Bad Investment

August 16, 2012

Turns out Social Security may not only be an unwise investment for new and future retirees, it may not be an investment at all. A recent Associated Press report noted that today’s new retirees are part of the first generation that has paid more into the Social Security system than they will actually receive after retirement.

One such example from a 2011 Urban Institute study was given in the AP article:

“A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85 …”

Though Medicare has come back into the spotlight with the media attention toward Mitt Romney’s new VP pick and his now infamous proposal of remaking the single-payer healthcare system into a “premium support” system (something Romney also supports), reform of the other big entitlement elephant in the room, Social Security, has rarely been discussed since the failed attempts by the last presidential administration to partially “privatize” it.

Perhaps Social Security reform deserves new attention. After all, the program’s own trustees state in their latest annual report that after 2033, “tax income would be sufficient to pay only about three-quarters of scheduled benefits…”  At that point, one could just as well literally hide their money under their mattress and guarantee a more secure retirement. Assuming they remember where they hid it, they at least would not lose any of their money. Not to even mention the problem of inflation.

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Another Job Growth Plan = Selective Subsidization

September 4, 2010

If the history of political meddling in the economy teaches us anything, it is that people seldom come to a realization of basic economic realities. That’s why President Obama can come up with yet another plan to ‘stimulate’ our economy like this:

That’s why we need to take further steps to create jobs and keep the economy growing, including extending tax cuts for the middle class and investing in the areas of our economy where the potential for job growth is greatest.

The simple fact lost on many is that all of this involves taking money we don’t have (which will mean increased debt and/or future devaluing of our currency) and spending it in ways that politicians deem appropriate. What it really, in effect, represents is government taking our money from us and deciding how to spend it for us.

[picapp align=”left” wrap=”true” link=”term=obama+economy&iid=9647673″ src=”http://view4.picapp.com/pictures.photo/image/9647673/president-obama-speaks-the/president-obama-speaks-the.jpg?size=500&imageId=9647673″ width=”234″ height=”167″ /]”Extending tax cuts for the middle class” implies that only that segment of income earners defined as “middle class” by politicians and deemed worthy of tax breaks will benefit from such a measure. The “investing” (which is government code for “spending”) in areas of the economy “where the potential for job growth is greatest” means government deciding what industries and individuals should be subsidized.

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AP: Health Care ‘Reform’ Law to Lead to Higher Costs

April 28, 2010

The recently passed health-care “reform” law was roundly touted by proponents as a way to rein in health-care spending costs. But, now, even the Associated Press is acknowledging that many prices will rise.

According to an AP article, the following is likely under the new law:

Insurance premiums are likely to keep going up over the next few years. Experts predict that the law’s early benefits — such as expanded coverage for children and young adults — could nudge rates a little higher than would otherwise have been the case. Also, insurers and medical providers could try to raise their prices ahead of big shifts set for 2014. … More than 30 million previously uninsured people would gain coverage quickly — and they’ll start going to the doctor for care previously postponed. Increased demand will push up health care spending, putting more pressure on premiums. The cost controls in the bill are unlikely to provide much of a counterweight. Democrats scrambling to line up votes for the final bill weakened a provision that would have enforced austerity through a hefty tax on high-cost employer coverage.

In short, increased demand for a product leads to higher prices. Increased taxes on higher quality insurance plans added to this creates a situation in which the demand is up but increased quality is punished.

This situation is what critics of the “reform” plan were warning before the bill was passed into law. But, the fact that the AP is acknowledging the economic consequences of the law now is revealing.


Analyzing Tax ‘Credits’

February 27, 2010

After reading a recent AP analysis of CPAC that purported to point out factual errors in political rhetoric, I noticed one interesting problem that represents a common misconception about what some call tax “credits.” The specific example given in the analysis was the $400/$800 “Making Work Pay” tax “credit” given to individuals and joint filers as part of last year’s stimulus package.

Ron Fournier, the writer, referenced that “credit” as an attempt to debunk former Massachusetts Governor Mitt Romney’s claim at the convention that the Democrats were the party of no tax cuts. Fournier equates what he calls these “tax benefits” with what Romney was referring to when he mentioned “tax cuts.”

