Promises Made

Irony?

2007-11-25T14:40:00.000-05:00

Who among us thought that W would probably think more about the president of Pakistan than any other leader during his terms in office? I am sure Andy Hiller never fantasized his question would be so relevant. CNN certainly had no clue.

Who is Travis Patriquin?

2007-10-23T00:38:00.001-04:00

We should all know.

Discrimination is wrong ... except when it is for the greater good

2007-10-16T11:36:00.000-04:00

It is illegal to discriminate by age in the EU, except when it is not. An EU court rules that it is fine to enforce a mandatory retirement age in order to save the pension system... So much for human rights and freedoms.

Older Early Retirement

2007-09-04T15:47:00.000-04:00

This paper argues for raising the early retirement age for Social Security to 63.5 from 62 in order to extend the typical working life. A core argument in it is that only 10 percent of workers would be negatively affected by being unable to work during those extra 18 months. What the paper does not consider is how many will die before they will be able to collect. Death is, of course, a boon to social security since it saves 100 percent of payments in those cases.

After looking around the internet, it would appear that about 1.5 percent of 62 year olds will die by the time they are 63.5.

Why Not?

2007-09-04T10:08:00.001-04:00

Get a roommate? Why not?

WSJ on Home Prices

2007-09-04T09:16:00.000-04:00

The Wall Street Journal has an popular take on over-priced California homes. It seems there a couple ways a home's value can be derived -- replacement cost (the cost to build the house and buy the land) and economic value of the rents (the potential rental income minus operating costs divided by the expected return sought). By my calculations, housing is expensive by both measures today.

Michael Yon ...

2007-08-27T13:57:00.000-04:00

"Al Qaeda promised them everything under the baking sun, yet al Qaeda killed people who smoked—and Iraqis like to smoke."

Hertzberg Blogs ...

2007-08-27T13:21:00.000-04:00

But no comments here.

NYer Giuliani Time ...

2007-08-27T12:57:00.001-04:00

Despite pages of analysis, this article fails to discuss the electoral college (EC) math that would seem to make Rudy Giuliani a formidable candidate. My instincts sense that Rudy's real difference from other Republicans is that he could upset the electoral college apple cart win a head-to-head race against Hillary in New York. (This April poll puts Clinton ahead by 14 points -- but I have heard of others that are different).

Rudy's EC strength: Puts New York (31 EVs), New Jersey (17 EVs) and Connecticut (7 EVs) back into play. If he picks up those states, that swings 55 electoral votes -- or about one-fifth of what Kerry picked up.

Rudy's EC weakness: If he does not carry those states, he runs a real risk of losing states such as Iowa and New Mexico and perhaps more.

A Rudy/Hillary finals could also serve to lance the venomous partisan boil that has been building for a while now -- after all, Americans of all stripes can agree on the fact that they resent and despise New Yorkers.

Markets Work -- Even in New Jersey.

2006-08-24T09:49:00.000-04:00

An amazing story out of New Jersey picked up in the New York Times ... it seems that insurance rates are coming down now that regulators are standing aside and letting the market work. In the past, politicians had forced insurers to make up losses in high loss areas such as Newark through increased rates in the suburbs (redistribution at its finest).

Of course, the insurers responded by not picking up the phone when calls came from Newark, so the bad drivers could not buy insurance and the people in the suburbs were gauged, so they bought less. That, of course, meant a smaller insurance pool and the start of a downward spiral.

Things hit bottom three years ago and regulators finally threw in the towel, opening the market and letting insurers set rates by their own formulas.

Miracle of miracles, even the bad drivers in Newark are paying less than they were before in some cases.

Kerry in need of "relativism refresher"

2006-08-17T12:44:00.000-04:00

John Kerry's last mailer contained this gem.

"If the Bush administration could plan and execute the war on terror as well as it executes its shameless pre-election fear-mongering, we'd all be a lot safer."

If Bush's opponents were as organized and intelligent as the terrorists in planning and executing their fight, perhaps they would have won the last presidential election...

Juba the Sniper is Dutch?

2006-08-17T10:41:00.000-04:00

There is (was?) sniper(s) on the loose in Baghdad going by the name of "Juba" who filmed himself sniping at (and presumably killing) American soldiers. It seems that in July 2005 he failed to finish off one of his targets -- Pfc. Stephen Tschiderer -- and was captured by U.S. soldiers (video).

