<$BlogRSDUrl$>

Saturday, January 22, 2005

WP Features Perpectives on Social Security 

Tomorrow's Washington Post features a host of commentaries on the privatization plan President Bush has staked his "political capital" on.

In the introduction, economist Everett Ehrlich is quoted describing the plan in the following way:

"What Bush is doing with the Social Security debate is akin to drilling a hole in a boat, telling people the boat is sinking and suggesting that everyone put on a hat. The boat is the federal budget, the drill is Bush's tax cut, and the hat is his plan for diverting some Social Security money into private accounts -- a solution disconnected from the problem, Ehrlich says."

Body Counts 

Has anyone thought about how the US government logic of portraying casualties in Iraq would sound if applied to any other kind of devastation? For example, if one were only counting military deaths, would the casualties suffered during the recent tsunami in South Asia number in the hundreds...low thousands?

Would anyone object if we weren't given numbers for civilians killed and injured because no one bothered to check? Would it be problematic if officials said it simply wasn't part of their area to count civilians? What if this policy were taken by a government in Sri Lanka? Would the US find it wrong?

Just asking.

Friday, January 21, 2005

Pension Reform, Real Security 

Let’s face it. The real problem for retirees isn’t that Social Security might go broke, it’s that the retiree might go broke. And why might that happen to many retirees in the richest country in the world? It’s about pensions and tax deferred savings—Social Security is just the last thing between them and poverty.

When the President brought up Social Security privatization, he tapped into a fear many people approaching retirement have, that we might not have put enough away to protect our home, our expenses, and our lifestyle. For some (an increasing number), the fear is about more than just lifestyle—it’s about real destitution. What’s changed in American life that so many people are living with the possibility that they might end their lives without the security they held onto during their career?

The real problem, in economic terms is about pensions. A pension, in the old-fashioned sense, used to be a ‘defined benefit,’ a set amount that retirees would receive monthly from their employer after their career was over. A pension was dependable and sacrosanct; retirees depended on it. Increasingly, that sort of pension is becoming a thing of the past.

We’ve seen a shift to ‘defined contribution’ plans, which are characterized by the dependability of the contribution, not the dependability of the benefit at the point where a retiree needs it. They’re not always a pension, per se, these plans may be tax-deferred savings plans that are owned by the individual, but they are still meant to do what the old-fashioned pension used to do, provide income after we end our working life. These plans, sold to taxpayers and employees as being more flexible and more successful as an investment vehicle, are increasingly yielding a poor excuse for a retirement for more and more people.

These plans were always a good deal for employers, they helped separate retirement concerns from compensation for work. Any vehicle that helped employers set a wage and also allowed the worker to contribute out of that wage towards their own retirement was a good way to step away from a fully funded pension, so why wouldn’t employers offer it? At first, the new plans were primarily funded by employers, but over time, we’re seeing more employers ‘offer’ such plans without contributing significantly to them. It’s up to the employee to pony up a portion of their check to fund the plan.

What’s worse for employees, retirement plans often have no default amount that is both satisfactory to provide for a decent benefit and is also automatically deducted monthly, unless the employee otherwise requests it not be. For the employer, again, that’s all the better, as less employees complain about the diminished size of their check and ask for a raise, to live on the remainder. So the contributions made to these plans, particularly for low-paid workers, remains inadequate to fully provide for the worker’s retirement. It’s only too late that most wage-earners in this predicament start to worry about how to make up the difference.

The other problem with ‘defined contribution’ plans is that there’s no guarantee that it's investments will be doing well at the end of a worker’s career, when it really counts. Financial consultants, usually working for large investment firms, generally advise a more conservative approach to the worker’s retirement bundle as they advance in age, but their bread isn’t always buttered the same way their clients is. Often, the financial consultant is partially compensated by the outfits who invest the worker’s money. While most financial consultants want their clients to do well, there is the temptation to leave investments in place with firms that kick a commission their way as well. There’s also a human tendency to let the winnings ride in risky equities when the market is doing well, like many workers did before the tech bubble burst.

The joke now is that many a 401k has become a 201k. It’s only funny if it wasn’t yours.

So the defined contribution plan isn’t a panacea. It’s good for some folks, usually better for those who might do well in general than for those who squeak by to earn a living. They get worse advice to invest less money.

