Favorite

Bush’s bad math 

It must be hard for most people to believe the two international reports that show a big gap between the math concepts and skills of young Americans and those of much of the rest of the developed world, which continues for a third generation and is growing. But how can you avoid the evidence at President Bush’s press conference Monday, when he tried to explain how his “reforms” were going to save Social Security and not aggravate its long-term financial problem? That has perplexed people since he first said he was going to rescue Social Security by having workers direct part of their payroll taxes into the stock and bond markets. Now and for the next 15 years, Social Security will add to its vast surplus, and it will support full benefits to everyone until at least 2042 or 2052, depending on whether you believe the Social Security trustees or the Congressional Budget Office. If something isn’t done, like lifting the earnings cap on the payroll tax, benefits would be lowered then. Reporters asked Bush to explain how reducing the amount of payroll taxes that are invested in government bonds for Social Security at every pay period and transferring the money instead into private investment accounts that workers would manage themselves would keep Social Security flush far beyond 2042 or 2052. “Yeah, I will try to explain how without negotiating with myself,” Bush said with a chuckle. But he couldn’t do it. “I think what you all — people ought to do is to go look at the Moynihan commission report,” he suggested, referring to the President’s Commission to Strengthen Social Security. That helps us a little, that is if the president is going to choose Model 2 of the Moynihan report, which seems most like what he is proposing. Bush hints that benefits will be cut under his plan but not for people who are already retired or are approaching retirement. Every worker would see his or her benefits cut but Bush says those who put payroll taxes aside in a private account would earn so much from it that it would more than offset the reduction in regular Social Security. It would be voluntary but if you didn’t choose to play with the stocks your benefits would be cut anyway to make the system solvent. Not many current workers would be excited about it. Under the commission’s plan —and presumably Bush’s — a worker who is 37 today and retires in 2032 would receive 17 percent less in regular benefits. For young workers the reduction would grow to a third. Today’s babies would see cuts of more than 40 percent from currently expected benefits. A study of the commission’s plans at the Massachusetts Institute of Technology in 2002 concluded that the role of Social Security in allowing the elderly to maintain their standard of living after retirement would decline “rather sharply” over time if the private investment option becomes law. But Bush says he’s sure that younger workers who invested in the markets would see such big gains that it would offset the reductions in pensions and that those retirees could enjoy perhaps an even better life than they would under the present Social Security system. That calls for some wildly rosy assumptions, starting with the notion that the stock market will perform the next 30 years as it has the past 30. The most bullish analyst, even Bush’s Treasury Department, will have trouble showing an array of stock returns and dividend yields that will add up. It also assumes low administrative costs, although obviously not as low as Social Security’s 1 percent, which is one reason that it is the most efficiently run government program in world history. The Moynihan commission — Bush wanted us to check it out, remember — figured that it would cost about 10 times as much to administer if a government office managed the investments. But Bush says every worker would manage his own investments, subject to some limits so he doesn’t squander money on lottery tickets or some wild scheme, because otherwise he would not have real ownership, which to the president is the real reason to do it. If Wall Street or local banks and brokerages get their hands on the money, which is why the investment industry has been cheerleading for the “reform,” all bets are off. But that seems to be the key to the Bush plan. Chile and England do it that way now, and the government is having to come to the rescue. But none of that answers the basic math question. How will the private accounts and the diminished payroll taxes solve the cash problems of Social Security when they do finally come to roost? The commission’s answer was to divert trillions of dollars from general revenues. But that was when we thought we would always have a surplus. Bush’s loyal treasury secretary said it was easy. Just pick a figure in the trillions and we’ll borrow it. If that’s the answer, who needs math at all?
Favorite

From the ArkTimes store

Comments

Subscribe to this thread:

Add a comment

More by Ernest Dumas

  • Coal is over

    The free market's natural search for cheaper and more efficient energy has taken over and even President Trump and a governing party heavily in denial about climate change cannot stop it.
    • Apr 13, 2017
  • Race to kill