Though it is now old news, this is the first I have heard of Juba. What is most interesting is that he appears to be of Dutch citizenship and was born in Morocco. Still, I guess he was a hero to some Iraqi's and that his DVDs are a hot item on the Iraqi streets.

The Dutch Juba was wounded and captured in a van outfitted with mattresses four soundproofing, according to various Web sites. Apparantly the attacks are still continuing.

Why No Attacks Since 9/11?

2006-08-13T12:37:00.000-04:00

Despite daily bombings in Iraq, train bombings in England, Spain and India, rocketing of Israelm, bombings of Indonesia, there have been no organized terrorist attacks in the past five years on U.S. soil Why not? Eleanor Clift has the answer on this week's McLaughlin Group:

The fact that they haven't attacked for the past five years is not because President Bush is keeping us safer; it is because they are really methodically plotting something and they do not want to do something that is anti-climatic.

That's right Eleanor. I can see the weekly planning meeting now:

Meeting Leader: "C'mon people. We need good ideas! Who has one ... and Ali, the meeting to poison the watermellon at the IBM corporate picnic was a good one, but not big enough. We need to think bigger!

Assembled group gives blank stares, all look down at table.

ML: O.K. People, sometime and place next week, but bring ideas!

Yeah, that's the reason. Keep thinking hard Eleanor.

Eliot the Zealot

2006-05-31T19:15:00.000-04:00

Just wanted to use the headline before someone else did. Listening to his "Day One" speech sparked the the thought and brought forth all my memories of his zealotry over the past half decade. Funny thing is, Teddy Roosevelt the child was more frightened of monstrous "zeals" than anything else ... and Eliot thinks he is the reincarnation of Teddy.

Don't Know Much About History

2005-12-13T09:41:00.000-05:00

Did John Murtha fail history?

Murtha offered a rebuttal to Bush's comparison to the American experience. "If they'd have kept the French here after 1776 . . . we'd have thrown them out," he said. "And that's what I say about what's happening in Iraq right now. The Iraqis are not against democracy. They're against our occupation."

As anyone who stayed awake in class should know, it was Gates' victory overy Burgoyne at Saratoga (obviously that battled was fought after the July, 1776 Declaration) that convinced the French they should support us. They landed in Newport, Rhode Island in 1778.

I am always shocked that our elected Representative know so little about the country and its past. And that applies to all parties.

Village Voice Has Half the Story

2005-12-05T15:21:00.000-05:00

Interesting take on 401(k) plans and pensions in the Village Voice. The article notes that people lost up to one third of their accounts in the Nasdaq crash. What it leaves out is that the stock market has regained most of its losses (Dow from 11k to 7.2k back to 10.8k today). People who continued to contribute to their plan probably have a gain because they bought more shares at lower prices than at the 11k level which the Dow only touched briefly.

The article also bemoans the loss of "guaranteed" monthly pension checks. Funny, but those arguing for DB plans and Social Security never seem to ask what the cost of that monthly check is. You know, if you are so disposed you can use your 401(k) balance to buy one or more annuities (those monthly guaranteed checks). No one is stopping you from doing so.

The problem with DB plans for many people is that they do not stay in one job long enough to vest in a significant benefit. At least with a 401(k) plan you can consistently build your retirement savings from job to job without having to start over.

Even Clinton-administration refugee like Alicia Munnell admits that the expected benefit under the two types of plans will, on average, be the same, though an individual's mileage may very (see her book). People who stay in one job for life will be better off in a DB plan, those who move around will benefit best from a 401(k).

Oh yes, you can also choose to take your DB plan balance as a lump sum if you so choose; that would be like, you know, a 401(k) plan.

Bloomberg Goes to the Dogs

2005-12-05T11:44:00.000-05:00

It looks like Hizzoner has found some new constituents ...

Workers Paradise ... Yeah Right

2005-12-05T11:09:00.000-05:00

What happens when you cap gas prices? It looks like employees will steal the gas. And then you have to call out the army...

Brilliant!

2005-11-28T19:35:00.000-05:00

This is brilliant!

NPR Biased?

