Confuseopoly

There is so much wrong information about Social Security and Social Security Reform and Social Security Privatization that even people who should know better are saying things that don’t make sense.

I will say this one more time: Social Security is not a savings account, it is not a pension plan; it is an insurance policy; it has no returns.

The fact of the matter is that Social Security will take in more money than it hands out in benefits until about 2018. Furthermore, the extra money that has been taken in over the years has been put in nice, safe United States Bonds and Treasury Bills. Yes, that’s right, the Social Security Administration owns a big chunk of the National Debt, and that’s not necessarily a bad thing. The Feds can’t default on this obligation without either defaulting on bonds held by private holders, banks or other nations, or by special, politically suicidal act of Congress. Either way, worldwide economic chaos would ensue. Yes, these bonds earn less over the theoretical long term gain in the stock market, but frankly that is irrelevant. Benefits paid are not linked in any way to performance of the trust fund. Putting the returns on trust fund investments into the argument is a big, fat, red herring. Aren’t you glad these funds haven’t been invested in the NASDAQ Composite for the last 5 years?

If nothing at all is done, there is still no problem until sometime between 2042 and 2052. Even then, Social Security would be able to pay something between 75% and 81% of promised benefits. For “flat broke” and “busted,” that’s not too shabby.

There is no consensus that major changes need to be made. Republicans are daring to ask for details before they pledge support. The religious right is threatening to link support of this to a Gay Marriage Ban Amendment. The AARP opposes major changes, perhaps because enough of their members remember why the program began: a stock market crash plunged the economy into a depression and wiped out many people’s retirement savings.

The idea that a Private Retirement Account would be “your” money to invest as you wish is being exposed as a lie. There would be an approved list of investables, and thus an approved list of Wall Street firms that stand to make a lot of money, particularly since we are talking sums of money that will initially fall under “small accounts” rules. So much for controlling “your” money. Seriously, if the goal is to have more people invested in the stock market, then increase the maximum IRA contribution, maybe loosen 401K requirements. Don’t pretend that a maximum of $1,000 per year, invested in much of anything, is going to provide a decent retirement. Even if you do manage to get 7% a year — which frankly involves a lot of really good luck, skilled investment choices, and no fees whatsoever — we are talking about a PRA nest-egg of less than $200,000 at the end of 40 years. (Note: this figure is from Microsoft Excel’s investment calculator). How long do you expect to live past retirement age? Ten years? More?

And no-one has yet answered the underlying question: If the problem is that Social Security won’t have enough money, how will giving it less money help?

President Bush has said there will be no benefit cuts, and maybe that’s true for the next 4 years. But then again, members of his administration said they knew exactly where Saddam Hussein’s Weapons of Mass Destruction were.

In closing, Fannie Mae Follow Up and Meat Packing Plants Aren’t Just Bad for Livestock.

Must be here somewhere….

They say the devil is in the details, and strangely enough we aren’t getting to see those details.

Florida Governor Jeb Bush is fed up with the rapid increases in state Medicaid expenses. Medicaid, you may recall, is supposed to be a safety net for the health care of Americans near and below the poverty level. The number of Floridians in this system has quadrupled over the last 20 years. The state portion of these expenses have increased 88% since 1998, while tax revenues have only risen 24%. It is not known how much of this increase is due to the Federal government shifting expenses to the states. In which case, Mr. Bush has his esteemed brother to thank.

Having much the same philosophy as his brother, Mr. Bush feels that this problem can be solved by getting private insurance companies involved. Poor people can theoretically choose from a variety of programs, with coverage and limits suiting their individual needs, and the state will pay the insurance company. Policies will pretty much work like any other health insurance policy, paying negotiated rates to doctors and hospitals.

A number of people are wary of this proposal, and for good reason. They fear this will limit the types of services available, since specialized services cost money, and money spent cuts profits. Of course the insurance companies want to make a profit if they are going to get involved in this thing. And certainly providers have a right to make a living from services they provide. From the TBO link above:

Hospitals are wary that the plan may leave them with more unreimbursed costs for indigent care, but representatives at facilities such as Tampa General Hospital said they were reluctant to comment until Bush’s plan is evaluated further.

