![The DSM Register Independence Day Weekend “Progressive Trifecta†(3rd of 3) “Keep Social Security Safeâ€]()
by John Bloom | Jul 21, 2011
The Des Moines Register’s Opinion Section on Sunday, July 3, 2011 featured a “Progressives Trifecta†of half-truths and sophistry:
Richard Doak – What if the founders were around today?
Donald Kaul – My favorite 4th of July speech
Dean Baker – Keep Social Security safe from politicians who want to save it
This week I will focus my comments on Dean Baker’s article sub-titled “Real patriotism requires coming to terms with the grimmer side of American historyâ€. Mr. Baker is co-director for the Center for Economic Policy Research (CEPR). The CEPR home page lists 10 funders, mostly far left organizations including the Open Society Foundations, which was founded by and led by George Soros.
Dean Baker-He advises the reader that two thirds of people age 65 rely on Social Security for more than half their income. He notes that “with traditional pensions disappearing and many near retirees losing much or all of the equity in their home, and also seeing 401(k) assets plummetâ€, hence “the next generation is likely to be even more dependent on Social Securityâ€. He then proceeds to explain “Fortunately the program (Social Security) is fundamentally solidâ€. He goes on to summarize various facts about the trust fund and speculates about various ways to further improve the long term health of the program. He says “Many opponents of Social Security insist that its $2.6 trillion trust fund does not exist or that it is “just sheets of paperâ€. He acknowledges that “the trust fund is held in the form of U.S. government bonds, which are indeed sheets of paper. However, investors everywhere eagerly seek out these ‘sheets of paper’ as the safest asset in the worldâ€.
- Public reliance on Social Security-Mr. Baker is not providing a fully accurate picture in his description of the American public’s dependence on Social Security. I checked several sources for my information and found them to be relatively consistent, so I have only referenced three of them. My conclusion is that Americans who have lived within their means, saved money, invested prudently and maintained marketable skills are relying properly on Social Security as a meaningful component of their retirement. Social Security was never intended to be more than that.
- Average U.S. Home Prices[1]
- The median price of homes in the United States in 2004 was $221,000. It peaked in 2007 at $247,900. In 2010 it was $221,800. Baker’s statement about near retirees losing much or all of their equity would only have occurred if they leveraged their home equity for other reasons. If they had been in their home for 20 years, even the depressed 2010 prices reflect a gain of 80%.
Planning to Retire by Emily Brandon[2].
- Americans age 65 and older receive most of their income from four sources: employment, Social Security, pensions, and asset returns, according to a recent Congressional Research Service report. The prevalence of each of these types of income has shifted somewhat since 1980. More Americans now continue working past age 65 and fewer people bring in income from assets. Here’s a look at how the biggest sources of retirement income have changed over the past 30 years.
- Employment. In the 1980s and 90s about 16 percent of seniors worked, a number that steadily increased to 20 percent in 2008. Earnings now make up over a quarter (26 percent) of income for Americans age 65 and older, with the typical senior bringing in a median of $20,000 annually from work.
- Social Security. Social Security remains the most common source of income for people age 65 and older. About 86 percent of seniors receive these monthly checks for a median of $12,437 annually. This entitlement makes up 39 percent of the typical senior’s income.
- Asset income. Just about half of Americans (54 percent) receive some income from assets, down from 67 percent in 1980. But most Americans don’t receive very much in the form of interest, dividends, rent, or royalty payments. Interest rates and dividend yields have fallen since the early 1990s. The typical American made just $1,054 off their assets in 2008. Asset returns account for approximately 13 percent of retiree income, down from 24 percent in 1990. (Writer’s note: The Federal Reserve is “saving the economy” with 0% interest rates. Unfortunately this punishes millions of retirees who saved for their retirement and were counting on fair returns on bank deposits, CD’s etc..)
- Pensions. The proportion of Americans with a pension from a former employer has fallen slightly from 37 in 1990 to 34 percent in 2008. Pensions payout a median of $10,800 annually which makes up about 20 percent of the typical retiree’s budget.
401K Balances Moving Back to Pre-recession levels by David Pitt[3]
- Americans who were afraid to open their 401(k) statements during the recession are finding good news inside the envelope now: For the most part, their accounts have come all the way back and then some.
- Nine in 10 of the popular retirement plans are at least back to where they were in October 2007, the peak of the stock market. Since the bull market began in March 2009, stocks have almost doubled.
- And many investors who kept their nerve and continued putting some of their paycheck into a 401(k) during the market’s worst months are now ahead.
My main issue with Mr. Baker is his insistence that the Social Security Trust Fund is secure. The current crisis over the debt ceiling now exposes that lie completely. President Obama has admitted that checks may not be issued if the U.S. Treasury cannot continue to borrow next month. If the Social Security Trust Fund held real assets, rather than government paper, they could sell those assets and pay benefits independently from the General Fund. As noted above, long term investments in real estate, stocks, bonds, commodities (gold), etc. have real value. Unfortunately all we have is paper made worthless by closet socialists like Tom Harkin and Barack Obama. I wish this were not true. I have paid into these programs at maximum levels for most of my working career. Privatize Social Security? Absolutely. Young people should demand it. The Ponzi scheme is over!
