Bush's Inconsistent Policies

Date: February 6, 2005
Sent to but not published by Boston Globe

President Bush is somewhat inconsistent with his application of rugged individualism and the ownership society. At the same time that he is proposing to replace a chunk of social security benefits with privatized accounts he is proposing to pay life insurance premiums for all servicemen and women on active duty -- a policy that I applaud.
Where is the consistency in his proposals? Why not just give service personnel the money for those premiums and let them put it to the purposes the individual chooses. The answer, of course, is the same as the reason we should continue our present course with social security: people often let short term considerations overwhelm long term considerations, so fail to buy insurance; and the transaction costs for each individual would be prohibitive so that lower benefits would be obtained for the same cost.

Who Owns MY Social Security Benefits

Date: February 6, 2005
Sent to but not published by New York Times

Could someone please explain to me what I do not own in my forthcoming Social Security benefits.
The benefits are registered in my name. No one else has access to them, except my spouse who may draw benefits on my death.
To be sure there are some limits in how these benefits are created and delivered. But those limits are exactly the same as those incurred by term life insurance and the purchase of an annuity that pays an income to me and my surviving spouse – it is also an annuity with inflation protection which is an expensive option in the private market.
The argument that private accounts will benefit one's children is false. Transaction costs will, as they did in the U.K. eat up funds in these private accounts. If, on retirement, one is forced (a policy inconsistent with the myth that these accounts are under the individual's control) to purchase an annuity then, on one's death, (despite the Administration rhetoric) nothing will be left for one's heirs.
Lets stop this barrage of misinformation and lets undertake a sensible, modest upgrading to the Social Security system.

More Energy Policy

February 3rd. 2006
Sent to but not published by the New York Times

It seems to me that President Bush has never come across a dot that he didn't try to disconnect.
The latest example is given in Paul Krugman's column (New York Times, February 3rd., page A 27) describing the Energy Policy of the Administration. With one breath, the President, in the State of the Union Speech, talks about increasing research on biomass and renewable energy; yet at the same time, his budget measures result in a reduction of funding to the Energy Department's research group that is working on those issues.
To understand the Administration's goals we need to look at what they do, not at what they say. Just as with the pious profession of help to the poor in New Orleans that has been coupled with cuts to Medicaid, the true goals of the Energy department do not embrace  renewable resources.

February 2nd. 2006
Sent to but not published by the Boston Globe

It is hard to understand what motivated Tom Reilly and Marie St. Fleur except expediency and ambition. Both broke their promises of implicit support to other candidates for Lieutenant Governor: Reilly to Mayor Murray of Worcester; St. Fleur to Deborah Goldberg.
Robert W. Service wrote: "Now a promise made is a debt unpaid, and the trail has its own stern code."
Today, St. Fleur is now that much deeper in debt and for Reilly the trail to election as Governor is a lot tougher

January 30th. 2006
Sent to but not published in the Boston Globe

Your op-ed writer, Abner Mikva (Globe, January 30th, page A11) claims that Bush needs a new lawyer.
Nonsense!
President Bush and his colleagues know exactly what they are up to. What Bush needs is a new sense of direction. He needs a sense that the Government can be a positive force for society rather than the destructiveness (of National honor, of accountability, of the rule of law, of trust, and of the Nation's financial stability)  and incompetence  (in Iraq, in Social Security reform, in Medicare (Part D) and in the Gulf of Mexico) displayed by his administration.
Will we see a change of heart in Tuesday's state of the Union Address? I hope so, but the record thus far does not look promising.

Bush, Socal Security, and the Big Lie

Date: January 27, 2005
Sent to but not published by Boston Globe

George W. Bush is an expert in playing the game of accusing his opponents of the sins that he himself is guilty of. He is quoted as saying in yesterday’s press conference (Boston Globe, January 27, 2005: A 3) that “those who want to derail a Social Security agenda ... by scaring people.” It is Bush and his minions who are going around scaring people with the big lie that the Social Security system is in deep trouble. Most assessments of the System agree that “minor modifications” of the system are required -- a modest change in the income level on which Social Security taxes are levied will do the trick. The draconian changes proposed by the President are completely unnecessary.
Instead of engaging in a sensible reform program, which we agree is necessary, he is determined to destroy the system while claiming to be saving it. Private accounts have three major flaws -- flaws that have been amply demonstrated by the disastrous privatization undertaken by the UK’s Thatcher government in the 1970's (and it was a disaster for both pensioners and for the insurance companies providing the pension benefits). These three flaws are the problem of volatility; the problem of individual plan costs; and the problem of transition costs. The first two accrue to the individual, the last to the country.
Any one who has lived through the past five years knows that share prices can go down as well as up; as can bond prices. Individuals with their private plans can win or lose in these two markets. As a result the capital they amass may or may not be sufficient to compensate for the reduction in Social Security benefits. The nice thing about Social Security benefits are that they do not run out – individual privatized accounts do not have similar longevity.
The Social Security trust fund has microscopic administrative costs (about 0.3% of its assets and many of these costs are not incurred for the administration of the trust fund but for assessing eligibility and making payments to the 40 million beneficiaries -- retirees and disabled employees). Privatized plans operating through brokerage houses, mutual fund companies, and insurance companies have much higher expense ratios – only TIAA-CREF and Vanguard have expense ratios in this ballpark for their Asset Allocation funds; funds in this class have average expense ratios 1.28% (according to Lipper). These administrative costs will reduce the capital that accrues in the individual’s account. Social Security enjoys enormous economies of scale that the individual cannot duplicate.
If funds that are currently paid into the Social Security trust fund are diverted to private accounts, the country will have to make up the difference. This means that we will start dipping into the trust fund next year rather than 20 years from now and it means that the trust fund will be exhausted in about seven or eight years rather than in 40 or 50 years from now. It is estimated that an additional $2 trillion debt will be incurred by the US; debt that international capital markets will be very chary about funding.
These are real costs that Bush and his yea-sayers do not mention. The price of freedom is eternal vigilance, so watch what Bush and his spokes-people are saying as the volume of their scary talk increases over the next stage of the Social Security debate. And ask the tough questions that they ignore.
The past election was supposed to be about morality, what Bush is saying about Social Security is not moral; what Bush intends to do about Social Security is not moral.

January 25th. 2006
Sent to but not published in the Boston Globe

Your editorial today (January 25th.) on Canada's "partial turn" has, I think, a more accurate description of the state of affairs in the body of the editorial where you talk of a repudiation of the Liberal Party. Although the right wing Conservative (Tory) Party gained 25 extra seats, the socialist New Democratic Party (NDP) also gained 10 seats.
It is hard to imagine a long-lasting coalition between these two parties. Yes, there will probably some agreement around good government issues, but on social and economic issues the two are far apart. The Tories want to cut taxes, increase the level of private health care and turn back the law allowing gay marriage. The NDP has the opposite view on each of these issues.
One area where there might be room for cooperation, if the Tories remember their history, is to move the country to some form of Proportional Representation.With 17.5% of the popular vote the NDP has only 9% of the parliamentary seats. In the 2000 Election, the Tories had 12.19% of the vote but only 4% of the seats; the Alliance party which later merged with the Tories was also slightly under-represented: 25.49% of the popular vote but only 21.6% of the seats in parliament. So both parties have an interest in a system of Proportional Representation
Such a system would provide a better reflection of the wide variety of views held by the Canadian population and better represent its geographic diversity.