Monday, January 03, 2005

Bush, Extortion and Social Security

"Pure and lasting religion in the sight of God our Father means that we must care for orphans and widows in their troubles, and refuse to let the world corrupt us." (James 1:27)

Like many Americans my employer cancelled our pension plan. They cashed me out and dumped the money into my 401K and the amount they cashed out seems rather meager after nearly 20 years on the job. So, like many Americans I decided that if individual retirement accounts were offered in lieu of a standard social security benefit I would take the benefit and opt out of the private accounts. Even though I am “highly compensated” social security is crucial to my total retirement portfolio. I have a number of friends who are in the same position and who have come to the same conclusion. We have IRA's, we have 401K's and are heavily in the market, we need security.

In short, as someone with nearly 20 years in corporate finance and a graduate degree in Economics I know financial cow flop when I smell it and our man from Texas does shovel it out in generous portions. It seems W caught wind that a bunch of us weren’t going to square dance in his fiscal cow pies voluntarily so it looks like we’ll be doing it looking down the barrel of George’s 12 gauge. In plain English, the latest plan on the table calls for what I and a number of other commentators have been warning about, the Republicans are about to put a bullet in the head of Social Security for the sin of having a broken toe nail. This is from MSNBC:

The change would save trillions of dollars in scheduled expenditures and solve Social Security's long-term deficit, but at a cost. According to the Social Security Administration's chief actuary, a middle-class worker retiring in 2022 would see guaranteed benefits cut by 9.9 percent. By 2042, average monthly benefits for middle- and high-income workers would fall by more than a quarter. A retiree in 2075 would receive 54 percent of the benefit now promised.

While no decision has been made, allies and opponents expressed little doubt about where the president is heading.

"No decision has been made, but the administration is clearly leaning in that direction," said Michael Tanner, director of the libertarian Cato Institute's Project on Social Security Choice. "I don't think anything else is seriously on the table."

A former senior administration official who recently discussed Social Security strategy with Bush aides said the change in the indexing formula "is assumed to be a part of any final solution."

"You've got the bitter medicine of changing the indexing, but to go along with that you've got the sweetener of the accounts," the former official said.

To set the record straight, Americans already have access to individual retirement accounts. We have 401K plans, Standard IRA's and Roth IRA's to name but three. To hear Bush tell it (or sell it like snake oil) we never had individual retirement accounts until he came along. The fact that diverting money out of the Social Security trust fund will only weaken the system not strengthen it as our President insists is further evidence of just how low this administration will sink. As for "market returns" enhancing our portfolios please look at the S&P 500 total return over the last five years, or the NASDAQ or the DOW or better yet, the Nikkei. W's goal is to destroy Social Security not save it.

Social Security is one of the most successful government programs in history. It has overhead of less than 1% while providing survivor benefits to widows and orphans. Social Security provides a very modest but guaranteed income to the elderly. In short, Social Security serves the most vulnerable elements in our society, and once again it is these people that our President and his allies in the religious right are attacking for their own petty personal gain. Where in the Bible did our good Christian President learn to threaten to cut off the funds to the poorest of the poor? Where in the Bible does it say to throw widows, orphans and the elderly to the money changers on Wall Street? Once again we see that the Republican Party and their leader George Bush act not in concert with their God, but in defiance of Him.


At January 27, 2006 at 9:02 PM, Anonymous Finance said...

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