Weaving and Spinning on Prime Time
This will not be the last thing I have to say about the President's News Conference.
There was very little news, but there was a big faux pas. Just when the President's crusade to kill Social Security had hit new lows, he dug the hole a little deeper tonight. Now, he has introduced a "means-test" to insure that low income workers get or exceed what they do now. In order to pay for this means that middle income and higher income workers have to take a larger cut in benefits, on the order of 40%. In addition, the adjustments to future payouts would be calculated on a price index rather than the current wage index. So, in effect, what the President has done is make the social security program the newest welfare program. I can't wait to see the Republican Congressreaction to this one.
Once again the President lies to the public. He still maintains that social security will be bankrupt by 2042. That's simply not the facts. Social Security will only be able to pay out about 70% of the promised benefit, but hardly bankrupt and just by tweaking the amount that social security taxes are paid on or moving the retirement age, this can be postponed.
The sixty cities in sixty days has brought the President's approval rating on Social Security down to 34%. I hope he keeps the campaign going. The spin doctors will have to figure out a way to overcome tonight's news conference.
The rest of the conference was usual babble. He has no immediate energy policy. There must not be a crisis in his mind. If there were a true national crisis, certainly he would have asked us to conserve gasoline. As long as his buddies at Exxon and BP/Amoco are making huge profits and ripping us off, he won't ask for that.
It doesn't look as if he and "Vladimir" have the understanding that the President thinks he does.
The War on Terror is going great! Terrorists attacks were up over 6 times they were last year. Iraq war is going great, terrorist attacks are up there, too. We can pull our troops out when the Iraqis learn how to fight. But we are winning.
Probably most people wanted to see "Survivor" anyhow. If things don't start turning around for Republicans, we may have the makings of a new reality show.
posted by Red Dog @ 9:39 PM
5 comments
5 Comments:
Red Dog, don't get bitten by the spin on both sides! Social Security is a guaranteed investment loser for all parties involved. Being a person of common sense, you should know that increased government taxation to rescue Social Security's guaranteed negative rate of return isn't the answer. The best the Democrats can do is to delay the inevitable by raising payroll taxes.
The biggest investment risk is relying on Social Security. We know it's soon to pay out more than it takes in. Yes, Wall Street carries risks but conservative investing, over the long haul, is a proven winner.
Besides, what's the difference in a private individual owning T-bills as opposed to the government? Your answer lies in the fact that people might become independent of government subsidy -a death knell not to Democrats necessarily but to the liberal line of thinking. This issue isn't about retirement funding. It's about preserving politicians.
First of all,thanks for your comments.
The spin on social security, provided by the Repuclicans, is that it is a retirement account. It is not that at all. It's real name is Old Age, Survivor, and Disability Insurance. It is an insurance policy that guarantees retirees will have at least poverty level income. Retirement is a three legged stool with Investment Accounts (401(k) and IRA's, etc), personal savings, and social security providing the three legs.
The President's plan to carve out investment accounts takes money out of the system now and requires borrowing to pay current level benefits. So, its kinda like borrowing money on your credit card to invest in the stock market. I doubt any sane individual would take that risk, particularly if you have to pay back the original amount you borrowed plus the finance charges and accept a reduction in the final settlelment of x%. Call them fees.
What most people overlook with the investment accounts is that you must purchase an annuity with what you have left after the loan and interest have been deducted. Since you don't pass on the annuity to any heirs, the only thing left to pass on is the excess amount you have left over after you purchase the annuity.
In the latest iteration of the President, indexing. Your benefit will be tied to the price index which allows you to retire at whatever years you choose and will guarantee you the same purchasing power that you have in the year you retire forever. Unfortunately there is a thing called inflation that eats away at this plan.
The pristine beauty of social security is that it is insurance, in case your other investments crater. Which they can. You can be much more aggressive with your investments if you know that you can at least have about 40% of your pre-retirement income guaranteed.
The real answer to social security reform is tax reform. The real crisis in government entitlement programs is with Medicare and Medicaid. The real problem to all of these is the current account deficits that we are running which have nothing to do with Social Security, except that the deficits would be worse if the social security excess were not paying for the war in Iraq, Star Wars Missile Defense Systems, Rain forests in Iowa,etc.
Continuing our line of thought....I agree that tax reform is the answer because the middle class is primarily soaked with the tax burden.
I don't believe big business pays any taxes because they pass their tax costs to consumer in the form of higher prices. The poor pay no taxes and actually receive more in tax credits than their yearly tax liability.
My idea is that everyone's retirement savings should be tax free as long as their savings account is clearly marked for retirement only - a 59 1/2 age limit is appropriate or possibly a certain dollar amount could allow the thrifty to retire earlier than that. I've never understood why they tax Social Security benefits.
Personally, I'd rather risk my future in a private investment account because time is somewhat on my side. But, these entitlement programs are busted to their very core and will only get more expensive. When social security launched, you retired at 65 and died about 67 year old on average. Now, we're outliving how long we were supposed to draw federal benefits.
Social Security needs tweaking right now. I already carry "private accounts." It's a shame the less investment-minded cannot see that investing IS the best strategy, then every election day won't remind them that they must vote for the person who'll guarantee the most in their check - that's not the way representative democracy works.
Obviously we are on opposite sides of the magic year of 1950.
My point is that SS provides a security if there are no other means available. If other means are available then great, it becomes an 'extra'.
You are wise to invest in growth instruments and I wish you luck. However, I've seen too many 401(k) statements in the red. More companies are filing bankruptcy and underfunding their pensions, causing the government to bail them out. Corporate criminals cook the books too often with cataclysmic results for their investors and employees. Mergers, bankruptcies, and outsourcing all reduce jobs which can totally wreck some local economies. So someone has to pay for the devastation and likely it falls on those who can least afford it. Which leads me to the philosophical argument of the "collective experience".
Don't ask me how I got there, just bear with me. The social security system has always been participatory (with some few exceptions). The taxes we pay support those who are retired, the young honoring the old by providing for their security in the latter years. When we retire, we expect the same consideration. Our money goes into a pool and is dispersed to the needy. The excess is left there for the future needs of those retiring. The pot continues to grow until the time that those contributing to the pot is equal to those taking from the pot. The problem is that no one managed the pot and we are reaching the point where there will be no excess in the pot. Four ways to fix it: reduce the number of people drawing from the pot, reduce the share of those drawing from the pot, increase the number of people contributing to the pot, or increase the share each contributor puts in the pot. Combinations are allowed which makes the total options 24 (if my statistics are right). Somewhere in that combination is the fix. By keeping the pot whole we still are part of the "collective experience" it just depends on which side of the pot you are on at a particular moment in time. No where in the fix can you refuse to contribute to the pot and go out on your own.
O.K. thanks for letting me get through that exercise. The whole point is there are other options without upsetting the balance in the pot. If we want the government to set those options up for us, fine. If we feel the government should stay out of it and we should handle our own money, that's fine, too. Just leave the pot alone.
You lost this one red dog big time.
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