Joshua Micah Marshall floats the idea of a Social Security clearing house.
We're setting up a special tabbed blog at TPMCafe, which will run live right through the November election. And there we'll provide wall-to-wall coverage of every race we're tracking -- every poll, every detail about fundraising, who's getting paid what, what's getting said at town meetings, who's running away from their old positions, bamboozling the press and so on. Everything you, the political junkie, need to keep your finger on the pulse of all these races.
We have BAR running for the Senate, Gary Binderim (District 2), Jim Henley (District 7), James Wright (District 8), Al Green (District 9), Ted Ankrum (District 10), Sheila Jackson Lee (District 18), Nick Lampson (District 22, against a Bush Republican to be named later) and Gene Green (District 29).
Social Security is a great issue to demonstrate the superiority of our candidates in terms of policy and values. Let's do the research and put out the word.
Posted by Jon Boyd at 07:02 AM | Permalink | Comments (0) | TrackBack
Texas Legislators decided to give themselves a $6000 raise in their pensions. For a legislator what serves 12 years on a part time job that meets 140 days every two years, they can start drawing $34,000 a year at age 50.
For the rest of their lives.
This is more than some of their constituents make in a full year working full time trying to raise a family.
Most workers don't get a pension. Some lost it all during the Enron fiasco. Yet our part time civil service law makers are guaranteed to make more than the poverty rate for doing absolutely nothing after the age of 50. And using our tax dollars to do it.
Am I the only one not real happy about this? $34,000 sure seems like an unreasonable amount.
John Cobarruvias
Posted by John Cobarruvias at 02:53 PM | Permalink | Comments (1) | TrackBack
Former Treasury Secretary Robert Rubin spoke to the House Democratic Caucus last week on Social Security. Rubin said that Democrats need to continue to "hold firm" in opposition to Bush's effort to reform Social Security, and advised the Democrats to not introduce their own plan to reform Social Security.
Rubin gained a great deal of prestige during the late 1990s when he presided over the Treasury Department and was the main architect of the Clinton Administration's economic policy. He served as Treasury Secretary from 1995 to 1999, and was formerly co-chairman of Goldman Sachs.
Rubins primary caution was that Democrats should avoid arguing over specifics with Republicans before the President has even laid out his own detailed plan for reforming Social Security. He said that Democrats should focus the debate on principles, especially framing it in opposition to additional deficit spending.
Rubin stated:
Putting out a Democrat plan on Social Security would be a horrible mistake because right now it's the president's principles against our principles.
An aide said:
From a political standpoint, he said, hold firm because your have a difference in prinicples; their principle is a privatization plan, ours is not to add to the deficit, and there's not a whole lot of room for compromise.
The main argument for not forming an alternative Democratic plan is that it would be essentially committing political suicide due to the fact that the playing field is highly skewed in favor of the Republicans. Republicans can wield a great degree of power that results from the coordination among the White House, the Senate, and the House that in turn would allow Republicans to influence any negotiation process. As long as Republicans remain committed to the creation of private or personal accounts this situation would most likely result in a detrimental result to Social Security.
While Rubin warned not to engage Republicans on specifics at the moment, he did say that a solution to Social Security reform will require bipartisan cooperation.
In criticism of Bush, Rubin said:
I haven't ever heard a bond marketer talk about savings 50 years out.
Meanwhile Bush is still high on Rose Garden Optimism. He maintains that his plan to restructure Social Security will improve it's longterm stability while not endangering the income of older Americans. However, he has already stated that if you were born before 1950, that there is nothing to worry about, and implicitly to everyone else: "retire at your own risk."
But he's got the unbeatble plan:
My strategy is pretty simple: Explain the problem to the American people, and keep explaining it and explaining it, and assuring seniors that you're going to get your check.
Personally, I think most people have made up their minds, any amount of repitition is not going to help Bush at this point. Another fact that runs against Bush, is that there are fewer people above age 50 that supposedly have nothing to worry about than there are below that age. A major "problem" for the administration is that the baby boom generation is just reaching retirement age, and they are justifiably worried about their retirments. I feel a certain amount of satisfaction that Bush has spent about three months campaigning for his "reform" plan, and has made no significant gains, and in fact, seen a drop in popularity.
Sorry Bush, but the public still isn't buying it.
Currently Social Security ranks as the third most important economic policy issue. Medicare reform ranks first, and deficit reduction comes in second. The most recent ABC/Washington Post poll (June 2-5) shows Bush's approval of handling Social Security at just 34%, disapproval is at 62% (a 7% increase since January). It also appears that Bush has lost even more ground by taking a risk by promoting reduction in guranteed benefits for everyone but the poorest Americans. The Washington Post also has the poll in pdf form.