2005-11-28T13:35:00.000-05:00

How hard is it to be fair? Over the weekend I heard an interesting "letters from listeners" segment on NPR. One listener was respondeding to what I guess was a debate between two Iraq veterans about the war in which the pro-Bush policy veteran argued that the "million" deaths in Vietnam following our pull out could be repeated in Iraq if we leave.

That listener questioned the "million deaths" figure.

NPR's host told listeners that the news organization followed up with its own research into the matter and that though reports to the number of deaths differed depending on the source, "none" reached one million. That was it! The host then left me hanging. How many did die? 100,000? 500,000? 1? NPR gave no answer.

So, I started looking for the answer.

Wikepedia.org does not provide a count, though it does report that "The new unified Vietnamese government also took it upon themselves to punish the indigenous highland Montagnard tribes" and Between 1975 and 1978, the Vietnamese government carried out retributions against the highland tribes; imprisoning or executing nearly all prominent tribal leaders and confiscating fertile tribal lands for coffee plantations. Several human rights groups, including Human Rights Watch, has called this an act of genocide."

That source adds that more than 2 million "boat people" fled Vietnam after Saigon's fall (I have met some of those people personally, their stories are heartbreaking).

Still, no numbers here.

More looking turned up an article in the National Review by a Vietnamese article that was published just two years after the fall of Saigon. That source cited 300,000 Vietnamese sent to "reeducation camps" and as many as 20,000 suicides ... but it is a right wing source, so the search cannot end.

This source, which summarizes deaths from all wars pegs the figure at 430,000. Can't tell how credible it is though.

I guess 400,000 is less than 1 million. It is still an appalling figure though.

Deuce Four on the Silver Screen

2005-11-28T13:19:00.000-05:00

The talk on the right-wing blogs (such as Captain's Quarters) is that Bruce Willis is planning to film a movie based on the Mosul-based unit tracked by Michael Yon on his blog Left wing blogs (like Atrios) are saying "who cares?", but they are talking about it. TBogg openly wonders if the Willis will perform as badly as "The Great Raid" did at the box office.

Of course, it could do as well as this movie.

Personally, I am just hoping for a good flick ... the story on Yon's blog suggest that the potential is there.

Why I Hate Politicians

2005-10-04T13:19:00.000-04:00

This is from the AP. Makes perfect sense to me (not), satellite providers are exempt from the franchise tax primarily because they were founded after cable companies and only secondarily because they don't rely on the public infrastructure?

Cable industry wants tax on satellite subscribers
Consumers who receive satellite television service in Massachusetts would face a 5 percent tax under the terms of a proposed House bill, a move the cable TV industry is pushing because satellite providers such as DirecTV are competing with them for subscribers. The proposal, filed by Representative John Quinn, a Dartmouth Democrat, would levy the tax on both cable and satellite TV users, but wording in the bill -- written by the cable industry -- would then nullify the charge for cable subscribers because they already pay up to 5 percent in so-called franchise fees. Cities and towns have traditionally charged cable companies the fees to compensate a community for stringing wires and digging up roads to provide their service. Satellite companies have been spared the fees both because they came into existence after the fees were created and because their service does not rely on public infrastructure. (AP)

I hope John Quinn's constituents vote him out.

Refugees or Evacuees?

2005-09-08T10:54:00.000-04:00

The Brian Lehrer show on New York City's NPR affiliate has two guests who are debating the merits of using the word "refugee" or "evacuee" for those seeking shelter away from New Orleans. One of the guests is arguing that refugee is a word that carries negative connotations because it is typically used to describe non-white people suffering in third world countries. The other guests thinks both words are perfectly appropriate. I am wondering how much history we have forgotten. The French, Poles and others were described as refugees when they fled fighting in WWII ... it still seems to be a perfectly good (and unbiased word to me).

Watching the news the other day I did see a clip in which a black American said he was no damn refugee, he was an American. So perhaps the problem boils down to our self-image, Americans think of themselves as inherently different from others.

Rebuttal: Why are we ruled by these fools?

2005-08-25T10:45:00.000-04:00

For all of those who wonder "why are we ruled by these fools?" To paraphrase Peter Lynch, the best government to be ruled by is one that any fool can run, because someday a fool will run it.

