Clarification/Follow-up by tomder55 on 04/08/05 7:19 am:
I just found this article by Victor David Hanson in today's Nationa Review online . He is an outstanding commentator ;who makes some of the points I made much better than I did .

Clarification/Follow-up by ETWolverine on 04/08/05 7:38 am:
PP,

>>>Thanks Elliot, I hope you are right.<<<

I'm always right. I once thought I was wrong, but I made a mistake: I was right. (Just kidding.)

>>>Do you measure success by number of laws passed?<<<

No. I measure the success of a presidency in a number of ways: how effective was the President in acheiving his agenda, how did he effect the overall health and strength and influence of the country, how long-lasting were the effects of his actions (for good and for bad).

In that sense, Clinton was a bad and ineffective president: he spent so much time defending himself over the Lewinsky affair that he was ineffective in setting and implementing an agenda. What little he did domestically (including making the GOVERNMENT the sole legal purchaser of vaccines in the USA) hurt the country in th long term (we are down from 30 vaccine manufacturers in the USA before the Clinton presidency to just 3 today, because it just doesn't pay to be a vaccine manufacturer anymore). On foreign policy, he did NOTHING... which is in fact what led OBL to believe that he could do something like 9-11 with impunity. It is his lack of effectiveness in most areas, and the long-term bad results of what little he did accomplish that makes him a bad president.

By contrast, FDR (who's policies I disagree with) was an extremely effective president. He implemented the New Deal, fought a war, strenghtened the military-industrial complex, and got the country behind him in a way that we hadn't experienced in decades. He was effective because he accomplished what he intended to accomplish. I don't think he was a GOOD president, because I think his New Deal policies have hurt the country in the long run, but there is no denying that he was EXTREMELY effective.

Now, for W. I find him to be extremely effective. He pushed for 3 sets of tax cuts and got them all. He pushed for a strengthening of the military, and he got it. He fought an unpopular war, and still managed to get re-elected. He pushed HIS foreign policy agenda, despite the obstruction of the democrats in Congress and the State Department. He is cleaning house (via his proxies) in the State Department and the CIA. He is successfully pushing his marriage act (12 states so far have adopted laws similar to what he is pushing, with more on the way), which bodes well for a Constitutional Amendment on marriage. His policies regarding Israel and the PA are starting to bear fruit. The effectivness of the Iraq war is seen in the Iraqi elections, and in its influence over other parts of the Middle East (Syria, Lebanon, Iran, Egypt, Libya). And all this despite number of scandals that have rocked his administration (the allegation of having stolen the 2000 election, the allegations that he knew or should have known about 9-11, the allegation that he lied about WMDs, the allegation that he was AWOL from his military service, etc.). Clinton's ability to be effective was knocked out by a single scandal (2 if you count Whitewater, which was really Hillary's scandal, not his). But no matter what they come up with on W, he just keeps going, like the energizer bunny. THAT is effectiveness.

Now... is W a GOOD president (as opposed to being just effective). I believe that he is. But time will tell. You can only tell after the short- and long-term effects of his policies can be seen through the eyes of history. I think that in the end, W will be judged as a great president who's policies effected the country VERY well in the long run. But we'll have to wate and see.

Elliot

Clarification/Follow-up by tomder55 on 04/09/05 4:51 am:
The left's inalterable and irrational opposition to private accounts parallels their aversion to concepts like school vouchers. In both cases it seems to matter not a whit to congressional Democrats that the beneficiaries of reform would be the very minority and low-income workers they claim to champion.

The Democratic party has erected a Berlin Wall of opposition to meaningful Social Security reform.The Democrats despite all their recent casualties still have sufficient forces to go on obstructing.Which seems to be the only reason for their existance at this point.

Indeed ;the President may not be able to push meaningful reform like privatization through this session but the momentum is on the side of privatization;and if anything ;the Presidents bully-pulpit has demonstrate clearly that Social Security is built on a house of cards.

