Social Security

Things don't look so good for Social Security reform, and thats a shame. It's a shame because Social Security is broken, and needs fixing. And it's a shame because President Bush may be the last president we have for a while whose actually willing to risk the status quo for real solutions and progress.

Before we talk about Social Security we must set out a few realities--the facts as they are, from which to work. First, there is no 'trust fund' so to speak. Social Security as it stands is just part of the fiscal budget, and not a separate entity. It also has no money. All incoming money is promptly spent on current Social Security beneficiaries. That means that the money each of us pay every paycheck makes a quick u-turn and goes into some retiree's pocket.

And what about these treasury bills we've heard about that are in the fictional trust fund. The Japanese value them. Are they not real money? Well no. They are in effect IOUs. Now the government has a good track record of making good on, and paying for its IOUs, but they do not represent any real asset, at least of the US. Yes I think we will continue to pay out on our IOUs but where does that money come from. It comes from taxes, from you and me. So to the Japanese t-bills are assets, but to Americans as a whole, a t-bill is not an asset but a liability.

Think of it like this (I got this from David Frum). If I write an IOU to John, then John has an asset that he can collect at some future date. If I write and IOU to myself, I have nothing of any value. This is what we have done with Social Security. We have written ourselves a bunch of IOUs, which, to make good on, we will have to fund ourselves, through higher taxes. The only other thing we can do is lower the Value of the IOU, fudging on our initial promise to ourselves.

Another reality is that Social Security payouts are growing in real terms. This is because Social Security benefits are indexed to wages, and real wages continue to grow higher and higher. Initially Social Security was not indexed to anything, and every couple years congress would vote to increase the payments, but this was a problem because benefits were growing much faster than inflation. The solution was to index benefits to inflation. The formula that was initially used however, didn't work and cause huge undue increases in benefits. Finally, for some consistency, benefits were indexed to wages. This, however, means that we will be unable to grow our way out of our Social Security problem, because as the economy grows, wages grow, and Social Security benefits grow as well.

In addition or population pyramid has changed. At one time there were as many as 16 workers supporting one retiree. A decade of two ago 5 workers supported one retiree. Now its 3.3 workers and in the near future it will be less than 3. Fewer workers per retiree + continuously increasing wages (in real terms)= fiscal crisis.

What can be done to fix this mess? If we are to continue as we have with a pay as you go government run system only two things-- raising taxes and/or cutting benefits. Raising taxes not only taxes the worker, who earns and can use the money, it also is a tax on growth. The Social Security tax in general is know contribute to unemployment. Cutting benefits would mean in 2040, cutting as much as 30% of benefits. It would also mean also mean, if you look at Social Security as an investment of money now for future security, those paying in now will be receiving significant negative returns, getting much less out than what they paid in. Undoubtedly some combination of the two will have to be done to make the system solvent.

But there is a third element that would both help (though not fix entirely) solvency, and switch from a pay as you go system to a real system of saving and building wealth: Personal Social Security Accounts.

Much has been made of the transition cost for these accounts, but the transition cost are not new cost that would otherwise not exist, they are benefits we have promised ourselves that will otherwise not be paid unless we get our fiscal house in order. The two trillion dollar transition cost today will compensate for what is 12 trillion dollar promise we've made ourselves for future benefit payouts. It is a very good deal to go from owing 12 trillion dollars to owning 2 trillion dollars.

And yes, these accounts help the solvency of the system. I know that even the Bush administration has said they do not (a huge mistake in my estimation). But this is based on the assumption that personal accounts will get the same returns that a treasury bond gets (about 3 percent a year). But if you stock broker of financial advisor tells you you're only going to get a 3 percent return (really more like 1.5 percent after inflation) you should promptly fire him. Bonds, which are a virtually risk free investment when properly diversified, return 4 or 5 percent. And the stock market averages about 9 percent per year. Its a safe bet that personal account will beat the return that Social Security promises.