Steroids, Sports and Hollywood

2005-08-04T16:08:00.000-04:00

Cafe Hayek weighs in on the Palmiero steroid scandal and sports. The post draws an interesting comparison to the use of plastic surgery in Hollywood but fails to ask an obvious question. How many Hollywood stars do you think take steroids? I would think that many of the male actors do so in order to maintain their looks. Ever wonder how Brad Pitt became so cut for Troy, or how Toby became Spidey?

Is Poverty Relative?

2005-08-02T18:55:00.000-04:00

NPR has a story tonight that discusses the relative nature of poverty. This debate keeps coming up in discussion and I absolutely disagree with their contention that poverty is relative, to me it is an absolute condition, but then I also think that there is a difference between being poor and being in poverty.

The poor have fewer choices than the rich (or the middle). Those choices involve relative positions. Someone who is poor will be unable to outbid someone who is rich for a prime parcel of real estate, for example.

Someone living in poverty is doing without the basics of survival: food, clothing, shelter, basic healthcare (treatments that prevent death and major disability from easily treatable conditions) in amounts needed to support oneself and family. Once these basics are obtained the rest the goods and services out there are a matter of choice, and not necessity, no matter how much we feel we need them.

I do not count cell phones, Viagra, TVs (much less cable), dishwashers or even car in this class. O.K., I may be able to accept that a car is a necessity in many areas of the country, but not all.

The good news for the U.S. is that we are having the discussion at all. If poverty were widespread it would be obvious and no one would question its absolute nature. That some people believe poverty to be relative shows how rich we all are.

AARP Gulps

2005-07-11T12:13:00.000-04:00

Don't sip that water! It may cost you your retirement. So says AARP President Marie Smith.

Smith picked up a bottle of Aquafina on Friday to show why President Bush's plan to allow younger workers to put part of their Social Security taxes into private investment accounts won't save the system.

She took a big sip.

"Behold, you have more water," she said, holding the bottle up before setting it down and adding, "Of course you don't. Give me a break."

Of course Smith is all wet with her metaphor, you are not consuming your Social Security when you "sip" it into an individual account. If anything, your are ladling it from the communal well into your very own bottle, thus ensuring that you can control it (maybe add some Koolaide too?)

Smith, according to the article, is no financial expert, so perhaps she does not understand how her metaphor is off:

Smith, who in 2004 was named by Ebony magazine as one of the 100 most influential African-Americans, has retired three times -- she worked for the Social Security Administration, she sold real estate in Hawaii, and she and her husband ran a tropical garden in Maui. She took on the AARP president's job, a volunteer position, in April 2004.

She also pushes the Dems idea that Social Security is insurance, not an investment. Yet, she does not explain (nor was she asked, it appears) why someone would buy an insurance policy that is priced to pretty much guaranty a loss even if it pays. Those losing situations are the classic ones to self insure.

Then she gave the students another scenario: Gates probably insures his home against fire and other disasters, she said. If his house burns down, should he be able to collect on the insurance?

"That's what Social Security is about," she said. "You paid for it. It's your insurance."

She also lays out AARPs needed elements to any reform:

• It must be predictable and stable, with a risk-free retirement benefit.

• It must offer disability and survivors' benefits.

• Everyone, including police officers, firefighters and teachers, should participate in it.

• It should provide adequate benefits for low-income retirees.

• It should be fair.

Another example of Social Security Screwing the Young

2005-07-08T13:20:00.000-04:00

This is a good example of the problems with the current Social Security (and tax) system. A 21-year-old university student who is losing more than a third of his less-than-hefty paycheck to taxes. If this is a weekly check he is earning only $20k or so a year ... so why is he paying so much in taxes?

Also interesting that he understands the importance of saving for retirement, and is doing so voluntarily. Still, nearly a third of his taxes fund Social Security. If he is in a situation like mine was, he is also paying for school by borrowing and taking grants. So, we take from his paycheck only to return the money with strings attached so he can attend school. Does not sound so moral to me.

Just wait until he graduates and he finds the taxman's take goes up.

Can I get one of those baseballs?

2005-06-30T13:08:00.000-04:00

The London Times has an interesting take on Bush's Oval Office ... Wonder if he catches the Web Gems every evening?

Not content with dispensing the presidential autograph, Mr Bush reaches into a cabinet full of memorabilia and produces lapel pins and, for my colleague, a baseball with the presidential seal.