There’s the problem. Nobody really knows how this program is supposed to work. Nobody knows how it will be paid for. Nobody knows how much it will cost. Nobody even knows if, in the end, it will be a proposal that insurance companies will want to participate in.

I have long felt that health insurance in particular drove up costs. It inserts a profit-driven middleman. It insulates people from insurance costs, and from actual healthcare costs. It drives up the overhead costs of doctors and hospitals. This proposal does nothing to mitigate these concerns. If Mr. Bush really wants to get the free markets involved in healthcare, he should consider giving the poor a stipend with which to pay for healthcare and/or healthcare insurance. They should get to keep what doesn’t get spent — maybe in one of those nifty Health Savings Accounts his brother is so keen on — but once it’s gone, it’s gone.

But since Medicaid is a safety net, that almost certainly will not work either.

In closing, why does American Airlines want to know who you might be visiting, and is it really a secret TSA regulation?

Perspective

Imagine with me.

It is a couple weeks before national elections. Everybody is worried about terrorism, and whether it could disrupt voting. There is widespread violence, and the police are powerless to stop it. Sometimes, they are targets themselves. Military and law enforcement officers are patrolling every major city, heavily armed; they have an “us versus them” philosophy, and do not hesitate to shoot first and ask questions later. News networks are pressured to limit coverage of these events. Things seem to be getting worse.

In an effort to prevent disruptions to the elections, the border has been closed to all entry except those returning from religious pilgrimages. Citizens outside the country who wish to vote are encountering problems with the registration system. Interstate travel has been closed down and car traffic prohibited except for certain government officials and military troops. Waco, Cleveland, Milwaukee, Las Vegas, and Flagstaff are under martial law. In some places, even the location of polling places is secret. Citizens in these cities must wear ID badges at all times, and travel in or out is almost impossible.

Several dozen people have been arrested preemptively. Some argue that they are militants or militant inciters who would have made trouble. Others aren’t so sure. Some point out that we used to consider people innocent until proven guilty, that we used to arrest people for crimes, not thinking about crimes. Since no names are released, it is impossible to know whether the arrests are politically motivated. Odds are good they are not being treated well.

There is much rumbling in the West Coast Blue States about how the United States Government does not represent them, and hasn’t for a long time. A number of people seem to have forgotten that The Governator only played a commando in movies, and seem to believe he can lead armed rebellion. The NAACP and several other large minority groups have called for members to boycott the elections, and there is some question whether certain more militant members might not be violently enforcing this boycott. Meanwhile, in places like Ohio, Florida, Washington, and Chicago, people openly comment that this election will be no different from any in the last 50 years; just because more than one name appears on the ballot does not mean that the candidates chosen by those in power will not win.

Speaking of the candidates, they fear for their lives. Most of them will not even admit in public that they are running. They issue no statements, have no advertising, give no news interviews. A dizzying array of alternative parties confuse the issue further. The citizens who do think there is something to be gained by voting are frustrated, because they can’t find out anything about who is running and what they stand for. If they live to vote, they are reduced to randomly selecting candidates.

The international community is rightly concerned. They question whether it is possible to hold free and fair elections in this environment. They question whether it will even matter.

What would you do?

This didn’t happen in the United States, but it is happening right now in Iraq. The whole situation is a big mess, and only getting bigger by the day.

Security Theatre, Acts 4 and 5

Act Four, Heathrow and Environs

According to CNN, This Is London, and Reuters, a British Airways flight had a little problem. Somehow — and American officials blame BA — a man whose name was on the Do Not Fly list boarded a flight from London to New York City. This was not discovered until the plane was over international waters.

American officials refused to allow the plane to land as scheduled, instead demanding that the plane land at Bangor, Maine. Thus, the situation could be dealt closer to the middle of nowhere than to New York City. Instead, the airline decided to have the plane turn around and land at Heathrow, avoiding international incident.

This turned out to be a very lucky break for the gentleman in question. It turns out that the man merely had a similar name to someone who might be connected to Moroccan terrorists, that he was “not under investigation for carrying out any terrorist act.” In fact, he was questioned by Scotland Yard and then released.

238 passengers were delayed over 6 hours because one guy, who turned out to not be a terrorist.

Air Travel in the United States could be crippled by putting J. Smith on the Do Not Fly list.

