3% of earnings contribution, each member of the FAST could contribute up to $100,000 annually and be fully tax-deductible.
- Since the FAST is assuming the responsibility, redirect the interest payments on the non-negotiable notes held by the Social Security and Medicare Trust Funds to the FAST. Ultimately, the FAST will pay off these notes as well.
- All premiums for health, disability and life insurance as well as the health savings account purchased through the FAST would be 100% tax deductible.
- All retirement payouts and insurance benefit payouts would be 100% income tax free.
- Any portion of the health savings account left over at the end of the year (not used for deductibles or co-pays) can be withdrawn tax free.
- The annual retirement payouts upon the death of the one who made the contributions would pass income tax free and estate tax free to the heirs.
- All ordinary (cash) dividends on common stock of publicly-held, U.S. domiciled corporations would be tax-deductible to the corporation and tax-free to the one who receives the dividend.
- The FAST would issue bonds to pay for the present Social Security retirement and disability benefits and the interest-free loans made to those who could not afford their health insurance premiums. The U.S. Government would pay the interest on these bonds and guarantee them with the “full faith and credit” of the U.S. Government.
- The FAST would call in and pay off the principal on the bonds out of its growing annual revenues.
“Uncle Sam’s” reaction to the deal —
WOW! What a deal? Where do I sign? This is better than buying Manhattan Island for $24, or buying the state of Alaska from the Russians for $7.2 million! I get to escape the consequences for the sins that the politicians have committed through the years. Yahoo!
Benefits (What does “The Statesman” get out of the deal?)
- Each state would be relieved of most of its Medicaid obligations (except for the small number of people that may not choose to join the FAST) which makes up about 17% of its total budget.
- Each state (if it elects to do so) could be relieved of its pension liabilities — both the funded and unfunded portions.
- Between 2059 and 2079, the FAST will have paid off all of the unfunded liabilities and give each of the states its share of 50% of the FAST’s annual surplus, which is expected to be trillions of dollars each year to pay off the states’ debts. The pro rata share for each individual state will be determined by the percentage of national GDP that is generated in that state.
- After the state’s debt has been fully repaid, then the 50% of annual surplus trillions from the FAST would be used to reduce taxation and eventually become the main funding source for each state’s government operations replacing the need for taxation.
Costs (what does “The Statesman” have to contribute to the deal)
- The loss of tax revenues (for states that have an income tax) on the FAST contributions representing 7.65% of earned income up to the $137,700 cap.
- The loss of tax revenues (for states that have an income tax) on the FAST contributions over the $137,700 cap if the FAST participant elects to contribute beyond the cap. This could represent 15.3% of the total earnings above the cap.
- The loss of tax revenue on the elective contribution (for states that have an income tax) of up to $100,000 annually for each FAST member that elects to participate — regardless of his/her earnings.
- Each state’s tax-free municipal bonds would have to compete with the tax-free dividends from U.S. domiciled publicly-held corporations. This would likely require that these bonds pay higher rates of interest in order to attract investors.
“The Statesman’s” reaction to the deal —
This is a great deal! Where do I sign? The Medicaid costs and the unfunded liabilities have put some of our states in danger of bankruptcy. This deal offers us a painless way out. Count me in!
2. What are the terms of the contract between the For America Security Trust (FAST) and the individual participants?
The FAST commits to provide the following to the individual participants:
To take in all participant contributions and invest the money into an all U.S. equities (stock) fund similar to a total market index fund.
To provide a guarantee of a compounded 4% rate of return on all participant investment accounts, and, upon retirement, pay out a minimum 4% of that amount annually.
To provide the stock market’s actual annual return less 2% for the FAST charge for delivering:
- the administration of the plan,
- the 4% guarantee,
- interest-free loans to FAST accounts to protect against “drawdown”
during times when the stock market is under severe pressure,
- interest-free loans for those who cannot afford the premiums for their health insurance,
- and a guarantee that retirement and disability benefits will be at least the level that they are under Social Security.
To provide access to insurance companies that offer high-quality, comprehensive health insurance to all FAST participants.
- Pre-existing conditions will be covered at standard rates.
- There will be no ultimate cap on the amount of benefits that will be provided.
- All health care decisions will be made by the doctor and the patient — no government panels.