In order to add to the plans, many laws have been passed to allow tax-advantaged accounts, like IRA’s. Over time, lawmakers have labored, with help from the investment houses and banks, to make these plans more attractive. Alas, these plans, and changes to them, have also favored those who already do well enough. If you have more disposable income to sock away, new laws make it easier to put that money into tax-advantaged accounts. That’s great if you have more disposable income to give. It helps the financially healthy, but not families still squeaking by. They spend that money on rent, mortgages, car payments, food, and education instead.

So now, what does the Bush Administration offer to the families who worry that they don’t have enough? A private account, carved out of the last safety net they own, that Social Security check that might be most of what they still have coming, that's what. This is a bait and switch of the first order. What working families need is some attention given to help them put a pension away, not a pox on their antipoverty protection.

There are many ideas out there kicking around to incrementally improve the situation of people trying to build a retirement. The ones I’ve seen mentioned include making a decent standard deduction a legal default contribution for 401k’s. Most people go with contributing a default amount, so if a decent standard is taken from their check and salted away in their own 401k, they’re less likely to say, “Put less in there. I’ll never retire.” Another idea is based on giving a tax credited bond contribution to low-income families who save for retirement, cashable only on their retirement, to augment and encourage savings. There are lots of little ideas for laws to help people save, without cracking open their Social Security piggybank. None of them have attracted any attention from this administration.

Then there are the big ideas, ones that we never hear. One of them would be adding a mandatory or voluntary account in addition to Social Security—without taking away the latter benefit. You would have an additional amount withheld as a personal retirement account, tax deferred or exempt up to a certain amount. Maybe a tax refund could be designated for that account. A new program would have major benefits for working and poor families, and might provide a basis for discussing private or quasi-private accounts that work. But big ideas have big price tags. When your government is busy giving constantly more money back to the rich, no new programs can be discussed.

So we're left with the incremental ideas. Even these would help many families escape the specter of aging and becoming a burden to their families, living in fear that the littlest ripple could turn their world cold.

Anybody think we should address reforming our system, once we beat back the privatization scheme the President has in mind?







"...to bind up the nation's wounds." 

I’m working on my promised post about pensions and the real retirement crisis we face, but first, I have to stop in amazement at the contrast between the way this President has taken his inauguration as an opportunity to party and strut versus the approach our past ‘war presidents’ (who, interestingly enough, never characterized themselves as such) took to their inaugurations during wartime.

Bob Herbert wrote today that the balls and pomp in Washington reminded him of the scenes in ‘The Godfather’ in which a baptism is intercut with the carnage of a series of mob hits. Certainly the death and destruction in Iraq is not unpredictably set in contrast to events in DC where rich kingmakers dance into the night, partying and toasting to the ‘freedom’ the President proposes to export to every willing people, just as he’s done for the Iraqis.

God help them.

Lincoln had it right. In his second inaugural(see Boffoblog for the full text), with the country blighted by war, he chose to conclude with words to bind a torn country together. These are words we might imagine coming from another potential President, but alas, not from the current occupant of 1600 Pennsylvania Avenue:


“…With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation's wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.”

-Abraham Lincoln, 1865

Thursday, January 20, 2005

A Day of Silence 

We'll be away from all blogging activity in deference to the Bush Blackout.

Let's hope for a better tomorrow.

Please refer to http://www.bushblackout.com/

Thanks to Paul Glastris at Political Animal, we have these words to remember in the meantime:

"A little patience, and we shall see the reign of witches pass over, their spells dissolve, and the people, recovering their true sight, restore their government to its true principles. It is true that in the meantime we are suffering deeply in spirit, and incurring the horrors of a war and long oppressions of enormous public debt...If the game runs sometime against us at home we must have patience till luck turns, and then we shall have an opportunity of winning back the principles we have lost, for this is a game where principles are at stake."

Thomas Jefferson, 1798

Wednesday, January 19, 2005

Dems Ask President to Show His Hand 

As expected, there are more stories are being written along the lines of “What Will the Democrats Offer” on Social Security...

Tom Curry, in such a piece for MSNBC, is rooting around for what the Democratic response will be, beyond supporting the successful program and its apparent solvency to continue into the 2040’s with only minor adjustments (like there should be further explanation...).

Harry Reid is quoted as saying he’s tired of, “hearing all this posturing from the president. Let’s see him put something in paper for a change, rather than using his pulpit to speak.”

As the President is so fond of saying about his own positions, The Democratic leadership isn’t going to negotiate with itself.

Won't Get Fooled (Again)? 

