One of the arguments put forth by Bush & Co. is that Social Security provides a poor rate of return. David C. John and William W. Beach of The Heritage Foundation have just put out another piece making this claim. In it they refer back to two commentaries they claim as "research" -- Social Security's Rate of Return and Social Security's Rate of Return: A Reply to Our Critics.

I make no claim that their math is fuzzy -- though it may be. It is their logic. The part of their argument that fails is that they are comparing a guaranteed benefit with a speculative benefit -- much like claiming insurance has a poor rate of return. They may be correct on the surface, but rate of return is not the purpose of insurance.

For example, why should one insure their home against fire? The probability that your house will burn to the ground is low. Think of just how well you could do if you invested that money into the stock market. Then you could leave that money to your children when you die. What a great plan. What of those unfortunate enough to lose their homes to fire, you may ask. They claim that we will make so much from our stock portfolio that we will be able to buy a bigger and better home. What if the stock market crashes? They claim that cannot happen. What if they are wrong? Well, that does not matter. The important thing is that we get rid of that nasty insurance that is ruining our lives.

These same folks claim to be fiscally responsible as they have cut revenues and gone on a spending binge resulting in trillions of dollars in added debt. Do we really want to trust the foundation of our retirement to them?

I hope that all of you are letting your senators know that you are pleased or displeased with their vote to confirm Dr. Rice as Secretary of State. My message to Wayne Allard (R-CO) and Ken Salazar (D-CO):

I am deeply disappointed that you do not consider integrity, honesty, and honor as prerequisites for Secretary of State. Any damage done to our foreign relations during Dr. Rice's tenure rests on your shoulders.

If you are fortunate enough to have a senator with some integrity please send them a nice thank you note.

Be sure to let your senators know what you think about Alberto Gonzales. It should be short and to the point. My version:

Please vote NO on the confirmation of Alberto Gonzales as Attorney General. That he is willing to subvert the law to make torture legal shows that he does not have the moral character required for the office.

U.S. Senate website

Jim Jubak has a nice column on the fine mess our political leaders have created in managing taxpayer dollars. It is short and to the point -- as a country we are on the verge of bankruptcy.

Senator Kent Conrad (D-SD) and Representative John Spratt (D-SC) held a joint press conference yesterday (1/25/05) on the most recent CBO Budget and Economic Outlook. Republicans have not yet commented.

Does anyone see a way out of this mess without a severe crash to our economy?

Links:
Jubak's Journal -- Uncle Sam gets an 'F' in money management
C-SPAN has a video of the press conference
Senate Budget Committee -- Democratic Caucus
Senate Budget Committee -- Republican Caucus
House Budget Committee -- Democratic Caucus
House Budget Committee -- Republican Caucus
Congressional Budget Office

Another example of the Bush Doctrine of spreading democracy at the point of a gun.

From the Confirmatin Hearing of Dr. Condoleezza Rice for Secretary of State:

We are joining with developing nations to fight corruption, instill the rule of law and create a culture of transparency.

From the New York Times:

BAGHDAD, Iraq, Jan. 21 - Earlier this month, according to Iraqi officials, $300 million in American bills was taken out of Iraq's Central Bank, put into boxes and quietly put on a charter jet bound for Lebanon.

The money was to be used to buy tanks and other weapons from international arms dealers, the officials say, as part of an accelerated effort to assemble an armored division for the fledgling Iraqi Army. But exactly where the money went, and to whom, and for precisely what, remains a mystery, at least to Iraqis who say they have been trying to find out.

The $300 million flight has been the talk of Iraq's political class, and fueled the impression among many Iraqis and Western officials that the interim Iraqi government, set up after the American occupation formally ended in June, is awash in corruption. It is not clear whether the money came from Iraqi or American sources, or both.

. . .

"I am sorry to say that the corruption here is worse now than in the Saddam Hussein era," said Mowaffak al-Rubaie, the Iraqi national security adviser, who said he had not been informed of the details of the flight or the arms deal.

That charge is echoed outside of Iraq as well. Isam al-Khafaji, the director of the New York-based Iraq Revenue Watch, said corruption had become an "open secret" within the Iraqi government.

"There is no legal system to bring charges against anyone not following the rules and not abiding by the law, especially if you're a powerful politician," Mr. Khafaji said. "That's the tragedy of Iraq: Everyone runs their business like a private fiefdom."

[emphasis mine]

Three cheers for Barbara Boxer. It is refreshing to see a senator with the integrity to point out the record of Condoleezza Rice. Ms. Rice will go down in history as the worst National Security Advisor since the post was created. We can only hope that her record as Secretary of State will not be as bad. It seems unrealistic to think there are enough senators with sufficient integrity to prevent her confirmation.

Why is the leadership of the Democratic Party ignoring the issue of the long-term unemployed? As this New York Times article points out, there are several million people affected. There is also a good thread over at daily KOS, American Engineers - a dying breed, discussing this problem.

In all the exuberance over the 2.2 million jobs created this year it should be remembered that this barely squeaks past what is required to keep up with population growth. We are still more than eight million jobs shy of having the same employment level as when President Bush took office. The 5.4 percent unemployment rate does not count people that no longer collect unemployment compensation. Nor does it count people that have lost their small business - many of these had thrived for decades. Nor does it count the millions of Americans forced to take jobs for less money and benefits than their previous positions.

The CATO institute is claiming that Individual Accounts Provide a Better Return Rate than the 6.0 percent earned by the Trust Fund on Treasury Bonds in 2003. In their higher risk "balanced portfolio" they project a return of 4.9% before administration expenses.

President Bush is planning to express his "compassionate conservatism" by cutting Social Security benefits by one-third. Some highlights from an article in the Washington Post:

The Bush administration has signaled that it will propose changing the formula that sets initial Social Security benefit levels, cutting promised benefits by nearly a third in the coming decades, according to several Republicans close to the White House.

The White House hopes that some, if not all, of those benefit cuts would be made up by gains in newly created personal investment accounts that would harness returns on stocks and bonds.

The change would save trillions of dollars in scheduled expenditures and solve Social Security's long-term deficit, but at a cost. According to the Social Security Administration's chief actuary, a middle-class worker retiring in 2022 would see guaranteed benefits cut by 9.9 percent. By 2042, average monthly benefits for middle- and high-income workers would fall by more than a quarter. A retiree in 2075 would receive 54 percent of the benefit now promised.

Social Security benefits currently equal 42 percent of the earnings of an average worker retiring at 65. Under the new formula, that benefit would fall to 20 percent of pre-retirement earnings.

"If this was a case of just price indexing and doing nothing else, frankly, some of the [opponents'] charges are pretty valid," [David C.] John[, a Social Security analyst at the conservative Heritage Foundation and an ally of the president] said. "But if you give the personal accounts as well, you're giving people the opportunity to make up the difference. Not everyone will do that, but a substantial number will."