Category: national politics & policies

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national politics & policies tax policy too much government

Social Security Beyond Retirement Age

Social Security turned 75 last week, and yet I saw few demands to retire the program.

Instead, pundits like Paul Krugman took the occasion to praise the septuagenarian boondoggle.

Krugman started boldly, saying that the program “brought dignity and decency to the lives of older Americans.” Huh? Social Security has indeed brought a steady income to retired Americans, many of whom would have had to rely on their children’s help to live out their last years. But Krugman doesn’t say that. Instead he implies that, before Social Security, old folks led indecent and base lives.

But think about this: Saving for yourself and living on a limited means is indecent? It lacks dignity?

Krugman also talks about the economics of the program, defending, for instance, its dual accounting method in a bizarre way. But mostly he steps carefully around Social Security’s biggest failings, which include the intergenerational swindle, providing bigger rewards-over-contributions to earlier retirees than to current recipients, and, by its nature, will take more from, and give less to, future retirees.

Most shockingly, though, he says this: “Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund.”

Krugman does all but state that the special account has money in it.

It doesn’t. The “trust fund” consists of IOUs from Congress. That’s it.

I guess Social Security is a program too important to Krugman to tell the truth about.

This is Common Sense. I’m Paul Jacob.

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national politics & policies too much government

The Bill With No Name

It’s not legislation out of a Clint Eastwood western. It’s a congressional bill with the somewhat sketchy cognomen of the “________ Act of ________.”

This non-name may also front the law as eventually foisted. The Senate is in recess until September, so there might not be a chance to correct the title in both houses. To be signed into law, a bill must pass both chambers in identical form.

WashingtonWatch.com reports that HR1586 would “impose an additional tax on bonuses received from certain TARP recipients” — referring to the controversial Troubled Asset Relief Program, the $700 billion bailout program of October 2008. But the nameless bill has morphed somewhat. As Jim Harper of the Cato Institute observes, it was “introduced as one thing (TARP taxes), became another thing (an aviation bill), and is now a batch of spending policies.”

Maybe it should be called the Still More of Your Money Down the Drain Act.

Merits of this $26 billion bill aside, there’s the hardly incidental question of why. The title of the Bill with No Name is the exception that symbolizes the rule, i.e. that bill-passage is typically a rush job even when bills are thousands of pages long.

We know that many politicians want to run every aspect of our lives. Apparently it scarcely matters to them how they go about it, just slap together greater restrictions on our liberty combined with grand authorizations to spend additional billions and call it a law.

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies too much government

Move On to the Poverty Line

According to a recent email bulletin from Daniel Mintz of MoveOn.org, Republicans and running-dog Democrats are gearing up to “slash” Social Security benefits.

The tone of the bulletin? Strident hysteria. How can anyone even think of such a thing in hard times like these, when “no jobs bill can pass congress”?

Well, we’ve had stimulus bills up to our nostrils, but hope of “recovery” remains just that, mere hope. Mintz, who denies that Social Security is in anything like a crisis, ignores the devastation to the system caused by its Ponzi nature, Congress’s longtime plundering of the program, and the current depression.

He wants you to sign a pledge for no cuts and no raise in the retirement age. He says it would easy to “strengthen” the program by “making the rich pay their fair share.”

Of course, the effect of raising the maximum FICA payment (their “fair share”) without correspondingly increasing benefits to those who pay extra (no one’s proposing that!) would turn Social Security into a blatant welfare redistribution program. All ties to investment? Severed.

Further, it would signal politicians that their sins can always be covered over with a tax.

Worse yet, it would soak up huge hunks of wealth from those who do the most investing and turn a pension system — ideally a huge source of capital — into one humungous capital drain.

Making us all poorer. MoveOn-to-the-poverty-line.org.

This is Common Sense. I’m Paul Jacob.

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national politics & policies responsibility too much government

Freeze Federal Salaries

Procrastination feeds deficits. Deficits feed debt. Debt feeds catastrophe.

Politicians avoid balancing budgets by saying they will do so not this year, but “sometime in the future.” Hence our looming debt crisis. This debt either must be paid, defaulted, or . . . “monetized.”

That last term is code for inflation.

Why not bring the need for cuts and inflation together? After all, the Federal Reserve still exists, so some inflation is inevitable. Inflation is what central banks like the Fed do.

So, barring a complete monetary reform, simply freeze all federal salaries, at least until the average level of compensation for federal jobs matches the average level of compensation for comparable private-sector jobs.