Via Pudentilla, we see that the story, which has remained shadowy for some time, about Iyad Allawi executing tortured Iraqi prisoners has gained some more credibility, both in an article in the current New Yorker Magazine by Jon Lee Anderson and in an article in the Sydney Morning Herald by the Herald's chief correspondent, Paul McGeough. An unnamed US official is reported to be the source.

According to Anderson, a friend of Allawi describes him in the following way, “Iyad’s a thug, but a thug where he needs to be one. The Americans who set this up call him Saddam Lite.”

OK, I'm listening, it wasn't the WMD, it wasn't getting rid of torturing, murderous dictators, it was...spreading democracy. Right.

From a Sinking Ship... 

In an important vote-of-no-confidence, Republican House Ways and Means Committee Chairman Bill Thomas is predicting President Bush’s Social Security plan will become a “dead horse.”

Thomas wants to move up tax policy on the agenda, clearly a sign that he knows a loser from a winner, and privatization is looking more like a loser every moment…

Your Move, Mr. President... 

Clear opposition to Social Security privatization is just that—being clear. There’s lots of media talk about compromise plans (ones that would surely be dead on arrival with the Republican majority) and suggestions of reputed benefits of private accounts (even though we already have them… in the form of IRA’s, SEP’s Keogh’s, 401K’s, etc). There ARE times to negotiate on policy, but while dismemberment of a successful antipoverty program is being proposed in the guise of “saving” it, compromise is not a strategy for progress.

There is a line of thinking that supporters of Social Security haven’t engaged the debate fully if they haven’t put forward an alternative plan to make the Trust Fund completely solvent until infinity. But if, as Roger Lowenstein states, Social Security, "appears to be solvent or near solvent until the limit of what is humanly forecastable,” alternative plans aren’t what this debate requires right now. What is required is support for a program that works.

The President has described elements of a privatization plan, borrowing, and defined benefit cuts. The next move is his to make.

***

We'll have a post soon about addressing the savings gap for American pensioners-to-be. One thing it won't be about is replacing Social Security.

Tuesday, January 18, 2005

Fool Me Once, Shame on You... 

For a study of the plan to Saddam-ify Social Security, please read Paul Krugman today. The parallels are Massively Destructive.

Digging a Hole... 

The good news is that a Washington Post poll taken recently shows that Americans disapprove by 55% to 38% of the President’s handling of the Social Security issue. The caveat is that we can expect the White House fundraising and message machine to deliver at least $100 million in ads, mailings, and spin on the issue in the coming months.

As Al Franken said recently, scaring old people is easy. The President is moving on, embarking on a mission to scare the young that their pensions won’t be there when they need them. Nonetheless, his hand is firmly attached to the third rail of American politics in an attempt to remake America in the image of neoconservative ideals. Killing Social Security is job one. But he may find Americans unwilling to play along.

Monday, January 17, 2005

The Costs of War 

Dr. King was moved by the cost of the conflict in Vietnam to deliver one of his most significant speeches, on April 4, 1967. The speech, entitled, "Beyond Vietnam: A Time to Break Silence," laid down his case against US military involvement. Mentioned first among his reasons to oppose the war, King tied the failure of antipoverty programs to the drain on public coffers caused by the war.

King said, "There is at the outset a very obvious and almost facile connection between the war in Vietnam and the struggle I, and others, have been waging in America. A few years ago there was a shining moment in that struggle. It seemed as if there was a real promise of hope for the poor -- both black and white -- through the poverty program. There were experiments, hopes, new beginnings. Then came the buildup in Vietnam and I watched the program broken and eviscerated as if it were some idle political plaything of a society gone mad on war, and I knew that America would never invest the necessary funds or energies in rehabilitation of its poor so long as adventures like Vietnam continued to draw men and skills and money like some demonic destructive suction tube. So I was increasingly compelled to see the war as an enemy of the poor and to attack it as such."

***

If anyone wonders about the cost of war today in Iraq, it might be worth looking at a recent post from Angry Bear, who discusses some of the hidden costs, before linking to a previous dissection of the war's running tab.

Dr King's Legacy 

It’s Martin Luther King Day in the United States and one wonders today, had he lived, what Dr. King would have done to protest the war in Iraq. King risked much of his comfortable credibility to oppose the Vietnam War and the racism inherent in waging it. He made it clear that one couldn’t support civil rights at home, as Lyndon Johnson had done, then wage war on a people of color abroad to suit the ends of a strategic global chess match.