Clarification/Follow-up by powderpuff on 04/09/05 5:38 am:

Having never studied economics,
I have a hard time grasping the idea that everyone would be able to put away enough money in a private account to retire on. Wouldn't you have to save $2,000 a month for 15 years or so to have enough to live on? Of course, some money would be earned from interest... but I don't know -just seems to me that it wouldn't work for most people who are already living at poverty level.

Clarification/Follow-up by powderpuff on 04/09/05 5:38 am:

BTW, I think most people already knew that Social Security is built on a house of cards. Coming up with the solution is a problem.

Clarification/Follow-up by Choux on 04/09/05 3:49 pm:
Tom, Elliot is already dragging out Clinton to thrash; that is what the right wing guys do when stuff isn't going their way. :D

Clarification/Follow-up by tomder55 on 04/09/05 5:08 pm:
I answered the question about what economists call 'the miracle of compound interest 'in a reply to Excon's question about Social Security :

an 18 year old worker averaging $30,0000 per year over the course of their employment puts away just 4% (the max.amt. the president's plan allows as opposed to the 6.2% of the workers and another 6.2 % of that worker's employer contribution into the current system)of income and invests it into the same gvt. securities available to the gvt. now (T bill and gvt security funds average about 6% return over the 47 years between 18 and 65 ).That worker at retirement will has a nest egg of $318,000 .That worker could continue to leave it in this safe investment and still draw a monthly income from that at around $800 /month(more than S.S. promises that worker currently even though that worker will have invested less money than the S.S. witholdings currently steal) . When that worker passes on ;it goes to that workers inheritance ;not to the gvt.

Now let's say this same worker was to invest it into a common mutual fund portfolio (which in any given 40 year period in history has netted about 10%)
That worker can expect to have a nest egg over $1,800,000 to draw retirement from. That's security .

The alternative plan being floated by the opponents calls for the cap cut off of contributions to be raised from its current $90,000 . Will that fix it ? Not .Why ? Because the gvt. will not be doing anything different with the money .They will still put it into a fictional trust fund. Why is it fictional ? Because they plunder from it and purchase gvt. securities with it ,and use the revenue from the securities to finance the operations of government. What are those securities backed by ?? The full faith of the US government . All raising the ceiling would accomplish would be allowing the gvt. to throw more I.O.U.s into the "trust fund" .(They already made this mistake in Medicare ...has the system been any better as a result ?)Recently the president has floated this idea ;and I say to him ."I read your lips ". “The one thing I’m not open-minded about is raising the payroll tax rate. And all the other issues go on the table.” All that increase in tax promises is a worse deal for young workers. They are promised a system where they pay more ,and get less (if the system isn't completely collapsed by the time they retire eventually the gender wars in this country would boil over. )

I fully expect reform to continue to provide that safety net. But the calculations that were used for the $30,000 avearge worker work the same no matter what income you plug in . The fact is that it is a better deal for workers to invest their money than to have big incompetent brother doing it for them .


Choux ;and what do the Democrats do? Announce the presidents proposal DOA before they ever consider the merits of it .

So far various experts and politicians have floated about 9 different options to fix SS. Most are Revenue Raisers and some are Cost Trimmers

Here are the revenue raisers (all variations of tax increases except # 6.)
1. raise the cap on taxable wages .
2.Increase the payroll tax rate .
3.Raise taxation of benefits .A means testing option.
4.grab money from Estate taxes and use it for Social Security.
5.Make Social Security universal. That means force the workers who are not subject to the plan into it (government workers at State and Federal levels.)
6. Invest some of the money in Index Funds. Well....now they have something there .Sorta Sounds like Bush's idea but it puts the investing in the hands of the gvt. ?

Here are the Cost Trimmers .
7.Adjust COLAs which is a fancy way to say that you screw the retiree of money promised.
8.Increase the Age of retirement to 70 .Leaving the *average*retiree a whole 6 years to enjoy retirement before they kick it .
9.Index benefits to prices not wages .A sure way to increase the poverty rate among seniors.

An interesting note is about 30% of workers nationwide are not in the Social Security plan ; Including Congress .Another successful retirement plan is in one of the most liberal bastions of the country ;Harvard University. Their retirement rests on 401 Ks. They have the choice of investing in low risk low costs mutual funds. It works well and Harvard employees are happy with the plan.

