Tuesday, November 25, 2008

Part I: Special IRAs, "SPIRAs" for all Americans

As we have seen in the past money can be given to banks, to insurance companies, and to wall street firms, etc. without hesitation. We are talking about hundreds of billions of dollars to wall street while giving only $600.oo to individuals. I would like to see our country do something wonderful and unusual, however not unusual to the founding ideals of the country. That is "for the people, by the people and of the people." What we need at this trying time is something dynamic to lift our spirits, to change our priorities, and to foster economic solvency for all Americans.

The worst imbalance of Democratic idealism is the desire to hold the people's money in the government's hands. The worst imbalancce of the Republican idealism is the desire that monies be held by a select few and corporations. Both parties should be effecting their best qualities, those that meet the needs of all Americans by fostering ownership of assets by all working individuals.

What I'm proposing is the idea that the monies that are slated for bailouts on wall street be given to working individuals to be placed in special IRA accounts, SPIRAs, that would be owned by these individuals.

These accounts would be established at banks that are FDIC insured, and these banks would have to pay a minimum of 6% interest on the accounts or can offer more to foster competition. The idea is that the interest earned on these accounts could then be used to pay the benefits for the individuals. The first priority of course would be to pay for medical coverage. Only the interest generated by these accounts would be used. The principal would not be touched. The interest earned and used to pay for the benefits would be tax free. These accounts would be strictly regulated and would have to be passed on to designated beneficiaries fostering future substantial accounts owned by the next generations. Of courese, the immediate effect would be an infusion of cash into banks to increase liquidity while creating a foundation of assets for working Americans.

Possible sources to fund these accounts:
(1) direct substantial stipends from the federal government possibly based upon age and work history.
(2) if there is to be an increase in capital gains tax, the added taxes could go into these accounts.
(3) estate taxes could be allocated to these accounts.
(4) allow transfers to SPIRAs from any IRA, 401K, etc. without tax consequences.
(5) allow voluntary deposits to SPIRAs affording some tax deduction.
(6) for working people who are 62 and older and collecting SS benefits and have earned income, the amount lost from their SS benefits ($1.00 for every $2.00 earned) would go into these accounts.
(7) people making under 50,000.00, or more for married couples, could make contributions to SPIRAs that would be partly matched by the Fed. Gov't.

These are a few possible ways to increase the principal of these accounts while it should be understood that once the money is placed in these accounts it cannot be touched. Only the interest generated could be used for securing benefits. The benefits of these accounts would be far reaching and will be discussed in later blogs. The medical coverage generated by these accounts could supplant medicare, a problematic system. If an individual is earning more and her or his account grows faster that should be seen as a plus as these individuals and their beneficiaries could be removed from medicare and possibily from SS as their generated interest grows substantially.

Tomorrow I would like to expand on the possibilities and ramifications of these SPIRAs. What I am asking is that our President and our Legislature do something imaginative and inspiring that benefits all Americans not just a few.


Anonymous said...

I'm curious, as an interested reader, is your vision of the SPIRA based on the ideal that those who could give, should? How will the government meet it's responsibility to ensure banks and how will an average person secure a life of retirement by redirecting funds to permanently restricted accounts?

The Original Mind said...

Thank you for your comment on SPIRAs. This should be a voluntary program that would be invested
in by people who see the value of the program. The average person now envisions a retirement plan
that would afford interest income generated such that the principal would not be diminished. Ideally,
the interest generated suffices. In order to get the tax benefits of a SPIRA a person would have to
commit to permanent restrictions. However, the amount each person commits to this SPIRA account
would be determined by the individual ranging from a partial supplemental account to a full commitment.
This, of course, would depend on each person's situation. I am suggesting that the gov't start to redirect
monies to individuals by augmenting SPIRAs.
A SPIRA is a commitment to an account that would begin to provide for a permanent source to pay for
benefits. These accounts will only increase as the accounts will be passed to designated beneficiaries.
It should be a voluntary program. The benefits are great in that once a SPIRA affords the interest to pay
for medical coverage the benefit would not be lost as the account would not be subjected to the fluctuations
of the market. The banks would have to be FDIC insured as is the situation now. The same problems we
now face with the banks would have to be faced with the SPIRAs. This should be done by a more realistic
banking system or else we will again fall into problems.

Anonymous said...

I don't see how this is any different than what we have now with a 401k. if this is voluntary and not mandatory then you won't have many people participating in it, especially because you can't touch the money in case of emergencies. people can't and don't save now, why would they ever change? this would be a great idea but so many people live check to check right now that I can't imagine them putting money they don't have in an account they can't touch. I wish more people thought like you but they don't and this is why 1% of the world controls the other 99% and this 99% of the world has no one to blame but themselves.

The Original Mind said...

thanks for your comment on spira accounts. it' true that most people do not save; however, it's important that people are encouraged to build a foundation of assets that will help guarantee benefits for themselves. if the government can so easily spend money on bailouts, perhaps it should make it part of the budget to foster these accounts and provide tax benefits that encourage building these accounts. for those that can easily afford these accounts it's a way to shelter estates. as well, as their accounts grow and provide medical and retirement benefits they can, as a condition, be removed from medicare and ss. this will help these systems to continue providing the benefits they do now by eventually weeding out beneficiaries whose spiras suffice. it's important to have hope and not be pessimistic about the future. the federal gov't needs to institute real solutions that substantially deal with the problems facing us. let me know what you feel should be done to ensure a better future for all americans. if we do not resolve the problem of providing medical coverage for our society our economy will never right itself. we certainly can do better for our country.