If you need an example look at the Thrift Savings Plan, enacted by congress as part of the last Social Security fix in the early '80s. This plan gives government employees the opportunity to invest there Social Security payments in bonds, stocks, treasury bills or any combination of the three they choose. A Thrift Savings Plan participant have to pick the diversified index funds, meaning a person using the plan can't put all his money in one company. Rather he chooses to put his money into thousands of companies, or thousands of bonds, thus ensuring proper diversification. The result is a program that returns an average of 5.9 percent for its participants annually.


These higher returns made possible by investing a portion of Social Security taxes in individual accounts will then compensate for the diminishing returns that will inevitably happen in the government controlled portion of Social Security. In fact if personal accounts are enacted future retirees can look forward to getting more money from Social Security that today's retirees.

In short personal accounts both help fix solvency and the underlying cause of current insolvency, the 'pay as you go' system.

Coulter

Coulter
Originally uploaded by RHarris.

Read the latest Ann Coulter collumn here. The whole think is funny and irreverant, but this is probably my favorite passage:

The only people liberals can find to put up a fight these days are ex-Klanners and other assorted nuts.

There's former KKK "Kleagle" and Democratic Sen. Bob Byrd, who compared the Republicans to Hitler last week. Byrd having been a charter member of a fascist organization himself, no one was sure if this was intended as a critique or a compliment.

Provocative

I like this story.
Brian Duprey, a Republican State Senator in Maine (traditionally liberal) has introduced legislation that would make it illegal to abort a baby based on its sexual preference (the legislation looks forward to the possibility that in the near future a gene may be found that controls sexual preference).
What Duprey has done here is brilliantly cleaver in my opinion: setting liberal interests against themselves. In opposing this legislation abortion advocates will leave themselves open to attacks of "gay bashing" or "being homophobic."
But if the legislation passes, one has to wonder why its not ok to abort a child based on sexual preference, but ok to abort on, say the sex, potential physical, etc. of a baby? Its a whole new can of worms, so to speak, when it comes to abortion.

Parting is Such Sweet...

I have to get in all my digs on Rather before he fades from our memories into obscurity. Here's a compilation of Rathers bias over the years. Its quite compelling.

The Clinton Conundrum

Hillary.Clinton
Originally uploaded by RHarris.

If you can remember back to my post about the 2008 presidential race, you will recall that I though the problem that would sink Hillary's bid would be here inability to convince us that she could keep us safe. Low and behold, Dick Moris has about the same analysis in his column today:

Interestingly, our polling — which we conducted for Hillary in the early '90s — showed that men and women, sexist or not, all had the same gender-based
stereotypes. Women were perceived as better on issues involving children, education, integrity, health care and the environment; men were seen as better on defense, foreign policy, holding down taxes and cutting spending.

Goldberg

Goldberg
Originally uploaded by RHarris.

The big news these days is the shooting by American soldiers which killed an Italian Intelligence officer, and wounded an Italian Communist journalist, Giulana Sgrena. It defintely was a tragedy and has resulted in much discussion and finger pointing. The Soldiers involved in the shooting say that the car was speeding towards a check point. Sgrena says there was no obvious check point.

There's more to it than that. It the Italians did not tell us that they had reporters and agents in the area because they had gone to pay a bribe to release a kidnapped reporter. Americans are very reluctant to pay bribes, knowing that paying one only encourages more kidnappings. Nevertheless, if we had know what was going on, the event that tragedy that resulted would have been much less likely

But calling this event a tragic mistake is not enough for Sgrena, who insists that American troops are targeting journalists. No evidence has been offered up as to why this is so, except a guess at secret desires/motives. Also, as Jonah Goldberg points out, there isn' much in the way of reasoning to support that conspiracy theory either.

About this Italian reporter. The best proof, by far, that the US was not targeting her as a matter of policy or by mistake is that she is still alive. If the mens rea was there the Americans would have A) put a lot more holes in that car (though still probably not the "rain of fire" she complained about) and B) they would have finished the job, if for no other reason than the best way to have your policy of executing journalists exposed is let a big-mouthed one whosympathizes with the enemy -- i.e. her kidnappers -- get away wounded.