The shift to sport is an opportunity to ask him the question burning in the minds of many British people — what does he think of the takeover of Manchester United by Malcolm Glazer, the US sports franchise owner? “I read about that on ESPN.com,” he says.

Oh yes, he also addressed Iraq

Frankly, I rejected the intellectual elitism of some around the world who say, “Well, maybe certain people can’t be free”. I don’t believe that. Of course I was labelled a, you know, blatant idealist.
But I am. Because I do believe people want to be free, regardless of their religion or where they are from. I do believe women should be empowered in the Middle East. I don’t believe we ought to accept forms of government that ultimately create a hopelessness that then can be translated into jihadist violence. And I believe strongly that the ultimate way you defeat an ideology is with a better ideology. And history has proven that. Anyway, you got me going. Starting to give the whole speech again.

What's Going On at the NYT Magazine?

2005-06-19T13:21:00.000-04:00

Being in the news business ... though a lowly trade reporter and not a star at a national publication ... I have always wanted to believe that the leftward tilt of many stories was an accident of perspective and not an intentional campaign, now I am not too sure.

Taking a look at this morning's NY Times magazine I was astounded by the inaccuracy of the headline: "What's the Movement to Outlaw Gay Marriage Really About? What struck me was the use of the word "outlaw". In my mind for something to be outlawed it must first be legal. A quick look at dictionary.com seems to back me up on this. I have to believe the editors at the times are better educated than I am, so they must know the definition of outlaw. No benefit of the doubt can be given them.

To document this obvious distortion of the English language, I had hoped to include a link to the offending headline. But it is not on the NY Times Website. In its stead there is a new headline:

"What's Their Real Problem with Gay Marriage? (It's the Gay Part).

Obviously, between the time my paper copy of the magazine was printed on Saturday and Sunday afternoon, the Times Magazine editors realized (or were attacked for) their error and made a revision.

To fix the first problem, however, they have created another. Where the initial headline was neutral in tone ("the movement to outlaw" is at least a third party phrasing), the new headline (inadvertently?) puts the Times Magazine on one side of the issue ("their real problem" implies the magazine is on the "our" side in an "us versus them" battle).

We will see if they feel the need to revise the headline yet again.

UPDATE: A look inside the magazine reveals I made an error. Both headlines are in the print version: the first is on the cover and the second is the article headline.

At least she is honest

2005-06-19T00:20:00.000-04:00

Vanessa Redgrave is on Larry King (with Bob Costas), however good an actress, she is one very misguided soul. Costas asked her if there a larger evil arrayed against the U.S. and U.K. that could justify the detentions of terrorists, she said no.

Costas seems irked ... he is really going after her.

Redgrave essentially said holding criminals without the process of trial is anathema to democracy. She truly misses the larger picture. Those held in Gitmo, or elsewhere, are enemies of our state, not common criminals.

One of the essential horrors of war is that it exists outside of civilization. There is no law between the combatants in war, therefore there can be no crimes. Each side holds the other, by the very definition of the struggle, defines the others rules and laws as not applying to it, otherwise there would be no state of war.

It is an essential, or root, mistake, to apply the criminal code to ones opponent in a war. They can be afforded decency in treatment, but they cannot be afforded due process by the very definition of their captivity and the state of the world that led to it.

Equality and Sex ... the other side

2005-06-12T11:49:00.000-04:00

Cafe Hayek speculates on income and inequality and something occurred to me ... if men are achieving for the babes, then what are women achieving for? Or, to put it another way, will beautiful women achieve their desires on the looks alone (by seducing men with resources to splurge on them in exchange for sex). Then, the only way to achieve equality will be to ensure there are no beautiful women (ugliness plastic surgery, forced weight gain diets?). In fact, would that strategy then solve the inequality problem you present with men, if their are no beautiful women to sleep with then we can get back to concentrating on the wines and other material goods, right?