Only 48% support some form of voluntary plan to invest a portion of their contribution to Social Security in the stock market. 49% reject private accounts altogether, a 5% increase since mid-December. If one combines personal accounts with reduction of future benefits, support for personal accounts falls to a meager 27%.
Across political groups, only a minority believe Bush's plan would improve the financial viability of Social Security. 63% of Republicans, 85% of Demcorats, and 72% of Independents believe Bush's plant would put Social Security in a more dire fiscal situation.
The only group in which Bush is making headway, is among Americans under 30. Among this age group, 71% support some form of private investment accounts. (I'm definitely not one of that 71%).
Thanks to Jon B. for pointing out the articles on Robert Rubin.
The articles:
Talking Points Memo (May 26, 2005)
The Hill, "Rubin urges Democrats not to reveal their hand" (June 1, 2005)
The Washington Post, "Poll Shows Public Is Skeptical on Social Security Plan" (June 8, 2005)
Posted by at 04:16 PM | Permalink | Comments (0) | TrackBack
On Thursday 28 April president Bush spent a lot of time on No Child Left Behind. He emphasized the importance of measuring the progress of students. Good, but enough is enough. He reminded us that it is the duty of the federal government to do so.
Wouldn't it be nice to know how much money was given to the churches?
How, with so many churches in America, was it decided which churches would receive money? Why shouldn't Americans know what was done with the money given to the churches? What was the criteria and what was expected of the churches? Was the money to guarantee his continued leadership?. What are the measuring tools for proof the money is being put to good use? Does his political capital mean that he can do what ever he wishes with the taxpayers' money?
I also wonder how much money it cost to have dignitaries bypass Camp David and have so many meetings in Crawford. Maybe after the newness of Bush's farm has been exposed to all the heads of state Bush will go back to being fiscally responsible and again realize the economic value of having Camp David so much closer to the White House. Bush has no problem using taxpayer money so lavishly on things for himself while having no problem making sure taxpayers get less and less for their money.
How many grandparents are certain their children are being taught by qualified teachers? How many substitute teachers are being used to avoid hiring qualified teachers who too often merely serve as baby sitters? Ask your grandchild if his Spanish teacher is qualified to teach Spanish. Ask your grandchild if his math teacher is qualified to teach math, etc. These are the questions your children should be asking your grandchildren.
Posted by at 10:24 PM | Permalink | Comments (0) | TrackBack
I guess just being a Christian School does not guarantee Christian attitudes are being taught and practiced. It was recently reported that officials at a Christian University near Chicago moved dozens of Black and Hispanic students to a hotel for their own safety and police stepped up campus patrols Friday after 3 people received threatening, racist letters.
Poo poo to Continental Airlines. It is ironic that former CEO Bethune who retired Dec 30 should get a 27 million dollar payout while asking and getting $418 million in cuts from execs and lower level employees. Perhaps Comtinental should ask Bethune for a loan or better still he could reject some of the big payoff funds.
Kudos to grandparents who are raising their grandchildren because their parents need temporary help, and double kudos to those who have permanent custody and are responsible for making their grandchildren good citizens.
Maybe grandparents will take the responsibilty to find time to challenge convenience store owners who sell tobacco products to their underage grandchildren, and better still inquire as to why no arrests are made. Supermarkets do not intentionally sell tobacco products to underage persons, so why should convenience store owners be allowed to intentionally sell tobacco products to your grandchildren?
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Poopoo to the NRA. Because of the NRA's stand on gun ownership many of our grandchildren are killed by hand guns. It is evident that hand guns and AK47's account for too many deaths, and for certain hand guns and AK47's are not hunting rifles.
I wonder if the new HISD Superintendent of schools has had time to evaluate the software that Neil Bush sold to the school board. It would be interesting for the citizens to know how the software will benefit our children.
It is ironic that Brown Schools, Inc., a private education firm, receiving public funds from Texas, California, Florida, Idaho and Vermont should file Bankruptcy, Chapter 7 and the school board still wants to put the education of our childrlen in the hands of "for profit" corporations. By-the-way aren't they lucky they aren't subjected to the restriction individual bankruptcies are going to be subjected to, thanks to the Bush Administration.
I hope you read the Wednesday April 13 Chronicle City and State front page bylined by Rick Casey. If you have thrown your paper away go to your public library and read it.
President Bush is a winner. His tax cut victory allowed him to pay $20,000 less in federal taxes for 2004 than in 2003. Not bad for looking out for ones self and wealthy and not so wealthy cronies. The not so wealthy cronies are good "yes" persons.
Chris Rock explained the difference between rich and wealthy. He says Shaq the basketball-wiz is rich and the man that signs his check is wealthy. Chris also says, "If Bill Gates awoke with Oprah's money he would kill himself."