Farewell

As we say goodbye to our friend, Dan Rather, I thought It appropriate to reflect on a touching moment from Dan's Career. Here's a Dan moment from 87:

rather
Originally uploaded by RHarris.

This rumor was given an enormous jolt of credibility when Dan Rather bumbled into a matchlessly goofy fiasco. On the evening of September 13, Rather was anchoring CBS's Sunday newscast. The sports division had been covering the U.S. Open all afternoon. A match between Lori McNeil and Steffi Graf was running long, and ratings-conscious network bigwigs warned Rather that the overtime would have to come out of his 6:30 broadcast. Infuriated by this edict, Rather stormed out of the studio right at 6:30. The match ended at 6:32. The entire
Columbia Broadcasting System thereupon went black for seven minutes.

Most people would doubtless have taken this little peccadillo in their stride: So the network went black. Big deal. That's what test patterns are for. Besides, Rather hotfooted it back to the studio and got on the air as soon as he realized that his childish tantrum had left CBS eyeless. But what did he do next? He issued a statement. "I would never, nor would anyone at CBS News ever think of deliberately allowing the network to go to black,' Rather told a breathless America. "I do believe that the CBS Evening News is a public trust and will continue to do anything and everything to meet the responsibilities of that trust.' Meanwhile, Larry Tisch played it cool. He called the blackout "unfortunate' but said he wouldn't "condemn' anyone. For building confidence, this ranks right up there with a friendly peck on the cheek from Don Corleone.

Teresa Heinz Kerry: Ever the Loose Cannon

Teresa_Heinz_Kerry
Originally uploaded by RHarris.

I suppose I pick on Democrats a lot. But really all I ever do is quote them when they accidentally reveal themselves. And, yes, I do realize that there are some republican nuts as well. But Alan Keys is on the fringe of the party not in the mainsteam.

When I quote Dems, I'm not making an argument about Democrats based on some obscure congressman from Vermont. Thus far I've only quoted the nonsense of Howard Dean, the newly elected leader of the Democratic Party; Robert Byrd, the most senior senator in the senate (I believe); and now Teresa Heinz Kerry, the Democratic almost-first lady. One would hope these very prominent Democratic figures are somewhat reflective of the party as a whole.

So here is the latest wisdom from THK:

COUNTING THE VOTES: Heinz Kerry is openly skeptical about results from
November's election, particularly in sections of the country where optical
scanners were used to record votes.

"Two brothers own 80 percent of the machines used in the United States," Heinz Kerry said. She identified both as "hard-right" Republicans. She argued that it is "very easy to hack into the mother machines."

"We in the United States are not a banana republic," added Heinz Kerry. She argued that Democrats should insist on "accountability and transparency" in how votes are tabulated.

"I fear for '06," she said. "I don't trust it the way it is right now."

The Ten Again

More on The Ten Commandments, this time from Larry Kudlow. Here's my favorite passage:

I have a few direct questions for you: Is it such a bad thing to think about not killing, not stealing, not lying, and not committing adultery? Is it so bad to talk about honoring one’s parents? Or to think about a power greater than oneself — about God or some higher deity? Or to set aside just one day a week as a spiritual day, separate from the material strivings of the other six days?

Genetics?

I was recently told I was obsessed with gays! Hmm. Well anyway I have this thought. If homosexuality is genetic, wouldn't the gay gene eliminate itself from the gene pool pretty fast? This argument is of course fairly susceptible to the argument, that, yes, homosexuality is genetic, but because for such a long time gays where shuned/socialized into living pseudo-heterosexual lives, the gene spread etc. etc. Anyway, its far from a full proof argument that homosexuality is not genetic, but its something to think about.