I refer you to the following article, The Fraud of the Social Security ‘Trust Fund’ Exposed by a Most Unlikely Source by Don Boudreaux on July 16, 2011[4]
If Americans choose to accept the misinformation of socialists like Mr. Baker as fact, then they deserve the government and fate that they choose. The Republicans have proposed a plan and until President Obama does likewise, they should be applauded for at least recognizing the problems. Mr. Baker knows better. He is simply a socialist who hopes to use the budget crisis to tax the private sector out of business, redistribute an ever shrinking American economic pie, and secure power for global elites like George Soros.
[2] U.S. News and World Report, January 12, 2010
[3] The Huffington Post, March 21, 2011
[4] http://cafehayek.com/2011/07/the-fraud-of-the-social-security-trust-fund-exposed-by-a-most-unlikely-source.html
Photo: Gino Santa Maria – Fotolia.com
![The DSM Register Independence Day Weekend “Progressive Trifecta†(3rd of 3) “Keep Social Security Safeâ€]()
by John Bloom | Jul 13, 2011
The Des Moines Register’s Opinion Section on Sunday, July 3, 2011 featured a “Progressives Trifecta†of half-truths and sophistry:
Richard Doak – What if the founders were around today?
Donald Kaul – My favorite 4th of July speech
Dean Baker – Keep Social Security safe from politicians who want to save it
This week I will focus my comments on Donald Kaul’s article sub-titled “Real patriotism requires coming to terms with the grimmer side of American historyâ€.
Donald Kaul – He shares viewpoints about the things he likes and dislikes about the 4th of July. He likes back yard gatherings but he dislikes patriotic claptrap. He likes patriotism, defined as acts of citizenship and service, but dislikes speechifying. He likes the flag itself but dislikes flag-waving, defined as substitute emotionalism for rational behavior. My primary issue with his meandering opening is that he never refers to the holiday by its real name, which is Independence Day, not the “Fourth of Julyâ€.
- Flag Waving Emotionalism-His example of substituting flag-waving emotionalism for rational behavior is “War, for example. How many times have nations been led into truly stupid wars behind a flowing flag? Does the word Iraq suggest anything to you?â€
The rest of the story: Which Iraq war was Mr. Kaul referring to? Why did he select war(s) started under Republican Presidents, but not include Vietnam, started under Democrat Presidents?  There was meaningful United Nations support for both military actions in Iraq. There was minimal UN involvement in the military actions in Vietnam. His point about irrational behavior would have seemed less partisan had he said “Does the word Vietnam suggest anything to you?â€.
- Favorite Fourth of July Speech-He proceeds to inform his readers about the great black orator and civil rights leader, Frederick Douglass. He rightfully acknowledges the key role that Douglass played in pointing out the hypocrisy of the “Independence Day†celebration of 1854, a time when slavery was a legal practice in southern states and segregation a common practice almost everywhere in the United States.
The rest of the story:  Mr. Kaul does not fully inform us about the political party that was responsible for the safeguarding of slavery between 1789 and 1854.  That was the Democrat Party.  Frederick Douglass supported abolitionist John C Fremont in the 1864 Republican primary.  Lincoln, who won the nomination and the election, was a moderate, not a radical abolitionist. Douglass eventually reconciled himself with Lincoln’s shortcomings and legacy. Douglass supported Republican Ulysses S. Grant in 1868. Mr. Kaul, why not acknowledge that Frederick Douglass’ speech was about injustices imposed by Democrats, including Thomas Jefferson and Andrew Jackson?
(On a side note, I wish influential liberal writers like Mr. Kaul would acknowledge that Republicans drafted and passed the 13th, 14th and 15th amendments ending slavery, providing citizenship and voting rights to all minorities. It is a tragedy that the Supreme Court later gutted the clear intention of these amendments with the Cruikshank decision of 1876. After that, southern Democrat Senators prevented enforcement rights for 88 years until a coalition of Republican and Democrat Senators prevailed with the Civil Rights Act of 1964 and the Voting Rights Act of 1965.)
- Tulsa Race Riot- He concludes with a review of the history of the Tulsa race riot of May 31, 1921. The Wikipedia article on this event varies substantially with Mr. Kaul’s article, but my interests are not to quibble over details.  It was a deplorable event driven by unreasonable fear and hatred stirred up by sensationalistic newspaper reporting.   The town’s black community was burned to the ground and they suffered a large number of deaths and injuries. I support Mr. Kaul’s desire to educate the public about this event.  Our nation’s history has too many examples of horrible behavior denying life and liberty to minorities and the underprivileged.