Kudos to Bill Gates who once said rich people don't need tax relief and is now saying "If we keep the system as it is, millions of children will never get a chance to fulfill their promise because of their ZIP Code, their skin color or their parents income." I would say that Bill Gates is a man who really believes the No Child Left Behind concept to which President Bush only gives lip service. May everybody's God bless Bill Gates.
Posted by at 10:16 PM | Permalink | Comments (1) | TrackBack
What a week. We dealt with the death of a man and a woman. A woman in Florida and a man in Rome. May they both rest in peace.
We are left with two men who tested their power to the limit. As a person of retirement age I never once thought we would be proud to have leaders of our country who would destroy a democratic system by trying to manipulate the Supreme Court.
At least all the activities of the last week kept us from thinking about the high price of gas. While being concerned about gas prices, I wonder how many of us noticed the high price of food.
Kudos to the Gray Panthers.
Amy Muhs, First Convenor, Barbara Burr, current Convenor and Co-Convenor Sally Sanders are doing a great job and welcome all who are interested in what happens to retirees and OUR country.
You are welcome to vist any meeting on the first Wednesday of the month at 2 p.m at the Tracy Gee Community Center, 3599 Westcenter.
Houston 77042
Posted by at 09:05 PM | Permalink | Comments (0) | TrackBack
I as a senior citizen have (I am sure that you too) are aware that we have a duty to dig in our pockets and open our mouths for the sole purpose of preserving our Democratic party and especially democratic princples. I had the opportunity to hear Chris Bell at the meeting of the West Houston Democrats yesterday. He deserves Kudos for his effort to bring back the importance of ethical conduct in running our nation.
Also I want us all to be aware that a scam is being visited upon us via the telephone.
I got a call on Thursday. The caller said that I had been selected to receive an $8,000 grant from the government. The caller was using broken english and was quite hard to understand so I hung up. On saturday I got a call again, this time the offer was for only $5,000. I decided to have some fun. I asked where the call was coming from, the answer Florida. This caller's first language obviously was not English. The money according to the caller had to be deposited directly into my bank account. I pretended I didn't understand. Then she wanted to know my bank account number. I told her 99999. Immediately another caller took over. She spent sometime trying to get me not to let this opportunity pass. I recorded this but I had too much background noises on the tape. I said all this so that you will remind your friends to possibly expect this call and hang up so that you won't be tricked into giving out information that will only hurt you.
By the way they would have been very angry if they ever invaded my bank account.
Posted by at 03:12 PM | Permalink | Comments (1) | TrackBack
Robert Shiller of Yale University has just published his study on Bush's "life-cycle accounts," which are part of Bush's default investment option for personal accounts. Workers who chose the default option would automatically be shifted into the "life-cycle portfolio" beginning at age 47, unless they sign a form to opt out.
Not surprisingly, the report finds that the White House has been overly optimistic in its assumptions about personal investment accounts.
Nearly three-quarters of workers who opt for Social Security personal accounts under President Bush's "default" investment option are likely to earn less in benefits than those who stay with the traditional Social Security system, a prominent finance economist has concluded.A new paper by Yale University economist Robert J. Shiller found that under Bush's default "life-cycle accounts," which shift assets from stocks to bonds over a worker's lifetime, nearly a third of workers would bring in less in benefits than if they remained in the traditional system. That analysis is based on historical rates of return in the United States. Using global rates of return, which Shiller says more closely track future conditions, life-cycle portfolios could be expected to fall short of the traditional system's returns 71 percent of the time.
Continue reading the Washington Post article, "Retirement Accounts Questioned."
The following is the summary from Robert Shiller's complete paper, "The Life-Cycle Personal Accounts Proposal for Social Security: An Evaluation":
This paper evaluates the President’s personal accounts proposal, focusing on the “life-cycle portfolio,” a proposal to balance risks and returns by defaulting younger workers into a higher stock allocation and then shifting more towards bonds as workers approach retirement. The paper includes an analysis of rates of return under the life-cycle portfolio and an analysis of the finance underpinnings of the life-cycle portfolio. The paper finds that the returns to life-cycle portfolios are considerably lower than the rates of return typically used by the Social Security actuaries in evaluating returns for personal accounts that do not have the lifecycle option. In addition, life-cycle portfolios are considerably riskier than what some would think. By suggesting that the life-cycle portfolio is the recommended portfolio for everyone, the plan neglects the variability across workers of economic situations, and of psychological barriers to good financial planning: given the risks, the plan could be disastrous for some workers.Methodology: The paper uses historical returns from 1871-2004 to assess the President’s personal accounts proposal. It does 91 different simulations for a worker born in 1990 assuming that he or she experiences the actual returns from 1871-1914, 1872-1915, 1873-1916, all the way through 1961-2004. This sample has an average real stock market return of 6.8% annually, slightly above the 6.5% annual return assumed by the Social Security actuaries.