Yalta Brouhaha

2005-05-09T10:17:00.000-04:00

Bush's remarks as reported at WhiteHouse.gov:

As we mark a victory of six days ago -- six decades ago, we are mindful of a paradox. For much of Germany, defeat led to freedom. For much of Eastern and Central Europe, victory brought the iron rule of another empire. V-E Day marked the end of fascism, but it did not end oppression. The agreement at Yalta followed in the unjust tradition of Munich and the Molotov-Ribbentrop Pact. Once again, when powerful governments negotiated, the freedom of small nations was somehow expendable. Yet this attempt to sacrifice freedom for the sake of stability left a continent divided and unstable. The captivity of millions in Central and Eastern Europe will be remembered as one of the greatest wrongs of history.
The end of World War II raised unavoidable questions for my country: Had we fought and sacrificed only to achieve the permanent division of Europe into armed camps? Or did the cause of freedom and the rights of nations require more of us? Eventually, America and our strong allies made a decision: We would not be content with the liberation of half of Europe -- and we would not forget our friends behind an Iron Curtain. We defended the freedom of Greece and Turkey, and airlifted supplies to Berlin, and broadcast the message of liberty by radio. We spoke up for dissenters, and challenged an empire to tear down a hated wall. Eventually, communism began to collapse under external pressure, and under the weight of its own contradictions. And we set the vision of a Europe whole, free, and at peace -- so dictators could no longer rise up and feed ancient grievances, and conflict would not be repeated again and again.

Many critics jumped on Bush for his lack of knowledge of the detailed ins and outs of the Yalta negotiations, implying that his comment above is foolish (or unnuanced).

Then again, perhaps he is just speaking a larger truth -- Yalta did lead to nearly 50 years of Cold War. What if the U.S./U.K. alliance had stood stronger for Eastern Europe's freedom? Bush is not saying that doing the right thing is easy, or expedient, or even possible only that some things are right, and some are wrong.

Talk About Clueless Judges

2005-04-21T09:58:00.000-04:00

If the LA Times got this right, our judges really are out to lunch ...

But that's what Judge Kleinberg attempted. He suggested that the Asteroid disclosures were "gossip" unworthy of the same constitutional protection granted to exposes of official corruption. He ruled that the right of free speech, which he called "rife with complexities and restrictions," was trumped by Apple's "undisputed right" to protect its intellectual property.

What part of the first ammendment is so complicated?

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Does not sound so complicated or restricted to me. Perhaps Jefferson was right about each generation needing to claim its rights anew.

Stakeholder Accounts

2005-01-12T19:48:00.000-05:00

If we want to create an "ownership society" this is a wonderful idea that has been put in place by the Bristish. Kinda turns the pay now, receive later approach of our Social Security system on its head. In concept, these accounts takes advantage of time to help fund the future financial needs of those born today. If there is one thing that those born today have is time ... and one thing they lack is money.

The accounts (initially proposed as stakeholder accounts with a much larger funding) could be used for retirement, health insurance premiums or education. They also would enable young adults to enter society with a vested stake, something that does not happen often enough today.

What is Fair?

2005-01-12T19:44:00.000-05:00

Could someone explain how using Treasury bonds to fund the Social Security trust fund differs from a case were a company issues bonds to a defined benefit plan that it sponsors?

In other words, General Motors (for example) is prohibited by ERISA from issuing corprate debt to its pension plan in order to fund that plan. The assumption by lawmakers being that you cannot replace an IOU (the pension promise) with another IOU (the bond) from the same party and still have a funded plan. Is the corporate situation analagous to the Social Security Trust where the SS payment promise (made by the Treasury) is being funded by a non-marketable Treasury bond (issued by the Treasury)?

If it is not the same, then what is the difference? Why would the GM plan be considered unfunded by the PBGC when the Social Security system is considered to be funded?

To extend the analogy further, corporate pension plans -- such as that run by GM -- must calculate their liabilities annually. Those liabilities include all promises made to future workers. Once a worker accrues a benefit under an ERISA plan the earned benefit cannot by law be reduced -- a promise once made must be kept (and funded). Considering this, it seems that people are treating the promises now being made under Social Security somewhat cavalierly. Every worker born after 1975 (those up to 30 years old) is now being promised benefits that will be delivered after 2042, yet many commentators seem to be arguing that it does not matter today that a predicted shortfall will be reached in 2042 as that date is too distant to matter. Does this make sense considering that there must be millions of Americans under 30 now in the work force?

Shouldn't we be making sure that we are properly calculating the earned benefits of those in their twenties so they have some idea of what they need to save to supplement their Social Security benefit?