The rest of the story:  Now, it is also a fact that the state of Oklahoma originated in 1907 and had Democrat Governors until 1963. The Governor in 1921 was Democrat, James Brooks Ayers Robertson.  An article from the Encyclopedia of Oklahoma History and Culture, referring to the early years of the state legislature, “The legislature banned interracial schools at all levels. Many public facilities along with common carriers were segregated. Some 540 railroad depots in the state had to be altered to fit the new separate waiting rooms requirement, while new coaches also had to be added to the lines. Over time, legislators segregated everything from hospitals to housing to cemeteries to restaurants. In 1915 Oklahoma made national history by becoming the first state in the Union to segregate public pay telephone booths.â€.[1] Mr. Kaul, why don’t you acknowledge that the Tulsa race riot was a product of the racist history of the Democrat Party?
[1] http://digital.library.okstate.edu/encyclopedia/entries/S/SE006.html
by John Bloom | Jun 29, 2011
The Des Moines Register’s Editorial on Monday, June 27, 2011 was titled “Steep budget cuts now could harm economyâ€.
Summary – The Register’s Editorial group pointed us once again to the “nonpartisan fiscal agencyâ€, the Congressional Budget Office (CBO).  They quoted the CBO’s “dire warning about unsustainable federal deficitsâ€, but cautioned that the report also “warned that steep cuts right now could make the nation’s fiscal condition even worse by kicking the legs out from under the economyâ€.  Also on June 27th, The Wall Street Journal’s front page led off with an article titled “Debt Hamstrings Recoveryâ€[1].  The WSJ’s Tom Lauricella notes “Around the globe, the inability of governments and households to reduce their debt continues to cast a shadow over Western economiesâ€â€¦â€Unlike the aftermath of typical recessions, simply lowering interest rates hasn’t been enough to get growth back on track…Quite the opposite has been the case… The lowered cost of borrowing has enabled individuals and government to delay taking measures to change the way they spend and save.â€
Comment on the DSM Register’s Selective Reporting – I have noticed a pattern of inconsistency in the DSM Register’s and WSJ’s reporting.  Many featured articles in the WSJ, arguably a far more competent source of economic analysis than Gannett’s network, are minimized or never presented in the DSM Register. In addition to the “Debt Hamstring†analysis, another recent example would be the study released by management consultant McKinsey. They surveyed 1,300 companies and found that one third (1/3) of them will “definitely†or “probably†stop offering health insurance after 2014.  Since candidate Obama guaranteed us that we would be able to keep our current insurance, this seems like a worthwhile piece of news. If the DSM Register featured it, I must have overlooked it. I wonder if the nonpartisan CBO is aware of it?
Analysis of the “Spend Now, Save Later Strategyâ€Â - If we were in the position of China, over $3 trillion in foreign exchange reserves[2], I would not have a big issue with spending some of those reserves to shore up a short term slump in the economy.  However Government debt as a % of GDP has increased from 30% in the early 2000’s to 35% by the end of the Bush presidency (increasing under both Republican and Democrat congresses). During the Pelosi-Reid-Obama era, that % is now approaching 60%.  Meanwhile consumer debt and mortgage debt has more than doubled since 2000 (from $10 to about $20 trillion combined). Given the state of our debt, any increase in interest rates (almost a certainty the way the Fed has increased the money supply) will quickly multiply the consequences of our excessive debt.   For my entire adult life I have heard politicians claim that we will “save later, when the economy is strongerâ€. That day never comes. The Clinton-Gingrich era budgets were a nice anomaly but were not based on sustainable structural changes. The Register is wrong. We must cut government spending substantially and quickly.
[1] WSJ 27 June 2011, Debt Hamstrings Recovery
[2] WSJ, 26 June 2011, “China Pledges Continued Support for European Debtâ€
by Art Smith | Sep 14, 2010
Art Smith (“From The Right”) will be live chatting along with Conner Anderson (“From The Left”) at The Des Moines Register’s web site on September 14, 2010 from 7:00 to 8:00 PM. Come and follow the conversation!
by Art Smith | Sep 26, 2009
The Des Moines Register, one of the two printed dailies that I read, has done some work to revamp the Politics section of their web site. As part of that effort, they have added “Featured Political Bloggers”, providing perspectives from the Right, the Left, and Across the Spectrum. Yours truly is one of the “From the Right” bloggers. More information about these changes will be included in the Sun
Although I’m pleased to be included in this project, more importantly I’m impressed that the Register is providing a forum that allows more established bloggers an opportunity to present opinions on topics that are important to everyone from such a variety of perspectives. Most people in Central Iowa recognize that the Register’s editorial positions tend to lean to the Left (although they occasionally surprise us). It is an exceptional publication that works with people from an opposing perspective as actively as The Des Moines Register is at this time.
Bloggers featured include:
From the Left:
From the Right:
From Across The Spectrum:
All of these folks have great ideas and I’m looking forward to interacting with them and Des Moines Register readers.
Radio Gig
This coming week will also be the beginning of four weeks of filling in for Tim Albrecht on his internet radio program “The Beanwalker Live!” on the Macs World Live internet radio station. On Tuesday September 29th, I will be filling the 4:00 to 5:00 PM time slot. On Octobers 6th, 13th and 20th, I will be doing the entire two hours from 3:00 to 5:00 PM. I plan to have some great guests in October, so please check it out! And if you can’t catch it live, podcasts will be available!