More on Romney

The current Republican Governor of Massachusetts published an article yesterday in The Boston Globe about stem cell research, to which I linked. Today in The Daily Standard, read about the Globes odd, and possibly underhanded references to Romney's religion (Mormonism, that is).

Chimps Ahoy

The guys at NRO are blogging about chimps (primarily because of that chimp who attacked a man and chewed on his face!) Anyway, for some reason I found this awkwardly written post very funny. Probably because the source of the authors expertise are The Planet of the Apes movies.

Deanomania

I don't want to seem like I'm picking on Dean all the time (or do I?) But really he deserves it. Look at what Tucker observed:

Libby (Cedar Rapids, IA):
Very sorry that Harold Ickes did not call you on your throwaway comment that Dean has a "demonstrated lack of [self] control" - or similar verbiage. Please, please go back to the damned Dean Scream: look at it unfiltered, as it were. The man is pumped, he is elated, he is hoarse [and getting a cold - check next 2 days' clips] - and he croaks out an exuberant whoop. Please: be the first on your block to actually look at this [and succeeding clips] and say publicly that this man maybe does have a little self-control. Need more proof? He got through med school, where self control counts for way more than a good mind.

Tucker:
I don't need to look at the clips. I was there in the room, about 10 feet from Dean when he screamed. You're correct in one sense, that nothing he did that night seemed remarkable at the time. Everyone in the room was screaming. Dean was hardly the only person there who lost control of himself. But you're wrong to think I was referring only, or even especially, to the famous scream when I said Dean lacks self-control. I was also in Iowa a few days before, when Dean barked at a man at a rally who dared to question him, and then berated reporters for no apparent reason. I watched as he made comments about Osama bin Laden ("innocent until proven guilty") and Saddam Hussein and partial birth abortion and Israel and the U.S. military and a lot of other topics that clearly he hadn't thought deeply about before uttering. In other words, Dean is a guy who just says whatever pops into his larger than normal head. Which may be good. Or not. But it's not evidence of self control.

This is taken from Tucker's PBS website.

For fun, I thought I would post an LSAT question that I missed, and you can see how you do. To simulate the test you should limit yourself to about a minute and a half. The question:

Trust, which cannot be sustained in the absence of mutual respect, is essential for any long lasting relationship, personal or professional. However, personal relationships, such as marriage and friendship, additionally require natural affinity. If a personal relationship is to endure, it must be supported by the twin pillars of mutual respect and affinity.

If the statements above are true, then which one of the following must also be true?

(A) A friendship supported solely by trust and mutual respect will not be long lasting.
(B) In the context of any professional relationship, mutual respect presupposes trust.
(C) If a personal relationship is supported by mutual respect and affinity, it will last a long time.
(D) Personal relationships, such as marriage of friendship, are longer lasting that professional relationships.
(E) Basing a marriage on a natural affinity will ensure that it will endure.

Note: Don't pick the answer that you agree with, pick the answer that follows logically from the statement. Email me at sexualharrisment@hotmail.com, and I'll respond and tell you if your right.

Ukrainian Mischief

Former President of Ukraine, Leonid Kuchma, has been of accused of the murder of reporter Georgiy Gongadze, famous for publishing embarrassed stories about corruption under the Kuchma administration. A Kuchma body guard fled Ukraine with hours of audio tapes, wherein Kuchma orders Foreign Minister Kravchenko to "get rid of" Gongadze (Kuchma claims the tapes have been doctored).

Now a new development:

Former Ukrainian Foreign Minister Yuri Kravchenko is said to have committed suicide over the investigation into the murder of reporter Georgiy Gongadze. There was even a suicide note where Kravchenko writes he killed himself because he claimed to have "become a victim of political intrigues of Kuchma and his entourage."

Still, one has to wonder how someone shoots himself in the head twice.

Read more here. I'm going to go out on a limb and say this looks like fowl play to me.

Stem Cells

Mitt Romney, who has my endorsement for 2008 (as if anyone cares) has written an op-ed piece on stem cell research for the Boston Globe.