Today, one has to believe King would be reminding us to continue to fight against the idea that the US can morally use violence against innocent people, treating them as pawns in another violent counter-move to achieve strategic goals, whatever they might be. He’d likely be even more furious about an American administration pre-emptively making an example of another country, such as the attack on Iraq. One has to believe he’d speak out against a war being justified domestically as defense of a frightened and angry America, which had just endured such an attack on itself, when no reason to link invasion of Iraq to our defense was proved.

He’d also heard now-again-familiar pep talks about spreading democracy, then used to justify violence in Vietnam. King didn’t buy the idea that democracy could be imposed on a country at the barrel of a foreign gun. What’s more, King saw the connection between the adventure abroad in Vietnam and cuts in domestic programs to fight poverty. Even in times of more plenty in America, war was a priority that required someone at home pay the price to send soldiers, materiel, and firepower abroad. In LBJ’s day, that price was spread a bit more evenly throughout society, but still hit the poor the hardest. Even without tax cuts for the rich in his day, King decried the injustice underlying the choice to fight poor people instead of feeding them.

Today, it’s pretty easy to see the priorities of an Administration that wants to cut back on benefits to the aging, to people in need of housing, and to children in need of an education, to list a few areas, in order to pay for a war against and occupation of a country that had not threatened the US. It’s not hard to imagine what Dr. King would’ve thought about those priorities.

There’s a temptation to confine Dr. King’s legacy to the work he did in the South, to the beginning of his work as a civil rights leader through the adoption of the Voting Rights Act in 1965. But King’s leadership grew to a broader vision as he realized the interconnectedness of one form of oppression with another. Seeing the poverty in northern cities and the segregation of communities that had no simple law to enforce the apartheid of a nation separated by custom and economics, King grew to become a challenger to the powers that continued to support the status quo, even when they accepted the legal niceties of de jure equality.

Today is a good day to reflect on the unfinished business of Dr. King, rather than simply celebrate the victories he won. He wasn’t one to rest on his laurels. King spoke of his Nobel Peace Prize as a commission to continue to work for peace, not just an award for having done so. We might in some small way do the same on his behalf. We might also remember in a time when people engage in a lot of loose talk about values, what real courage to live out values in everyday life looked like.

Good Blog/ Bad Company? 

Pudentilla’s Perspective, a good, solid blog (now on the Links at right) from the backwoods of Central Maine, has been asking a question that someone with serious time on their hands ought to answer, “Who in the hell is Scientific Applications International Corp?”

Pudentilla has noticed that the company pops up as the supplier of the FBI’s new, nonfunctional, and unbelievably expensive computer system to track terrorists, but also in several other unexpected places, with interesting connections to intelligence agencies— and voting system suppliers.

One has to hope their voting systems are more functional and open than their FBI system, which seems to have been largely scrapped

...I have to wonder who their execs and board have been contributing to...

Sunday, January 16, 2005

Updates from the Social Security Wars... 

After a lovely weekend off the grid, I hope a little roundup on the latest Social Security tidbits will help update readers on the latest machinations in the privatization sell-job:

As you know, we’ve been ticked to open up our annual Social Security Statement here, only to find it contained a fear-mongering introduction from the Commissioner (who presumably wants to keep her job, even if it means doing Karl Rove’s bidding) that hypes the non-existent ‘crisis.’ Well, according to today’s NY Times article by Robert Pear, the entire civil service staff at the Social Security Administration has been involuntarily enlisted in the effort too. Now they're all required to scare Americans and their legislators into supporting the President’s effort to phaseout their successful enterprise.

In other notes, Kevin Drum at Political Animal has excerpted a recent exchange with the press, in which the President attempts to keep reporters on-script with the current lingo (“don’t say ‘privatization,’ ” you ingrates, say ‘reform.’)

Josh Marshall points to an opinion piece from Martin Wolk at MSNBC that quotes veterans of Social Security crises past who aren’t convinced by the current version of fiscal Armageddon.

Looking through the Times, both the Magazine and the Op-Ed page feature pieces on Social Security, a piece by honest conservative Paul O'Neill, who at least actually cares about people having a decent pension (even if he doesn't have a good suggestion to come up with a trillion to pay for the enhancements), and in the magazine a bit of history and number-crunching by Roger Lowenstein, who doesn't quite see the crisis the way the neocons do.

Finally, we have what look like permanent URL’s to bookmark for the up-to-date lists of legislators who will be the critical focus of all horse trading on the votes in this monumental battle, the Fainthearted Faction and the Conscience Caucus.

This page is powered by Blogger. Isn't yours?