- All health insurance policies will be individually owned and can be obtained and used anywhere in the United States.
- The “standard” health insurance plan would include a $1,200 annual health savings account. The maximum total amount of the co-pay+ the deductible would = $1,200; therefore, the only out-of-pocket cost would be the premium for the insurance. If any of the $1,200 in the health savings account is not consumed by the end of the year, then any amount left over can be withdrawn tax-free.
- Guaranteed insurability for life and disability insurance is provided as part of the “standard” plan.
- Interest-free loans will be available to those who cannot afford the insurance premiums. These interest-free loans do not have to be repaid with out-of-pocket funds; they can be repaid from the excess returns on the individual’s FAST account.
To provide tax benefits to the participants through the terms of the contract that the FAST would have with the Federal Government and the 50 States.
- All retirement contributions made by the participants will be 100% tax deductible.
- All insurance premiums paid to the FAST will be 100% tax deductible.
- All benefits, retirement or insurance will be 100% tax free to the participants when paid out.
- Under the PLAN FOR AMERICA, no one (meaning the taxpayers) would have to pay for anyone else’s health care.
- Under this PLAN FOR AMERICA, all retirement benefits (the annual cash flow) will be paid to the heirs upon the death of the participant with no income or estate taxation.
What do the participants have to do to comply with our part of the contract?
- First, you have to opt out (withdraw) from Social Security, Medicare, Medicaid and ObamaCare and join the FAST.
- Second, the 15.3% that is the amount of the current payroll taxes will be withheld from your paycheck through a payroll reduction agreement and sent to your account in the FAST.
- Third, you must enroll in a health insurance plan through the FAST, unless you qualify to opt out. Remember, under PLAN FOR AMERICA (PFA), no one (meaning the taxpayers) would have to pay for anyone else’s health care.
3. Why would Plan For America (PFA) appeal to liberal Americans?
Plan For America (PFA) would appeal to liberal Americans for the following reasons:
- PFA provides for comprehensive health care insurance for every U.S. citizen with no pre-existing condition exclusion and no ultimate cap on the benefits.
- Children could remain on their parent’s or guardian’s plan until reaching age 26.
- The ultimate funding guarantee for PFA is the “full faith and credit” of the U.S. Government as are the present social programs — Social Security, Medicare, Medicaid and ObamaCare.
- The retirement age would not be raised in fact retirement could begin as early as age 60 at the worker’s option.
- Retirement benefits would not be reduced regardless of how much the retired worker earned in retirement.
- Pension benefits for public employee unions could be protected.
- Executive compensation would be under close scrutiny which would have a limiting effect on very high pay without corresponding outstanding results.
- PFA’s funding approach would make retirement and health care benefits much more secure than the precarious funding scheme that is presently in effect.
- There would be a “single payer” for health, disability and life insurance premiums. PFA makes the premium payments through payroll reduction and provides interest-free loans for those who have lost their jobs or cannot afford the premiums.
- A great degree of “Social” and “Economic Justice” would be achieved under PFA because the retirement plan of the workers and retirees will ultimately own the greatest part of U.S. corporations.
- Under PFA wealth distribution will be much more equitable.
- PFA would end the regressive payroll tax.
- Every worker, even moderate and low-income wage earners would have a legacy to pass on to his/her heirs.
- PFA provides for a financial plan for moderate and low-income American workers including disability and life insurance on a guaranteed-issue basis.
- The benefits from Wall Street will flow primarily to the retirement plan of the workers and retirees instead of to the “Fat Cats.”
4. Why would Plan For America (PFA) appeal to conservative and libertarian Americans?
Plan For America (PFA) would appeal to conservative and libertarian Americans for the following reasons:
- PFA incorporates tax reduction as part of the strategy. The payroll tax is eliminated, corporate dividends become tax free as well as being tax deductible to the corporation, and the retirement benefit cash flow is income tax free and estate tax free when it passes to the participant’s heirs.
- PFA retirement account will be held by an independent trust, not by the government as is Social Security.
- Health care for all U.S. citizens under PFA is provided through individual health insurance policies, not government provided or controlled.
- Participation in PFA is voluntary; joining the For America Security Trust (FAST) enables individuals to opt out of Social Security, Medicare, Medicaid, and ObamaCare.