Currently, as James Sherk of the Heritage Foundation has uncovered, federal workers earn 22 percent more than private sector workers . . . and that’s just in terms of nominal pay. If our politicians turned heroic and cut these down to where they should be, immediately, we’d save $47 billion in taxpayer funds per year.

But it gets worse, as Chris Prandoni writes: “The average federal civilian employee earns on average $32,115 a year in non-cash compensation compared to a private sector employee who earns three times less, $9,882 annually.”

So freeze benefits, too. Defrost only when they match private sector levels.

Politicians could start the freeze right now, just to show a smidgen of discipline. More likely? They’ll go with what they know: Procrastination.

Responsibility? Wait for another freeze. Of hell’s shiny surface.

This is Common Sense. I’m Paul Jacob.

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folly free trade & free markets national politics & policies too much government

Wide-Eyed Wackiness

Where to begin? How about the very first sentence of the New York Times article hailing passage of the Dodd-Frank financial bill? According to the illustrious fishwrap, “sweeping expansion of federal financial regulation” reflects “a renewed mistrust of financial markets after decades in which Washington stood back from Wall Street with wide-eyed admiration.”

We’ve seen some liberalization of financial dealings over the years. It was once illegal to own gold. Travelers can be glad of the rise of interstate banking after governments began to permit it in the 1980s.

But have politicians really offered nothing but “wide-eyed admiration” for “Wall Street” for “decades”? Has the federal government really been hands-off till now?

Take Senators Dodd and Frank. They were out front pushing home ownership on people who could not afford homes, with multiple programs and legislative packages. This bubble-making process was further inflated (quite literally) by the Federal Reserve’s cheap credit policies. Many lenders, encouraged by government-provided (but perverse) incentives, jumped onto the Irresponsibility Bandwagon in the run-up to collapse.

So how can the “solution” be additional bailout authority . . . which will further encourage bankers and others to invest unwisely?

And the new regulations — these, too, are supposed to help? We don’t even know what they are yet, because bureaucrats have yet to write them, as specified (vaguely) by Congress. In addition to their burden, they will allow pols to shake down Wall Street for years to come.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture national politics & policies too much government

Déjà vu Economics

Last week I noted the revival of interest in F.A. Hayek’s classic political tract, The Road to Serfdom. This week? The ongoing revival of interest in Hayek’s theory of boom and bust.

According to economist Gerald P. O’Driscoll, Jr., today’s debate about stimulus spending mirrors the debate in the Great Depression between John Maynard Keynes and Hayek. Republished letters from October, 1932, Times of London, are eerily up-to-date.

The letter from Keynes and his allies, arguing that spending — any spending whatsoever — would spring the economy out of depression strikes me as a tad bizarre. All spending is equal? Make that several tads bizarre.

Can you say déjà vu?

The Hayekian response seems at once more sophisticated as well as commonsensical. For instance, Hayek recommended an immediate repeal of the infamous Smoot-Hawley Tariff. He recognized a major factor for the Depression’s low expectations and business doldrums: The trade-killing legislation that hit the New York Times’s front page the day before Black Tuesday, 1929.

O’Driscoll and other economists have been making much of the enduring significance of the Hayek-Keynes debate. But there are differences between the Depression and now, aren’t there?

Back then, the loss part of the profit-and-loss system hadn’t been so completely undermined by recovery policy. Today we have bailouts, and these only increase risk-taking, likely to make the next bust even bigger — and today’s Keynesianism perhaps worse than the disease itself.

This is Common Sense. I’m Paul Jacob.

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Accountability free trade & free markets national politics & policies too much government

How to Keep Your Health Insurance Plan

Like the medical insurance coverage you have now? Don’t worry, you can keep it under the new “health care” regime . . . Or so President Obama and his Democratic allies promised during the recent debates over reform of medical insurance and delivery institutions.

Now we’re now learning, per “internal White House documents,” that the insurance plans we were told would enjoy grandfathered protection under the new law won’t be immune at all. Looks like more than half of current company plans must be chucked by 2013.

We shouldn’t be surprised. Apparently, the goal has always been destruction of private insurance. But why? Well, so government can swoop in to “rescue” us after private firms collapse under the weight of all the new taxes and regulations.

The State of Massachusetts offers a preview of what awaits us. Insurance regulators there were recently warned by a department in charge of “monitoring solvency” that a new round of price caps on insurance rates would jeopardize private insurers’ solvency. Officials imposed the caps anyway. Now those private firms face losses that, if the price controls persist, can lead only to bankruptcy.