Lastly, those in their twenties are now making a larger contribution than needed to pay current benefits (only about 74 percent of last year's employer and employee payroll tax was used to pay for current benefits). So, that cohort is floating a loan (in effect) to today's retirees. Yet it is this cohorts' benefits that may have to be cut. Those paying extra today to fund the trust will have to pay extra again (in the form of reduced benefits) when they retire.

Is the building of the trust fund a fair treatment of those now in their twenties? Is intergenerational fairness something that should be taken into account.

Can We Afford Private Accounts?

2005-01-03T14:36:00.000-05:00

The Heritage Foundation shows here that 74 percent of current Social Security withholding is used to pay current benefits while the remaining 26 percent is the surplus being set aside for the GenXers. Another way of looking at this is that three-quarters of your deferral (9.3 percent of your total pay) is being used to pay today's retirees.

That leaves the reminaing one quarter (3.1 percent of your paycheck) to be parked in the special government bonds sold to the Social Security system by Congress. In turn, Congress is spending those funds on other (non-retirement) things.

If that 3.1 percent were used to fund private accounts Congress would have to find the funds elsewhere. But is this a bad thing or a good thing? In essense, using the funds for private accounts would return the surplus to wage earners, but would still guarantee that the funds would be used for their retirement.

The change would also require Congress to come up with the 3.1 percent from somewhere else, presumably through an increase in income taxes or debt issuance. Yet, because of the way Social Security taxes are assessed, both of those alternative fund raising methods would appear to be more progressive than in the current system.

Comments anyone?

AARP's Place at the Table

2004-12-30T20:38:00.000-05:00

AARP is planning to greet the new Congress with a two-week, $5 million ad campaign featuring a "Social Insecurity" theme, according to the NY Times. The spots will feature people (a Harry-and-Louise-ish couple, an options trader and others) saying they don't want to gamble with their retirement. A number of bloggers, including Matthew Yglesias and Mark A. R. Kleiman see this as a good thing.

What is not explained by either the Times or the two bloggers is why AARP should have a strong voice in the debate. Those it represents will be uneffected by the likely reforms (even Bush has stated private accounts would be limited to workers who are younger than the AARP membership).

It sounds as though AARP itself has latched onto "retirement" as its core issue, even if the issue at hand has no direct impact on its current members.

What is lacking in this debate are organized voices from those who would be directly affected by the proposed reforms, namely Gen X and Gen Y for lack of better terms. AARP does not speak for them even if it would like to.

Is There a Social Security Crisis?

2004-12-30T13:38:00.000-05:00

George Bush has raised the spector of Social Security reform and sparked a debate about whether the system is in crisis at all. Those arguing that there is no crisis (and thus no need for reform) often point out that the system will not go bust before 2042. Even then, they say, the promises made under the system can be met with slight tweaks (see the Detroit Free Press for an example of the argument in the second answer). So, does this mean there is no imminent crisis? After all, 2042 is a long way off, right?

Perhaps not.

I am hoping, fingers crossed, to start collecting benefits when I turn 67 in 2034 (yes, I was born in 1967). What does the preceding statement mean to the debate?

My retirement age for benefits has already been changed once -- to 67 from 65. For me, this change happened in one fell swoop in 1983, not gradually over time as government officials still insist (see the Brookings Institute for a list of all changes to the system since its inception). Listening to some in the debate I have a sense that the promise that I will be able to retire at 67 will not be kept and yet I am nearly half way through my working career. That sounds like a crisis to me.
Pension benefit promises covering the years from my retirement in 2034 to my eventual death (this actuarial table says it will likely occur by 2046) have been made to me since I entered the workforce in 1986. That means promises are today being made to me for at least four year past the point at which those making them know they can be kept. That sounds like a crisis for me.
I am 37. There are many, many youger workers who are now making payments in the system who will retire well beyond the point at which the promises cannot be kept. An eighteen year old starting her first job today will pay more than 12 percent of what are in all liklihood small checks and not collect her first check before 2043 ... wait, that is one year past the current crisis date. How can we be making promises to her knowing they can't be kept. That sounds like a crisis to me.
Currently I pay 12.4 percent of my income into Social Security. In my case that works out to about $650 per month. To put that amount in perspective, Social Security is a larger expense than any others I have besides rent and taxes. It is more than I spend on food and far more than I am able to save. That sounds like a crisis to me.

Comments anyone?