- Under PFA, each individual will ultimately pay for his/her own retirement, health care insurance, disability insurance, and life insurance.
- PFA contract with the federal and state governments requires the U.S. Government to get out of the retirement and health care businesses as well as any and all aspects of private enterprise.
- Each participant and his/her heirs get to keep the wealth that they have contributed via perpetual cash flow.
- The federal and state governments should be able to balance their budgets in a very short period of time because under PFA the burden of the major entitlement programs would be eliminated.
- PFA provides the funding method to pay off federal and state debt.
- PFA will ultimately provide the funds to eliminate the need for taxation at the federal and state levels.
- The size of the federal and state governments should shrink under PFA because government services would not be needed in many areas.
5. How reasonable is the 2% charge from the For America Security Trust (FAST) for what it provides, and is it a good investment for “We the People?”
For what the FAST provides, a 2% charge is extremely reasonable and it is an excellent investment. The following are the benefits for the FAST participant:
- All contributions to the FAST are 100% tax deductible.
- All growth of the invested assets is 100% tax free.
- All payouts from the FAST are 100% tax free.
- All payouts to heirs after the death of the participant are 100% income and estate tax free.
- All contributions (for the purposes of retirement payouts) are guaranteed to have a minimum 4% compounded annual rate of return and to payout 4% of that amount.
- All contributions will receive each year’s market rate of return on the FAST stock portfolio less 2% for its charge.
- The FAST will provide an interest-free loan to the participant’s account if the market is suffering a downturn and the participant’s account is in danger of experiencing “drawdown.”
- The FAST will provide interest-free loans to participants that cannot afford their health care insurance premiums or for those who have exceeded the maximum benefit on their health care insurance and cannot afford to pay for the medical costs.
- The greatest benefit of all is saving the United States from financial disaster and bankruptcy, where all benefits and government services would be lost.
Contributions to the FAST are an excellent investment. Any investor would love to have the opportunity to have an investment that:
- Is tax deductible and pays out tax free.
- Passes to heirs’ estate tax free.
- Is guaranteed by the “full faith and credit” of the U.S. Government.
- Guarantees a 4% rate of return.
- Earns the stock market returns less 2%.
- Provides interest-free loans for health care needs.
6. Why would employers pay the 7.65% that is being paid as their share of the current payroll taxes to the employees if the employees enrolled in the For America Security Trust (FAST) and payroll taxes were no longer required?
The employers would in almost all cases increase the employees’ pay by the 7.65% that they would save by not having to pay the payroll taxes because:
- If an employee did not opt into the FAST and out of Social Security and Medicare, then the employer would still have to pay the government the 7.65%.
- The employee would have his/her own health care insurance through the FAST, thus the employer would not have to provide it.
- There would be a great deal of publicity, and the employees would know that the employer was keeping the 7.65% which would strain relations with the workers.
- Implementation of the FAST would bring on a $1 trillion capital infusion every year to the economy which would be great for business. Almost all employers would do whatever they could to encourage this economic activity.
- Employment levels would very likely increase greatly, and there would be more competition for workers. Consequently, employers would be prone to do whatever they could to retain their employees.
7. What actions could be taken to initiate Plan For America (PFA)?
One way to initiate Plan For America could be:
- Have Congress pass a bill (signed by the President into law) authorizing the Federal Court to appoint a Receiver for the For America Security Trust (FAST).
- The Receiver would have the authority to appoint five interim trustees to operate the FAST until the votes can be taken for the initial five elected trustees.
- The Receiver would have the authority to tap a line of credit extended from the U.S. Government to the Receiver for the purposes of establishing the FAST and enabling it to become operational.
- This line of credit would be repaid along with all costs for the Receivership upon the first bond offering by the FAST, which should occur shortly after
- A court-appointed Receivership would provide transparency because the
court would require full reporting.
- A court-appointed Receivership would provide accountability because the
court would require the Receiver to account fully for every penny.
- A court-appointed Receivership would provide safety because neither the
politicians nor any unscrupulous individuals would have access to any of the funds.
- Any vendor contracts entered into by the court-appointed Receiver or the succeeding FAST Board of Trustees would have to be competitively bid and published for transparency along with a report outlining the rationale for granting the contract to that particular vendor.