The real question is why does the left hate the option for the rest of America? Some possibilities are that since they hate Bush ,anything he proposes is automatically DOA in their book . Maybe this is payback for Republican blocking of Hillary care ? A cynic may think that they hope to gain some seats in mid-term by blocking this major initiative.

Or perhaps they fear that the tenents of their political philosophy is threatened by this .Workers in control of capital is anathema to the battle cry of the *champions of the oppressed workers* against those *evil capitalists *.There populist rhetoric would not have the same bite if workers were reading Barrons at lunch and watching the closing bell at CNBC.

Or perhaps it is that old paternalism. Except for the elites the rest of us are just too stupid to invest wisely and sensibly .Why those folks would go to the race track or the Indian Casinos ! We have a duty to protect people from themselves !
Democrats will not of course speak this frank ,but when you strip away the political rhetoric ;that is what they mean.

They say the proposal is a budget buster . That is short term thinking that the president addresses by proposing a phased in plan. But the truth is that the net effect of the plan is a zero sum game. If the worker agrees to put 4% of his money into a personal account then that worker is agreeing to get 4% less in traditional SS benefits.The worker makes up for the short fall with the gains from investing the money. The initial money represents extra borrowing to pay current liabilites(the so called gap) but in short time the gvt, in turn has a reduced future payout.

Another critique you hear is that it leaves gaps in the safety net. But ...the plan is voluntary .No one forces anyone to invest their retirement money .They can easily continue with the plan as is and still get their defined benefit.(subject to all the other *revisions * proposed to fleece the workers further as I catalogued above.)Democrats like to argue that the current system guarantees a benefit. But how can they say that when it is underfunded? This is the same problem that employers used to face with defined retirement plans. Most of them have now sensibly switched to defined -contributions plans. My employer knows that he has to contribute on a weekly bases a matching percentage of my contribution. Then the rest is up to me .I can put the money into a safe guaranteed fund if I choose or I can *gamble* on some safe funds with a solid long term track record.

If Roosevelt were alive today he would realize that basing a retirement plan on a system dependent on demographics was a mistake. He should've instead (20-20 hindsite)based it on a ration of 90% of the population caring for 10% . The age of eligibility would've automatically fluctuated with the demographics.
Fixing the system today with bandaids like revenue raisers and cost trimmers is not good enough . Down the road the problems will re emerge just as they have the last 3 times temporary fixes were applied to a tired old system . It is time to make it a better system for future generations .

Clarification/Follow-up by powderpuff on 04/10/05 6:54 am:

What about the young workers who don't have a $30,000 year income? I don't know many 18 yr olds who go from being a dependant high school student to a $30,000 year wage earner. Fact is, many people go from high school into minimum pay part time jobs. Fact is, many people don't get gainful employment until they graduate college and even then, many end up in minimum paying jobs (much below) and outside of their educational background earning potentials. Then what happens to people who become disabled before they have put away enough money to retire on? And what happens to people who never did make it to $30,000 a year income?

This sounds to me like a system that would work for people who are making enough money that retirement would be affordable anyway, but not for poor people.

Clarification/Follow-up by tomder55 on 04/11/05 3:05 am:
the formula works the same no matter what the income ..... a worker now making minimum wage still pays into the system . That worker's Social Security reimbursment is calculated based on all past wages when they retire . Nothing changes .This gives that worker an opportunity to invest a portion of their witholdings . The money is theirs to use or pass on as they see fit.(right now if a worker passes on the money does not go to an inheritance ) Poor people get shafted now in the system ;they do not make enough on SS to live a comfortable life. Other Social programs pick up the slack .No one is arguing that the safty net get removed from under them .

Clarification/Follow-up by powderpuff on 04/11/05 4:22 am:

okay, thanks, but I'm still not convinced.

How can this work with wage growth at one percent, GDP growth at three or four percent and stock returns at ten percent?