These historical returns are not, however, a good guide to future returns. The United States economy and stock market performed extremely well over the last century. Many factors suggest this lucky experience is not likely to be repeated: most analysts project slower GDP growth in the next century, the risk premium required for investing in equities may have diminished, and the P-E ratio is very high by historical standards.
The Wall Street Journal recently surveyed 10 leading financial economists, the median projection for the stock market real rate of return in this survey was 4.6% above inflation. This is slightly lower than the median real return of 4.8% in a 15 countries from 1900-2000 surveyed by Dimson et. al.
As a result, the paper also use "adjusted" stock market returns designed to match the median stock return in 15 countries from 1900-2000, this is slightly above the return in the Wall Street Journal survey and is a more accurate projection of future returns.
Life-cycle Portfolio: The paper analyzes a range of potential portfolios. The featured portfolio is a "lifecycle portfolio" designed to capture the President’s proposal. According to the President’s plan, workers would be defaulted in a specific mixture of stocks and bonds. At age 47, workers would automatically be shifted into the "lifecycle portfolio" unless they signed a form to opt out. The President has not specified the portfolio allocation of this account, this paper assumes a benchmark portfolio is invested 85% in equities through age 29 and then phase-down to 15% equity investment by age 60.
Key Findings:
• Using historical returns, the life-cycle portfolio loses money 32% of the time (i.e., 32% of the time the internal rate of return is less than the 3% real return required to break even in the proposal). The median rate of return is 3.4% annually.
• Using more realistic adjusted returns, the life-cycle portfolio loses money 71% of the time and has a median rate of return of 2.6%.
Discussion: These rates of return are considerably below the 4.6% that the Social Security actuaries have assumed for. In addition there is considerably more risk than one would generally associate with previous discussions of "lifecycle portfolios." The most important reason this happens is that the life-cycle portfolio is invested in higher-yielding assets in early years and lower-yielding assets in later years. Because contributions are made annually, the returns in later years matter much more (i.e., the return in the first year only affects the first contribution but the return in the last year affects all 44 years of contributions). This effect is heightened because the typical worker reaches peak earnings in his or her fifties.
Other Findings: The optimal portfolio for a worker choosing the personal account as a replacement for much of the guaranteed Social Security benefit is considerably different from the optimal portfolio for a worker investing a 401(k) in addition to Social Security. If you have a Social Security benefit that is not subject to market risk, then you can invest your additional savings in a higher return/risk portfolio. But in the President’s proposal, the investments are replacing a large fraction of the existing Social Security benefit. Thus you would not want to invest them in as risky a portfolio.
A worker that has the correct balanced portfolio of stocks and bonds should not even participate in the accounts. Conditional on participating, he or she should invest entirely in bonds in order to avoid changing their current portfolio. Other psychologically constrained workers might benefit from shifting their portfolios more into equities. Social Security design has to take seriously psychological barriers to enlightened saving and investing; workers not subject to these barriers are very different from workers who already do things right. Overall, any proposals to encourage savings and investment should be designed with a variety of different types of workers clearly in mind.
What the report doesn't mention is the possible future of the bond market. Just last week, when the Japanese prime minister made remarks suggesting the country's central bank could be shifting some of its enormous reserves out of dollars and Treasury securities, the dollar tumbled. A similar situation occured earlier this year when it was thought that South Korea might jettison some of its dollar reserves in favor of other currencies.
China, Japan, Hong Kong, South Korea, and Taiwan together hold 56% of the Treasury securities owned by foreign countries. Many of those securities are held by their central banks. So any significant shift of their reserves out of dollars could spell trouble for both the American currency and the bond market. Consequently, if the personal account system shifts workers to bonds beginning at age 47 and foreign nations get rid of their dollar investments, those workers could end up losing their retirement benefits.
Alan Greenspan, the chairman of the Federal Reserve, has said a shift out of dollars by foreign central banks and foreign private investors should be expected at some time, although he has not said it would necessarily be disruptive.
All in all, private/personal accounts just aren't a good substitute for Social Security.
Click here to view Robert Shiller’s complete paper, "The Life-Cycle Personal Accounts Proposal for Social Security: An Evaluation."
Posted by at 10:26 PM | Permalink | Comments (3) | TrackBack
Today on Meet the Press the main topic of discussion was private accounts connected to the solution of the real and or perceived trouble the Social Security program is experiencing. The Host says to Democratic Senator that all 45 Democratic Senators are in accord that the Republicans should remove the privitization element from the answer to solving the overall problem. Dumb senator Nelson, rather than taking the opportunity to show a solid front went on to say how we need to do this and or that. Why didn't he just say yes? This again was a good example of Democratic WIMPERY.
Posted by at 11:20 AM | Permalink | Comments (4) | TrackBack