Brummett: Social Security Privatization “very ruination of this vital contract.”(Social Security Series Part 5)

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George Bush discusses his plans to privatize Social Security.

Social Security Series Part 5

John Brummett in his article “Boozman: Superman or Superficial?” (Arkansas Times, Sept 30, 2010) asserted, “that to take money out of Social Security and let individuals risk blowing it with bad investments would invite the very ruination of this vital contract.”

Personal accounts are safer than the current system.

What is the solution to the Social Security problem for young people? Ron Paul addresses this in his Dec 27, 2010 radio address:

Notice that neither political party proposes letting people opt out of Social Security, which exposes the lie that your contributions are set aside and saved. After all, if your contributions are really set aside for your retirement, the money is there earning interest, right? If your money is in your account, what difference would it make if your neighbor chooses not to participate in the program?

The truth of course is that your contributions are not put aside. Social Security is a simple tax. Like all taxes, the money collected is spent immediately as general revenue to fund the federal government. But no administration will admit that Social Security is nothing more than an accounting ledger with no money. You will collect benefits only if future tax revenues remain high. The money you paid into the system is long gone.

My hope is that at least some members of the new Congress will cut through the distortions to see Social Security as it really is. The best way to fix the impending Social Security crisis is also the simplest: Allow younger individuals to opt out of the program and use their tax savings to invest privately as they see fit. This is the true private solution. Your money has never been safe in the government’s hands and it never will be.

Ron Paul has rightly noted that basically Social Security needs to be seen for what it really is. Dan Mitchell of the Cato Institute has rightly noted that Social Security is a “tax and transfer entitlement scheme.”

Below are some figures from a 1995 article by William Shipman of the Cato Institute:

Monthly Benefit Comparison of Social Security and the Capital Markets by Date of Birth, Income, and Age of Retirement (1995 Dollars)

[Bar graph omitted. Tabular presentation given.]

Year of Birth:  1930

               Retirement Age 62           Normal Retirement Age
            Low Wage      High Wage        Low Wage     High Wage
___________________________________________________________________

Social
 Security     $439          $929             $551         $1,200

Bonds         $380        $1,341             $574         $2,072

Stocks        $864        $2,614           $1,301         $3,999

Year of Birth:  1950

               Retirement Age 62           Normal Retirement Age
            Low Wage      High Wage        Low Wage     High Wage
___________________________________________________________________

Social
 Security     $468        $1,144              $631        $1,562 

Bonds         $749        $3,194            $1,069        $4,585

Stocks      $1,599        $6,380            $2,490        $9,972

Year of Birth:  1970

               Retirement Age 62           Normal Retirement Age
            Low Wage      High Wage        Low Wage     High Wage
___________________________________________________________________

Social
 Security      $529       $1,315              $769        $1,908

Bonds          $676       $3,268            $1,085        $5,243

Stocks       $1,363       $6,610            $2,419       $11,729

Source: Author’s calculations based on figures in Social Security Administration, Social Security Bulletin, Annual Statistical Supplement, 1994 (Washington: Government Printing Office, 1994); Stocks, Bonds, Bills and Inflation (Chicago: Ibbotson Associates, 1995); and “IFC Investible Index,” International Finance Corporation, Washington, 1995.

January 28, 2011 – 11:51 am Categories: Cato Institute, Social Security, Taxes | Post a comment

Tonight big BBQ for State Republicans

I am sure that many of you recently got this email below:

Arkansas GOP Newsletter

Dear Conservative Leader,

Event Update:

Don’t forget to join us this Thursday evening for our “Paint the Town Red: Jeans, Boots & BBQ” celebration to honor our newly elected officials! The event begins at 6:30 p.m. at the Robinson Center Exhibit Hall in downtown Little Rock. Tickets are $50 per person, children 12 & under are free.

We’ll have a barbecue buffet provided by Whole Hog, live country music, and an auction for a Henry Rifle. Conservative news radio host Dave Elswick will serve as the night’s master of ceremonies.

_________________________________________________

I am looking forward to visiting with Republican State lawmakers tonight. I have in the past put in profiles of most of these fine Republicans. (I have actually done 50 so far.) Take a look at some of them below.

David Meeks

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Ann Clemmer

David Sanders

Andy Mayberry

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AndyMayberry.gif

Kim Hammer

Jake Files of Ft Smith.

Jeremy Hutchinson

January 27, 2011 – 9:05 pm Categories: Uncategorized | Post a comment

Social Security is a bad deal for young workers today (Social Security Series Part 4)

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Ron Paul’s radio address Dec 27, 2010 on Social Security

Social Security Series Part 4

Ron Paul in his radio address of Dec 27, 2010 noted:

But millions of Americans now realize that the status quo is an illusion that will not last even another 10 or 20 years. The federal government cannot continue to spend a trillion dollars more than it collects in revenue each year because we are running out of creditors. Fiscal reality is setting in and the consequences may be grim, even if Congress finds the courage to take decisive action now.

Courage begins with a commitment to see things as they are, rather than how we wish they were. When it comes to Social Security we must understand that the system does not represent an old age pension, an insurance program or even a forced savings program. It simply represents an enormous transfer of payment with younger workers paying taxes to benefit the other beneficiaries. There is no Social Security trust fund and you don’t have an account. Whether you win or lose the Social Security lottery is a function of when you happen to be born and how long you live to collect benefits. Of course young people today have every reason to believe they will never collect those benefits.

Social Security is a bad deal for young workers today and they are voicing their opinions.

What do you think of the nation’s Social Security system? Do you think that by the time you retire there will be enough money in the system to pay you the benefits you are entitled to, or do you think there will not be enough money left to pay you benefits?

Responses by Age Group:
  18-30 31-44 45-60 61+ All
Yes, will be enough 18% 23% 44% 61% 36%
No, will not be enough 80% 74% 52% 29% 60%
(VOL) Not covered by Social Security 0% 0% 1% 2% 1%
DK/No opinion 2% 3% 4% 7% 4%
Source: A Washington Post-ABC News poll conducted by telephone January 12 – 16, 2005 among 1,007 randomly selected adults nationwide. Margin of sampling error for overall results is plus or minus three percentage points. Fieldwork by TNS of Horsham, PA.

Another idea to help keep the Social Security system funded would let workers put some of their Social Security savings into stocks or bonds if they wanted to. That could produce higher or lower benefits depending on how the investments perform. Would you support or oppose this stock-market option for Social Security?

Responses by Age Group:
  18-30 31-44 45-60 61+ All
Support 71% 65% 47% 35% 55%
Oppose 26% 32% 50% 58% 41%
DK/No opinion 2% 4% 3% 7% 4%
Source: A Washington Post-ABC News poll conducted by telephone January 12 – 16, 2005 among 1,007 randomly selected adults nationwide. Margin of sampling error for overall results is plus or minus three percentage points. Fieldwork by TNS of Horsham, PA.  
January 27, 2011 – 7:36 pm Categories: Social Security, Taxes | Post a comment

Jeremy Hutchinson: People want accountability on spending

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Me and Archie Manning at the Sugar Bowl. He insisted on taking this photo with me so who am I to turn down a football legend?

Saline Courier Sunday Paper front page Jan 23, 2011

 E-mail

If Saline County’s state Sen. Jeremy Hutchinson has his way, the state Highway Commission, the Game and Fish Commission, the Lottery Commission and institutions of higher education would lose their autonomy under a proposed constitutional amendment Hutchinson filed this week.
Hutchinson, R-Little Rock, who recently took office, represents portions of Saline and Pulaski counties.
Under his proposal, budgets  for these agencies would be overseen and set by the Legislature for the first time.
The resolution would amend parts of the state constitution that allow these three state agencies and the state’s colleges and universities to operate independently.
“I think people want accountability, and right now these four institutions are not as accountable,” Hutchinson said.
“I don’t think there is graft or corruption, but they don’t have the accountability like the Department of Finance and Administration has or the Department of Human Services, and they’re spending a lot of taxpayers’ dollars, particularly the Highway Department,” he said.
Hutchinson’s proposal was referred to the Senate State Agencies and Governmental Affairs Committee.
The Legislature can refer up to three proposed constitutional amendments to the general election every two years, Hutchinson noted.
In Hutchinson’s proposal, the Highway Commission, created by Amendment 42, the Game and Fish Commission, created by Amendment 35, and institutions of higher education, which were granted a certain amount of independence under Amendment 33, would no longer be independent of the Legislature and would be subject to legislative appropriations.
The proposal also would amend Amendment 87, which authorized the state lottery, to say that lottery proceeds can be appropriated by the General Assembly.
The amendment currently prohibits the Legislature from controlling lottery funds.
Hutchinson contends that recent controversies within the Lottery Commission and Game and Fish Commission illustrate the need for legislative and executive branch oversight.
The state Lottery Commission was found in an audit to have operated with undocumented expenses, without checking employee backgrounds and without meeting accepted standards on awarding large vendor contracts.
The Game and Fish Commission recently considered exempting itself from the state Freedom of Information Act. It eventually backed off.
Hutchinson said his main interest, however, is the Highway Department.
“I think the Highway Department has been shortchanging Saline County and other parts of the state for 50 years,” Hutchinson said.
“I think they need to redraw the district lines to allow equal funding,” he said. “The Legislature currently has no say in the matter. My proposal would give the Legislature, who are the people’s representatives, the authority to rectify inequities.
According to Hutchinson, the Highway Department “spends more tax money that any department, except for the Department of Education, yet  there’s very little accountability or oversight.”
“As for the Game and Fish  Commission and Higher Ed being under the Legislature, I really don’t have a burning issue with them, but I think what’s fair is fair,” he said.
“In particular the Highway Department should have legislative oversight,”  he contended. “We learned during the last election that people want accountability and with our form of government, the people get that through their elected representatives.
“Currently the elected representatives can’t do anything about these agencies,” he said. “If we bring these others under legislative control, they can at least be controlled by voting the legislators out.”
Hutchinson said he believes the bill will pass “if it’s referred out” (for a public vote).
“The Legislature refers three constitutional revisions every session. If this gets referred out, it will pass. I think the people are crying out for more accountability.”
Hutchinson said he has had “very good response” in conversations with other legislators. “There may be amendments that may be filed and we may need to remove an agency or two that the Legislature doesn’t support.”
In regard to his proposal, Hutchinson noted that the “Highway Department certainly doesn’t like it.”
“That was to be expected,” he said. “I haven’t heard from Higher Ed. While I’m concerned about tuition increases, I have no particular issue with them. I don’t see anything they’re doing that’s particularly offensive.”
Hutchinson emphasized that his proposal has “just been introduced. The resolution won’t be heard until the very end of the session.”
“The Joint State Agencies Committee will meet and refer them out, and we’re just now getting feedback. We’ll tweak the legislation and a hearing will probably be held in March. There will be a lot of input and we’ll try to address needs and concerns as they arrive, but obviously still hold people accountable.”
Efforts to obtain a reaction to Hutchinson’s proposal from the state Highway Department were unsuccessful Friday.
Ralph Hall, assistant to Director Dan Flowers, referred comments to Randy Ort, the agency’s public affairs officer. Ort did not return phone calls in time to be included in this report.
Matt DeCample, spokesman for Gov. Mike Beebe, said earlier this week that the governor “is just now starting to review the language of the proposal,” but is strongly opposed to any changes to Amendment 33.
Beebe supports the independence of colleges and universities, DeCample said.
Rep. Barry Hyde, D-North Little Rock, a co-chairman of the legislative Lottery Oversight Committee, reportedly said he would oppose changing the lottery amendment. He said that when lawmakers were setting up the lottery’s structure, lottery officials in other states strongly recommended that the program be insulated from politics as much as possible.
“To put it under the direct month-to-month control of the Legislature would open the door to all kinds of political shenanigans,” Hyde said.
Hyde said he worries about the future of the lottery, which generated more than $100 million for college scholarships in its first year.

TolbertReport.com – Jeremy Hutchinson Announces for he will run as a Republican for Arkansas State Senate district 22 (Video from last year)
January 27, 2011 – 3:45 am Categories: Jason Tolbert | Post a comment

Brummett: Estate tax is okay because it affects few people

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Series on Estate Tax Part 6

Milton Friedman clears up misconceptions about wealth redistribution, in general,

and inheritance tax, in particular. He shows that this tax does hurt families and

our society. The questioner suggests a 100% inheritance tax but that would

destroy a society. Likewise Brummett below tries to downplay the harmful

effects of the tax by saying it is alright since less than 1% of the USA will be

affected, so lets stick it to them despite the harm it causes to family businesses.



In this series on the Estate Tax I will be quoting portions of the article “The Economic Case Against the Death Tax,”(Heritage Foundation, July 20, 2010) by Curtis S. Dubay. Dubay is a Senior Analyst in Tax Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Number of Estates Paying Death Tax Not the Issue. A common argument in favor of the death tax is that it only affects a small number of estates and as such has a small impact on the economy. By that logic, a tax that only one taxpayer paid would be an ideal tax, even if that tax ground the economy to a halt. The number of taxpayers that pay a particular tax is economically irrelevant. What matters is the impact the tax has on the economy. By this more accurate metric the death tax is a poor tax because it is a large weight dragging down economic growth.


The number of estates subject to the death tax has declined steadily since passage of the 2001 tax relief. That package steadily phased out the death tax by reducing its rate and increasing the portion of estates exempt from the death tax from $1 million to $3.5 million, before doing away with the death tax entirely in 2010. In 2000, before the tax relief packages began, 52,000 estates paid the death tax. As a result of the increased exemption level, by 2008 (the latest year of available data) just over 17,000 estates paid the death tax.


Fewer estates paying the death tax has reduced the economic cost it imposes, but as long as the death tax remains in place it will continue to slow economic growth, destroy jobs, and lower wages. It is little consolation to workers that remain unemployed or see their pay stagnate because of the death tax that the impact of the tax has been slightly lessened.

Current proposals to resuscitate the death tax and set its exemption level between $3.5 million ($7 million for married couples) and $5 million ($10 million for married couples) would still subject estates that support the most jobs and generate the most economic activity to the death tax. Even though these estates are the most able to afford expensive planning measures to lower their death tax liability substantially, they often cannot escape the tax entirely and therefore still pay large tax bills. These large estates support more economic activity, generate more income, and support more jobs than the estates that would continue to fall below the threshold.


According to data from the Internal Revenue Service “smaller estates (under $3.5 million) make up the bulk of filers—more than 60 percent between 2002 and 2007. Large estates (over $10 million), however, contributed between 18 percent and 30 percent of the total revenue in the same time frame, indicating a disproportionate distribution of tax liability.” Subjecting these estates to the death tax again would continue to put a large number of workers at risk of seeing their wages idle or their jobs destroyed.

___________________________________________________

___________________________________________________
January 27, 2011 – 3:09 am Categories: Milton Friedman, Taxes | Post a comment

Social Security taxes have risen rapidly (Social Security Series Part 3)

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Debate on should the cap be raised on Social Security Payroll Taxes on Fox News.

Social Security Series Part 3

Basically the social security system in the USA has been in such bad shape because of this pay as you go system that there is no way to raise taxes enough to pay all the promised benefits over the next 40 years. Is the problem that we have not raised taxes fast enough in the past. Take a look.

Pat Fleck on his blog noted:

The tax was implemented in 1937 at 1.0% of the first $3,000 of wages. It stands today at 6.20% on the first $106,800 of wages. Inflation between 1937 and 2010 was 3.76% annually, whereas the wage limit has risen at 4.95%. Hence, even if the original 1.0% tax had remained constant, the amount collected on the limit would have increased substantially more than the rate of inflation due to the more rapidly increasing wage limit. However, with increases in both the limit and the rate, the tax in dollar terms has increased on the wage limit from $30 to $6,622, a 7.57% annual increase, which is double the rate of inflation between 1937 and 2010.

The main point I want you to take away from this post is: Social Security Payroll Taxes are two high now. Raising them further kills investment in the economy. Liberals have suggested raising the payroll taxes by 50% but that still would not take care of all the future promises that Social Security has made.

Glenn Beck has observed:

In less than six years, the federal government will be paying out more in Social Security benefits than the taxes that it takes in to fund it. Our Social Security Administration is getting $788 billion in fiscal year 2011. That breaks out to $6,500 per U.S. household.

You write a check for that? Can you write a check for that? ‘Cause that’s what we’re doing

January 26, 2011 – 12:57 pm Categories: Social Security, Taxes | Post a comment

Brantley criticizes Boozman’s views on Social Security (Social Security Series Part 2)

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Social Security Series Part 2

Glenn Beck on Social Security with Chris Edwards, Director of Tax Policy, Cato Institute

Max Brantley on the Arkansas Times Blog on Sept 3, 2010 (“Boozman’s aim on Social Security,”) asserted, “John Boozman has indicated he believes Social Security is unsustainable and needs to be changed by opening the door to to privatization measures.” Then Brantley goes on to mock Boozman’s beliefs on this matter.

The facts however are very clear on the matter. Bill Frezza is a partner at Adams Capital Management, an early-stage venture capital firm. His article “Not in 25 years, Social Security is Bankrupt Now,” August 9, 2010, Real Clear Politics sets the record straight:  

This just in from the trustees that issue the annual report on the health of those two pillars of the modern entitlement state: Medicare and Social Security. For the first time in its history the Social Security program will pay out more money than it takes in. This watershed event will occur this year, to the tune of $41 Billion dollars. Under any rational accounting standards this makes the Social Security program bankrupt. And that’s right now, not in 25 years when the so-called Trust Fund becomes insolvent.

You see, most pension programs hold income producing assets in their Trust Funds. Stocks, bonds, real estate, oil and gas partnerships, that sort of thing. A fully funded pension program owns enough of those assets to pay its liabilities even if the company closes its doors and not a penny more of new money comes in from current employees.

Social Security plays by a different set of rules enshrined under the New Deal and Great Society programs. These are the same rules that landed Bernie Madoff in jail. Although the Social Security system has been regularly taking in billions for decades and socking it into its Trust Fund just like a normal pension plan, Congress has just as regularly been draining the money out for current spending. All of the money collected from every American’s paycheck throughout all of our careers is now gone. In its place are not stocks, bonds, real estate, and oil and gas partnership. In its place are IOUs from Harry Reid, Nancy Pelosi, Charlie Rangel, and Barney Frank. $2.5 Trillion dollars worth of IOUs.

Now, imagine if a private company had a pension plan that its executives had completely drained wining and dining Congressmen in return for IOUs. What do you think would become of those executives when word got out that the only way they could make pension payments was to beg a flat-broke Congress for money?

Tar and feathers come to mind.

Max Brantley and other liberals will keep singing the same song because it brings them political points. However, the facts are out there for all to see. Just wait until those baby boomers double the number of retirees in our nation receiving Social Security in the next few years. Even the liberals may come around when that happens.

January 25, 2011 – 10:30 pm Categories: Cato Institute, Social Security | Post a comment

Dumas:Republicans opposed Social Security in 1936 through courts(Social Security Series Part 1)

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Social Security Series Part 1

Michael Tanner, a senior fellow at the CATO institute, explains that the rate of return on social security will be much lower for todays youth.

Ernest Dumas in his article “Back to 1936,” (Ark Times, Dec 23, 2010), notes, “Now the Republican Party has retreated to 1936, when it fought the Social Security law, which required people to buy old-age and survivors insurance and pay for it with a payroll tax and taxed employers to pay for unemployment insurance.”

Ernest Dumas tries to compare the Republicans of 1936 who fought Social Security through the courts to the Republicans of 2010 who are trying to fight Obamacare through the courts. Over and over again Dumas has repeated in the last few years what a great program Social Security has been. I want to start a series today that looks at the history of Social Security and what the future holds for this program.

Michael Tanner of the Cato Institute shed some light on where we are now 75 years later with this great program that Dumas praises (“Social Security Deficits will soon be Permanent,” Aug 16, 2010):

When last we heard from Senate Majority Leader Harry Reid, he was proclaiming that there was no need to reform Social Security because the program “is on solid ground for decades to come.”

Well, apparently that’s true — if by “decades” Reid, D-Nev., meant “five years.”

Social Security’s trustees this month finally released their long-delayed report on the system’s finances. According to the trustees, who include President Barack Obama’s secretaries of Labor and Treasury, Social Security is actually running a cash-flow deficit today, spending more money on benefits than it takes in through taxes. Most of that deficit has been caused by the recent economic downturn and, hopefully, will be only temporary.

But regardless of how the economy performs in the next few years, the trustees warn that by 2015, just five years from now, Social Security will again start to run deficits — and this time they will be permanent. That’s a year sooner than predicted in last year’s report.

While, in theory, the Social Security Trust Fund will be able to pay benefits until 2037, the same as in last year’s report, that figure is misleading because the trust fund contains no actual assets. The government bonds it holds are simply a form of IOU, a measure of how much money the government owes the system, $2.6 trillion, according to the report.

Of course, no one is saying that the government will default on its obligations, but one might ask where the government will get the money to pay back that $2.6 trillion. It’s not as though the government has it laying around. To say that Social Security is fine because the Treasury will find a way to pay its debts is like saying you have plenty of money for your mortgage — as long as you don’t eat.

January 25, 2011 – 3:48 pm Categories: Cato Institute, Social Security | Post a comment

Profile List of State lawmakers Part 2

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The Tolbert Report noted that the Arkansas Right to Life held a press conference on Jan 21 at the state capitol along with an organization that seeks to assist women that are dealing with a past abortion. Executive director Rose Mimms announced three bills that they will be supporting in the upcoming state legistlative session.

I have since Dec 22nd been including a profile of a St lawmaker in almost all my posts.  I have also included a list of all of the other st lawmakers I have already covered below and the date the blog post appeared. I will be including profiles on all the rest of the Republican lawmakers in the coming days. If you are a Republican St Lawmaker I would love to hear from you and if you had some material you would like to send me to include in your profile, then I would love to include it.

Jan 12 Alan Kerr
January 25, 2011 – 3:41 am Categories: Prolife | Post a comment

Mike Ross: The Best at playing politics

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Arkansas Democrat Rep. Mike Ross Explains Why He Voted For the Health Care Bill in Committee (video from Tolbert Report.com)

“I wasn’t sent to Washingon to play politics. I was sent there to do my job.” These are the words of Congressman Mike Ross after he basically got through playing politics and helped pass Obamacare by letting it get out of committee. Chairman Henry Waxman was very happy in July 2009, but I wonder what people from south Arkansas will think when Obamacare takes root and kills jobs.

Earlier I took a look at this issue with Mike Ross with John Brummett’s excellent article in which he points out:

Ross can say, quite correctly, that he voted against health care reform on the House floor the first time and that he voted against it the decisive time when it came back through the budget reconciliation process from the Senate….

I am afraid that it appears that Ross was trying to please the liberal Democrats by voting for Obamacare when it counted. He voted against it when they did not need his vote. That sounds like he was just playing politics.

_____________________________________________

oday I am profiling St lawmaker Donna Hutchinson.

Donna Hutchinson

Wed, Jan 7, 2009

Legislators, Representative

mug-donna-hutchinsonR-Bella Vista
House District 98
Second term
Committees: Joint Budget; Education; State Agencies.
Special connections: Mother of two former state legislators: Tim and Jeremy Hutchinson. Of Native American descent. Professional mediator.
How to reach her: House in-session number: 501-682-6211. E-mail: hutchinsond@arkleg.state.ar.us. “I have to turn off my cell phone while the House is in session and committees are meeting, which means it’s off most of the day.” E-mail is most reliable for contact on weekends. “I don’t get to go home every weekend. It may be two weeks before I get home and check my messages.”
What you should know: Wants to redirect highway money to areas that have the most congestion.
Her priority: To cut taxes. Then to make sure that lottery scholarship money goes to nontraditional students such as working adults who want to go back to college or students in need of remedial courses. “If you have to go into debt with school loans, it should be for credit-earning courses, not remediation.”
Firmest prediction: “I will be surprised if the governor gets his rainy day fund. Since we’re coming back in 2010, he really doesn’t need one. I also think the governor’s sales tax reduction on groceries will pass and tha

January 25, 2011 – 3:32 am Categories: Healthcare, President Obama | Post a comment