Clarification/Follow-up by tomder55 on 04/11/05 5:52 am:
The first two also negatively affect the current system . Besides the demographic considerations the other factors that affect the current system ;in fact it is dependent on it ;is a robust expanding economy. It is ultimately the size of the economy that determines our ability to support a growing elderly population with fewer workers. Increasing national savings should enhance productivity and thereby economic growth. Increased saving results from funding a Social Security system that is currently an unfunded system with real assets, not with increases in government debt can only help it's solvency .

I can only emphasis that a historical 10 % rate of return that the market provides is a much better deal than you get now from Social Security ;and it doesn not make a difference what the income level is .In fact I think it is a better deal for the poor for the reasons outlined in Privatizing Social Security: A Big Boost for the Poor
by Michael Tanner .By providing a much higher rate of return, privatization would raise the incomes of those elderly retirees who are most in need. Although the current Social Security system is ostensibly designed to be progressive, transferring wealth to the elderly poor, the system actually contains many inequities that leave the poor at a disadvantage. For instance, the low-income elderly are much more likely than their wealthy counterparts to be dependent on Social Security benefits for most or all of their retirement income. But despite a progressive benefit structure, Social Security benefits are inadequate for the elderly poor's retirement needs.

In addition, the progressivity of Social Security is undermined by differences in life expectancy. Because the wealthy generally live longer than the poor, they receive more total Social Security payments over the course of their lifetimes. In a privatized system, an individual's benefits would not be dependent on life expectancy. Individuals would have a property right in their benefits. Any benefits remaining at their deaths would become part of their estates, inherited by their heirs.

Finally, Social Security drains capital from the poorest areas of the country, leaving less money available for new investment and job creation. Privatization would increase national savings and provide a new pool of capital for investment that would be particularly beneficial to the poor.

For those reasons, Social Security privatization should be viewed as a big boost to America's poor.

Please note that this is not a new concept. Other countries like Chile ;Australia ;and Great Britain have already examined the demographic realities and have switched from pay as you go to a defined contribution system. Also Galviston Texas took advantage of a loop hole in the system and opted out of Social Security for it's employees . Where it has been properly implemented, it has been remarkably successful.

The key to this system being successful is limiting the investment choices (no wild speculations );limiting the rate of withdrawal ( prohibit lump-sum withdrawals and possibly require workers to purchase an annuity at retirement so they receive a monthly payout );and regulate the administrative costs that fund providers can impose.

Clarification/Follow-up by powderpuff on 04/11/05 6:56 am:
Okay, But what if the formula used for determining New Retiree Benefits were adjusted downward a little, and a new formula is used to increase New Retiree Benefits at a slightly slower rate than rising wages? For example, if wages were to rise by 1% a year, SS could increase its New Retiree Benefit level by 1/3% a year. If wages were to rise regularly by 2% a year, New Retiree Benefits could be increased to 1% a year.
After a while, after affordability has is achieved, SS could return to its old methods. New Retiree Benefits could once again be increased at the same speed as wage growth.

In the mean time, retirees might get other public benefits for discounts available only to retired people.

That might be a safer option?

Clarification/Follow-up by tomder55 on 04/11/05 7:12 am:
No matter how much workers' wages grow, the Social Security system won't be able to keep up because all of the revenue increase will immediately go out the door as COLA unless you cut benefits (which seems to be the bandaid everyone prefers ). I do not think you can grow your way out of this problem because the biggest problem is still the demographic problem. Let's just say that to fix the low birth rate reality we increase the rate of legal immigration .That Still does not fix the problem because todays new workers in the system is tomorrows new retiree . Eventually you would need more workers than jobs available to service the system.And lets be honest ;do we really believe that 50;75;100 years from now that Central and South America will not have figured out how to build a prosperous economy for themselves ? What happens then when the spigot to the labor pool dries up and we still have a low fertility rate to replace our work force ?

I don't think privatization is as risky an option of continuing the bandaid solution to a flawed system . Where is the guarantees? When I signed on to the plan they told me that at the age of 65 .I would be guaranteed a fixed monthly payout. Now the equations are changing on both my eligibility years ;the return and the % of my income used to support it. If I were a young worker today trying to start a family I would resent seeing the money that I could be using the build my families security going to pay for someone elses tee time.