As I’ve written about before, the Making Work Pay tax “credit” is not really a tax cut. It gives $400 to individual filers or $800 to joint filers without accounting for the fact that many of them do not end up paying federal income taxes anyway. In fact, in many cases this “credit” actually amounts to free money (money they never had nor paid in taxes) to these filers. It can’t be a tax “cut” if there is no tax to cut.

Thanks to our “progressive” income-tax system, such so-called “credits” have become the norm. They equate to what President Obama called “spread the wealth around” during the 2008 campaign. With these types of handouts, is it any wonder why our federal debt is now more than $12 trillion?


Criticism of Presidential Speeches to School Kids Nothing New

September 8, 2009

It looks like the criticism over presidential speeches to school children is nothing new. It turns out that Democrats criticized the first President Bush for making such a speech back in 1991.

I found this Associated Press report through a Nexis search. The main focus of the criticism was on the cost of the televised speech, but some critics also viewed it as a political move. Sounds eerily familiar to the criticism voiced against President Obama’s recent speech to school kids, doesn’t it? Except, actual Congressional hearings took place over the Bush speech.

The then-Secretary of Education, Lamar Alexander, defended the speech in a hearing by noting that to let the president “go to a seventh grade classroom and speak to the children of America about the value of education … unless I’m missing something … seems to be exactly what the president ought to be doing.” That also sounds like a familiar defense.

Also of note is that the National Education Association (NEA) criticized Bush for the speech. In another article I found through Nexis, the then-president of the NEA was reported to have said the following:

 … the NEA could not endorse a president who spent $ 26,000 of taxpayer money to televise a speech he recently gave at a Washington D.C. high school “while cutting school lunch funds for the neediest youngsters.”

No criticism of Obama’s speech has come from the NEA. In fact, they have covered it favorably on their site.

Those accusing Obama critics of overly hyping the significance of his speech should remember the way Bush’s critics reacted to a similar speech. Politics is politics. There really is nothing new under the sun.


Spending 50 Percent More Than You Take In

May 11, 2009

This AP article notes that, “For the current year, the government would borrow 46 cents for every dollar it takes to run the government under the administration’s plan.” This came from newly released information on the fiscal year 2010 federal government budget.

The article notes that Obama’s budget “proposes higher taxes for the wealthy, a hotly contested effort to combat global warming and the first steps toward guaranteed health care for all.” Translation: Taxing one group of people and giving the money to others. But the problem is that, as Margaret Thatcher once noted, “The trouble with socialism is that you eventually run out of other people’s money.”


Studies Show Positive Tilt to Media’s Obama Coverage

May 3, 2009

This AP report notes that two studies have indicated that media coverage of Obama in his first 100 days has been much more positive than that of Presidents G.W. Bush and Clinton. One study from the Center for Media and Public Affairs found that:

The tone of comments by reporters and sources on the three networks reflected positively on Obama in roughly the same proportions, 57 percent on ABC, 58 percent on CBS and 61 percent on NBC. Bush faced a two-thirds negative reaction, and Clinton 44 percent in the same period.

And here are the results of another study:

Another independent think tank, the Pew Research Center’s Project for Excellence in Journalism, did a more extensive look at media outlets and judged 42 percent of news stories, editorials and columns were pro-Obama. Clinton was 27 percent positive and Bush 22 percent positive in a similar evaluation.

There’s really no surprise here. It’s just nice to see scientific studies to back up what is the perceived common knowledge of media coverage of the current White House occupant. Representatives from news organizations in the studies were quoted in this story basically dismissing the studies instead of seeing them as indicative of biased coverage. This quote from a CBS producer is really noteworthy:

The newscasts reflect reality, said Rick Kaplan, executive producer of the “CBS Evening News.” He said he believed that the president has done extraordinarily well. “Everybody, including Republicans, would have to say that his first 100 days have been great,” he said.

“Everybody” thinks the first 100 days have been great? What hole has he been buried in for the last 100 days?