    You wonder if Attorney General Leslie Rutledge would be so eager to execute if her grandpa, Leslie Rutledge, who was imprisoned for killing neighbor Joe Beel and mortally wounding his brother Frank, had been sentenced to death in 1952.
    • Apr 6, 2017
  • Repeal charade

    The debacle of the repeal-Obamacare movement left the president and the Republican Congress ruminating about the terrible lessons they had learned from the defeat — mainly that neither ever had a health plan or even a clue about how to frame one.
    • Mar 30, 2017
  • More »

Readers also liked…

  • Guns, God and gays

    Many more mass shootings like the one last week in Roseburg, Ore., will stain the future and no law will pass that might reduce the carnage. That is not a prediction but a fact of life that is immune even to Hillary Clinton.
    • Oct 8, 2015
  • AEC dumps ALEC

    No matter which side of the battle over global warming you're on, that was blockbuster news last week. No, not the signing of the climate-change treaty that commits all of Earth's 195 nations to lowering their greenhouse-gas emissions and slowing the heating of the planet, but American Electric Power's announcement that it would no longer underwrite efforts to block renewable energy or federal smokestack controls in the United States.
    • Dec 17, 2015
  • No tax help for Trump

    The big conundrum is supposed to be why Donald Trump does so well among white working-class people, particularly men, who do not have a college education.
    • Aug 11, 2016

Most Shared

  • Executionpalooza

    Appearances count. I was struck by a single sentence over the weekend in a full page of coverage in The New York Times devoted to the killing spree in Arkansas, beginning with a front-page account of the recent flurry of legal filings on pending executions and continuing inside with an interview with Damien Echols, the former death row inmate.
  • Art bull

    "God, I hate art," my late friend The Doctor used to say.
  • Not justice

    The strongest, most enduring calls for the death penalty come from those who feel deeply the moral righteousness of "eye-for-an-eye" justice, or retribution. From the depths of pain and the heights of moral offense comes the cry, "The suffering you cause is the suffering you shall receive!" From the true moral insight that punishment should fit the crime, cool logic concludes, "Killers should be killed." Yet I say: retribution yes; death penalty no.
  • Judge Griffen writes about morality, Christian values and executions

    Pulaski County Circuit Judge Wendell Griffen, who blogs at Justice is a verb!, sends along a new post this morning.
  • The Ledell Lee execution thread

    Arkansas Times contributor Jacob Rosenberg is at the Cummins Unit in Grady filing dispatches tonight in advance of the expected execution of Ledell Lee, who was sentenced to death for the Feb. 9, 1993, murder of Debra Reese, 26, who was beaten to death in the bedroom of her home in Jacksonville.

Latest in Ernest Dumas

  • Coal is over

    The free market's natural search for cheaper and more efficient energy has taken over and even President Trump and a governing party heavily in denial about climate change cannot stop it.
    • Apr 13, 2017
  • Race to kill

    You wonder if Attorney General Leslie Rutledge would be so eager to execute if her grandpa, Leslie Rutledge, who was imprisoned for killing neighbor Joe Beel and mortally wounding his brother Frank, had been sentenced to death in 1952.
    • Apr 6, 2017
  • Repeal charade

    The debacle of the repeal-Obamacare movement left the president and the Republican Congress ruminating about the terrible lessons they had learned from the defeat — mainly that neither ever had a health plan or even a clue about how to frame one.
    • Mar 30, 2017
  • More »

Visit Arkansas

Haralson, Smith named to Arkansas Tourism Hall of Fame

Haralson, Smith named to Arkansas Tourism Hall of Fame

Chuck Haralson and Ken Smith were inducted into the Arkansas Tourism Hall of Fame during the 43rd annual Governor’s Conference on Tourism

Event Calendar

« »

April

S M T W T F S
  1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30  

Most Recent Comments

  • Re: Art bull

    • Well, when the Bull was first put up there, it meant one thing, and that…

    • on April 24, 2017
  • Re: Art bull

    • the nice thing about art is that it is what it is, but what it…

    • on April 22, 2017
  • Re: Executionpalooza

    • Fantastic work-from-home opportunity for everyone... Work for three to five hrs a day and start…

    • on April 21, 2017
 

© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation