Tuesday, March 15, 2005
The Party of "NO!"
That seems to be Dusty Harry's favorite word these days. As the CATO institute's Michael Tanner so eloquently explained, Dusty Harry has taken issue with Alan Greenspan's description of the problems facing the Social Security System in the very near future. Said Greenspan:
Because the pay-as-you-go system will be very difficult to manage, we need an alternative. Real progress on these issues will unavoidably entail many difficult choices. But the demographics are inexorable, and call for action before the leading edge of baby boomer retirement becomes evident in 2008.To which Dusty Harry replied:
I'm not a big Greenspan fan. I voted against him the last two times. I think he's one of the biggest political hacks we have in Washington.Evidently he forgot his 1999 musings when he stated, for the record:
Most of us have no problem taking a small amount of the Social Security proceeds and putting it into the private sector.
Look, people, here are the facts. The Social Security System is in heap big trouble. We can either fix it now, or watch it collapse in the next 20 years. Its very important to remember that this is your own money we're talking about. You're paying into this rathole of a retirement system. What's the difference between the current rate of return and the possible return from a partially privatized system? Well, to make it easy for those of you who barely managed to graduate from the public school system, I have attached this graph to help:
Ok...what does this chart show? It shows the difference between the returns from the S&P 500 Index and the 30 year US Treasury Bond from 1978-2004. You'll notice that the 30 Year Treasury bond, over the course of the chart, increased from roughly 80 to about 115.
In the money business, we call that static. Not a great Return on Investment (ROI). If your 401K returned this kind of increase over 25 years, you'd fire your financial advisor.
The upper portion of the graph is the S&P 500 index over the same period of time. You'll notice that it increased from about 100 to a high of 1517, ending the time period at 1211.
In the money business, we call that 'pretty damn good'. Yes, during the time period there were times of ups, and downs. Sometimes you win, sometimes you lose, but overall, over time, the market increases. Numbers don't lie, people.
Why can't Dusty Harry see this? You see, in Washington DC, money is power. Power is addictive - more so than heroin. The possibility of giving people the ability to control the money they used to send to the Social Security (Not Even Close To A) Trust Fund means there will be less money for Dusty Harry and Company to spend - thus less power for them to wield
So you'll see a lot of Dusty Harry demanding that W take Personal Accounts off the table. You'll see a lot of the D(ean)NC and MoveOn.org producing attack and scare ads claiming W's Social Security Plan will cause everything from economic collapse to an increase in male pattern baldness - not even mentioning the increase in child obesity. Expect it. They have nothing to offer but "NO!"
During this debate, its important that you remember one small, but extremely important fact:
Never forget that.
Here endeth the lesson.
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