Act Five, DHS Headquarters

In Act Four we learned that determining a person’s identity is not the same as determining whether or not they are a threat. This is to say nothing of the mental gymnastics we must use to see the logic in a list of people so dangerous they must not be allowed on an airplane, but yet are so innocent that there is no grounds to arrest them.

This simple logic has no place here at the DHS.

Mere hours ago, Tom Ridge announced enhanced expediting of international visitors through JFK Airport, the very airport that BA jet was to have landed. Here’s how it works: someone who wishes to visit the United States essentially completes a customs check before arriving, then checks out at a JFK kiosk when they arrive. Part of this pre-clearance process involves an iris scan so the kiosk can tell the same person did the interview as actually arrived. Assuming the smart-card on which this data is stored is not damaged going through the scanning equipment. I am not sure what this is supposed to prove.

Mr. Ridge would also like to see fingerprint information on every American passport. His reasoning is that we require it of other countries, so what’s fair is fair. Critics point out that it will be expensive to put that information on the passports, and even more expensive to have the information read. Do you prefer having a forensics expert at every international airport, or an expensive machine reader?

If the expense is not enough to make you blanch, let’s talk about the civil liberties. The Fifth Amendment says you have the right not to incriminate yourself, right? Except now to get a passport they are talking about wanting to have a complete set of fingerprints. We have no assurance that these prints will not be checked against a database of prints from unsolved crimes. “I’ve got nothing to hide” is not a good enough answer. Just because you did not commit a crime is no insurance that you will not be questioned; maybe you happened to touch something in a place where a crime later occurred; maybe you just happened to have a false positive. Which brings me to my final point.

Fingerprint scanners can have a false positive rate of up to 2% and a false negative rate of up to 7% Think about the number of international travelers there are every day. There were 239 people on that BA flight in Act Four; we are talking about having to question as many as 16 of them as the result of a false negative. A Boeing 777-300 seats 550 people. We are talking about potentially having to do an expanded security check for 38 people who are falsely singled out as not matching their own fingerprints. On one flight. Dallas Fort Worth International Airport had 4,429,005 international passengers in 2003. Seven percent of that is over 310,000, about 850 false-negative passengers every single day, 35 every hour.

Strike one, it’s expensive; strike two, it doesn’t work; strike three, it doesn’t actually identify who might be a threat.

Why exactly are we talking about doing this?

News Potpourri

Robert Scheer asks Is Al Qaida Really All That? Or has the reality been distorted to scare us? Are we right now in the midst of a popular delusion?

The United States is not the first nation to consider privatizing a government run stipend program for the elderly. The good news is that we can learn from the mistakes of others. The bad news is such schemes have been a miserable failure in Britain, Argentina, and only moderately successful in Sweden (where the payroll tax is 18%, somewhat higher than here in the States).

Expenses for President Bush’s second inauguration are expected to run $40 Million. This figure apparently does not include $17.3 Million in expenses incurred by the District of Columbia including such items as police overtime and building reviewing stands. So $11.9 Million will have to come out of the District’s Homeland Security Funds. Keep in mind, the whole city has the potential to be a terrorist target, albeit a difficult target. By comparison, the District estimates it spent $8 Million on the last inauguration. Money is tight right now, the Federal Government is running record deficits, and security is so tight it’s cutting off circulation because after all “we’re at war.” Maybe this time, we could do without a big gala with parades and dances, and who knows what else. Let’s consider a nice little swearing-in in the Rose Garden with dignitaries and lots of cameras. That sure would be easier on the guy who is supposed to swear Bush in.

It isn’t exactly front page news, but the search for Weapons of Mass Destruction in Iraq is over without finding much of anything, despite earlier claims. So these American and Coalition soldiers and these Iraqi civilians (maybe more) and these contractors died for a lie. The democracy that we now claim to bringing to the Iraqi people is already a failure. Don’t get me wrong, Saddam was not a good man, but the current situation stinks.

And finally, a message for all the bloggers. I have little sympathy for everyone’s fired over his/her blog story, including the latest one, wherein he refers to his immediate supervisor in less than glowing terms. I offer the same advice for blogs as I give for e-mail: Don’t put anything in writing you wouldn’t want to read out loud to your mother, your boss, or a judge. Following these rules will help you avoid embarrassment, termination, and courtrooms.

Clearly, common sense isn’t common.

