Frist Political Fund: Follow Up

This is a follow up on James post on this topic. I think James was too charitable on that knave Daschle. Daschle should fire his spokesman immediately for spreading such deliberately misleading information about the plans to invest Social Security funds.

First off, as James already noted the funds are not going to be held for a few weeks, but are going to be held for decades. Thus, short term fluctuations are not going to have a big impact. Second, the President’s plan, written with the help of that right wing hack the late Daniel Patrick Moynihan, insures the real value of the principal. This means that everybody will have at least the principle amount they invested adjusted for inflation. Also, the funds are withdrawn slowly over several years prior to retirement and put into annuities so that the impact of cyclical fluctuations are minimized. Moreover, if you are worried about bad investment decisions the President’s proposal allows for very limited choices into the types of investment that can be made. There will not be any whacky investments based on screwball advice from Uncle Willy or other nonsense.

The comment by Daschle’s spokesman is a fine example of fear mongering rhetoric. This is the kind of thing that will continue to hamper attempts to put in place meaningful reforms of Social Security and Medicare. For example, one of the big benefits of “privatization” is that it will remove the ability of the government to pander to the elderly via benefits increases. For you Lefties who think the deficit is too high think of the President’s horrendous Prescription Drug Plan. With privatized Medicare the incentive to pass budget busting bills like that are removed. For those Righties who don’t like higher taxes and the Nanny State, we have the same thing. Current deficits mean future tax increases. Someday the current deficits will have to be paid for. Right now, Social Security and Medicare threaten to put the U.S. budget situation permenantly into the red unless there are some pretty substantial increases in taxes.

FILED UNDER: Economics and Business
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. ken says:

    Another ignorant commentary about the nonexistent social security problem. Yawn.

    BTW Steve, how do you expect the government to insure the real inflation adjusted value of someones investment 30 or 40 years down the road. Conservative promises on social security are as empty and and meanless as was their promise that Iraqis would great thier invaders as liberators.

  2. Steve says:

    Besides being an idiot Ken, do you have any other redeeming qualities.

    As for adjusting a dollar amount from 30 years ago that is quite easy. Go over to bls.gov and check it out.

  3. ken says:

    Steve, you really are too funny.

    I never thought I’d live to see the day that someone claims that knowing how to figure the value of an inflation adjusted dollar was the same as actually insuring they would recieve that value thirty or fourty years hence.

    But then conservatives like you came along.

    This the same kind of fuzzy thinking that leads conservatives to believe that their claiming Iraqi has WMD is the same thing as their actually having them.

    Does James let you post here just for the laughs? I am trying to figure out where you fit in.

  4. McGehee says:

    Steve, just ignore Ken. He’s been disgruntled ever since Dan Rather refused to tell him the frequency.

  5. Steve says:

    That’s a good one McGehee.

    Ken,

    Lets suppose that some group of people have some real bad luck and the market goes bad on them as they are taking out part of the money. If that money is less than the inflation adjusted principle you give them the inflation adjusted principle. It is much like how the government insures bank accounts through the FDIC, and how the government currently provides a form of income insurance via Social Security.

    See it would work like this. Suppose in 1974 you invested $50 in the stock market, but the investment had “tanked” and now it was worth $185. You’d instead get a check for $193.61.

    Oh, and for the record Ken, I’m not a conservative. I mean how many conservatives do you find who favor keeping abortion legal, legalizing drugs, favor gay marriage, and wants the government out of our bedrooms?

    Now why don’t you go work out that massive inconsistency you have with regards to opposition to budget deficits imposing a tax burden on your children and grandchildren, but your willingness to impose a tax burden on your children and grandchildren for your retirement.

  6. ken says:

    Ok Steve, I see besides the wishful thinking aspect of your “plan” there is a rube goldberg beauracratic nightmare involved as well which relies, in the end, on the government just writing another check. Why didn’t you say so in the first place? After all, the government has plenty of checks and is not about to run out any time soon no matter how many they write. So even the two trillion dollar cost of your plan can be covered by just kiting..er, I mean writing, another check.

    But what I don’t understand is how you think the value of any particular stock market investment made today is going to be anywhere close to your wet dream fantasy of a free economic lunch fourty years from now.

    Look, say you are a barrista at our local Starbucks coffee shop and work with a crew of five others in three man shifts. Now I come into your shop and hear all you guys talking about investing part of your paychecks in the stock market. Now I have built up quit a nest egg and am getting ready to retire so I need to find someone to sell my nest egg to – and here you are. So I, along with the rest of my generation, will be selling our highly inflated assets while you six, along with the rest of your generation, are buying them.

    I am not trying to rub it in when I say that my generation purchased these assets while enjoying rising incomes and job stability throughout most of our working careers. When we start selling these assets it will be to people in your generation foolish enough to buy them while your incomes continue to decline. You will have to compete with third world labor throughout your working lives, something we didn’t have to face until recently. You will not have labor unions able to protect let alone increase your wages. You will not even have a sound dollar to save for your retirement as it will continue it’s secular devaluation begun with the onset of structeral deficits impossible to deal with in any other manner.

    Then fourty years from now, you are the one one sitting in Starbucks with your nest egg and are ready to start selling. But where are the buyers? Starbucks, like gas stations before them is now fully automated. There is only a low paid attendent sitting behind a bullet proof window reading a comic book. Is he going to buy you out? I don’t think so.

    No Steve, there is no solution to fiscal irresponsibilty other than fiscal responsibility.

  7. Steve says:

    Ahhh Ken, I see you do have another redeeming quality: lying.

    First, sure the government writes the check. After all the gov’t is the administrator of the program. The gov’t writes checks right now with the current SS scheme…so what is your problem…well other than terminal idiocy?

    Second, what nightmare. You keep track of people’s deposits and then if necessary you adjust that figure for inflation and you’re done.

    As for the “economic wet dream” WTFAYTA? I haven’t given any indication as to what my expectations are for the long term rate of return. The only “wet dream” here seems to be the one you have dreamt up and are trying to smear me with.

    Look, say you are a barrista at our local Starbucks coffee shop and work with a crew of five others in three man shifts. Now I come into your shop and hear all you guys talking about investing part of your paychecks in the stock market. Now I have built up quit a nest egg and am getting ready to retire so I need to find someone to sell my nest egg to – and here you are. So I, along with the rest of my generation, will be selling our highly inflated assets while you six, along with the rest of your generation, are buying them.

    I doubt a moron like you has any kind of nest egg. You clearly haven’t read the program nor have you read my post. C’mon admit it, it is obvious to the rest of us. Privatized SS wouldn’t allow people to simply invest in any stock or bond. There would be, according to the President’s plan, a limited number of options. IIRC none involve individual stocks.

    I am not trying to rub it in when I say that my generation purchased these assets while enjoying rising incomes and job stability throughout most of our working careers. When we start selling these assets it will be to people in your generation foolish enough to buy them while your incomes continue to decline.

    Well actually my income has been rising. As for the long term tends in income, do you even bother to look at the data?

    Then fourty years from now, you are the one one sitting in Starbucks with your nest egg and are ready to start selling. But where are the buyers? Starbucks, like gas stations before them is now fully automated. There is only a low paid attendent sitting behind a bullet proof window reading a comic book. Is he going to buy you out? I don’t think so.

    Ahhh yes, the old “technology will make us all unemployed” line. Yep, that is why when farms became automated nobody could find a job and there was a massive depression that made the 1930’s look like a picnic…ohh wait there was no such depression.

    Your grasp of economic history is about as sound of your grasp of current economic issues.

    By the way, did you ever solve your own inconsistent position or are you just going to go on being a hypocrite?

  8. ken says:

    Steve, I see thinking you had enough smarts to work as a barrista was giving you too much credit. Not even Starbucks could long survive with someone who believes thinking a thing is so makes it so. You must be a muddled acedemic of some sort. A TA perhaps?

    Also Steve I wonder what you mean by calling me a hypocrite for having already taken care of my own retirement needs through excess social security savings and some modest wealth. Could it be your jealous? Don’t be. I expect I will have to work for as long as I live in order to keep medical coverage. Right now it seems the only group my age with lifetime medical benefits that are not threatened are people from the public service sector, ie teachers, firemen, police, politicians and other government workers. I don’t begrudge them this coverage but it does look like the rest of us are on our own.

  9. Attila Girl says:

    Ken, it’s “forty.” Not “fourty.” Thought you’d want to know.

    If you want to see examples of successful transitions to privatized social security, you might want to look at Chile.

  10. Steve says:

    Ken,

    Given your professed age and your behavior here I can only assume you are counting your age in dog years.