Despite all this, there is a way to keep your current health insurance coverage. All folks in Congress have to do is repeal their recent “reforms.” All you have to do is make sure they do.

To ensure that you have better options in the future? Well, very different reforms will be required. And repeals of different laws.

This is Common Sense. I’m Paul Jacob.

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First Amendment rights incumbents national politics & policies

The Kill-Political-Discourse Act

Sometimes politicians name their legislation the better to hide what they are trying to do. The name fails to disclose, you might say.

Consider the so-called DISCLOSE Act, which just passed the House of Representatives by a mostly party-line vote of 219-206 and is now awaiting action in the Senate. The full name of the monstrosity is the Democracy Is Strengthened by Casting Light on Spending in Elections Act. It should be called the Democracy Is Undermined by Rigging the Game to Favor Incumbents and Especially Democrats Act.

The goal is to hamper political advertising by independent groups and corporations by requiring disclosure of the names of contributors who give above $600 a year. The new rules would harm corporations more than unions, and would foist anew some of the same burdens on First Amendment rights just overturned by the Supreme Court. The same court that threw out chunks of McCain-Feingold on free speech grounds would also likely find DISCLOSE unconstitutional.

But could the court do so before the 2010 elections? Democrats like Hank Johnson ― who told fellow partisans that the Act, if passed, would stop Republicans from being elected ― are betting that it can’t. Their hope is that with the speech-shackling new law skewing things in their favor until the high court acts, they’ll be more likely to escape political annihilation in November.

No, we can’t wait for the Supremes on this one. Call your senator.

This is Common Sense. I’m Paul Jacob.

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government transparency national politics & policies

Absolute Safety Never Assured

There’s this old joke. “How do you know when a politician is lying? He’s moving his lips.”

Regarding President Obama’s recent speech about the ongoing oil spill disaster, Byron York of the Washington Examiner noted “one particularly striking moment . . .

midway through his talk, Obama acknowledged that he had approved new offshore drilling a few weeks before the Deepwater Horizon rig explosion on April 20. But Obama said he had done so only “under the assurance that it would be absolutely safe.”

York then quoted industry experts swearing on a stack of scientific reports that, regarding oil drilling, there is no such thing as “absolutely safe.” So, the intrepid reporter wanted to know, who told Obama that new deep sea oil drilling would be safe?

Long story short: He got a lot of administrative runaround from the Administration.

But who in their right mind believes anything is “absolutely safe”? Water isn’t. Chewing gum isn’t. As Thomas Sowell has explained in books like Applied Economics, we never choose between the risky and the absolutely safe. There’s risk all around. And trade-offs.

Assuming that Obama is not a nitwit (a pretty safe assumption), when he spoke the “absolutely safe” line, he simply wasn’t being honest.

Why? Because he looks bad. But this could have been an opportunity for America (and its president) to confront reality.

Of course, for a sitting politician, that’s the furthest thing from safe.

This is Common Sense. I’m Paul Jacob.

Categories
folly national politics & policies

Save the Unions’ Ponzi Schemes?

Senator Bob Casey from Pennsylvania is legislating something big, the “Create Jobs and Save Benefits Act.”

Innocuous? Everyone wants more jobs. Government may have a lousy track record creating jobs that actually produce things demanded by people, but still — the bill is hardly unexpected in times like these.

It’s the second half of the title that indicates the powder keg within. The bill would bail out horrendously mismanaged union pension plans.

Unions, in the current legal context, are legal creatures of the state, with special privileges. And, surprise surprise, their own pensions — the ones that they manage — appear to be in as bad shape as the public-employee pensions I’ve talked about before, the ones that are building into a tsunami of insolvency.

A public bailout would transfer money from people without any special pension plan to people with pensions that are going bust. This is horribly unjust. That’s why Americans for Limited Government — a past sponsor of this program — is calling out Republican politicians who’ve signed onto Casey’s audacious scheme.

“At issue are multi-employer pension plans, in which companies across an industry pay into a single pension pool,” explains the Wall Street Journal. “[E]ven before 2006 only about 6% of multi-employer plans were fully funded, compared to about 31% of single-employer plans. The real problem is that multi-employer plans have become a sort of pension Ponzi scheme.”

Hmmm. Where have we heard that before?

This is Common Sense. I’m Paul Jacob.