Weight Loss Follow-up

Just a short note about two news items that relate to my last missive on weight loss. Today’s big revelation is that calories matter when you are trying to lose weight. Furthermore, exercise is good for you. Even the article concedes that “The advice is not really new.”

The other news is that there seems to be a link between weight and sleep. Specifically, people who sleep less are more likely to be overweight. Without invoking any science whatsoever, there are a couple of common sense reasons this might be so. Perhaps people who are tired are trying to get more energy by eating more food, when what they really need is a nap. This might be conscious or unconscious. The other unscientific but common sense explanation is that most people do not eat while they are asleep.

In any event, adequate sleep, exercise, and moderate quantities of nutritious food are good for human beings. Science confirms it.

But 157,000 Sounds Good

December of 2004 added 157,000 jobs to the American economy, for a 2004 total of 2.2 million jobs, short of the 2.6 million new jobs the Administration predicted for 2004. This is still described as “Another employment report, another month of mediocre job gains.”

It has been a while since I have sung this particular tune, but the song remains the same. It still takes 150,000 new jobs a month to take care of new entries to the workforce. Remember that when the AP says ” With Friday’s report, Bush is close to closing the gap in job creation that has plagued him since taking office in 2001. There are now just 122,000 fewer jobs.” The economy isn’t just short 122,000 jobs, it is short that plus 150,000 jobs for every month of this Administration. That comes to about 7.3 million jobs. The Administration has also revised its estimates of 2005 job creation downward from 3.6 million to 2.2 million. About 1.8 million would be break-even.

The Bush Administration has yet to hit, let alone exceed, a yearly job creation target.

Then why is the unemployment rate so low? Partly because of the way the unemployed are counted. Partly because, as the AP points out in that same article, “Separately, labor force participation is trending down…. The participation rate has declined sharply in the past several years among younger workers, with economists speculating that a weak labor market is causing those people to stay in school, including seeking higher degrees. But the number of people age 55 and older working or looking for employment has risen in the past four years. ”

As if this is not bad enough news, there is anecdotal evidence that there are fewer job listings. In short, fewer jobs to be had. Competition is stiff enough that CNN put out this handy list of job-seeking tips today. Elsewhere, CNN points out that “The average work [week] edged up a tenth of an hour to 33.8 hours last month.” “Average” is still part time, at a level such that most employers do not provide benefits. Still another article today, CNN points out that wage growth is less than inflation, and payroll data suggests that actual wages decreased almost 5% at the small firms that created 2/3 of the new jobs.

So, small firms are hiring, but at lower pay levels. Big firms are continuing to lay off more workers each month. In fact, over one million lay-offs were announced in 2004.

In closing, I join others in asking Where are the insurgents coming up with the materials and know-how to blow up a tank? Granted, the Bradley is not the greatest tank in the world, but it is still a tank. It is not a Hummer with a couple of trash can lids welded to the doors. A Tank.

What the heck is going on here?

They listen when you complain.

Today I read some political news that truly cheered me. No, really. It turns out that public outcry — ordinary citizens calling and writing their elected Congressmen — turned back an egregious attempt by certain Republicans in the House of Representatives to substantially loosen ethics rules:

Rep. J.D. Hayworth (R-Ariz.) said during a break in the meeting that the “indictment rule” was restored in part because of complaints that members had heard back home. “Constituents reacted,” he said. “We’re blessed with a leadership that listens.”

[snip]

Rep. Christopher Shays (R-Conn.) called the planned ethics changes “a grave mistake.”

“Those of us who were here in 1994 remember we gained our Republican majority in part because we argued that as public servants, we have a responsibility to the American people to maintain the highest standards of conduct,” Shays said.

Brendan Daly, a spokesman for House Minority Leader Nancy Pelosi (D-Calif.), said: “Even for Republicans, this proposed change was unconscionable. The issue simply became too hot for them to handle, so they had to drop it.”

There are other ethics rules changes still under consideration, so if you think Congressmen being held to ethical standards is good — and keep in mind how many of them ran on a platform that stressed “values” — be ready to write some email.

But before you hit send, there are two other issues where your elected officials need to know your opinion. The media says the two big issues for this Congress are Social Security and judicial nominees.

As important as judicial nominees are, it is also important to look at the fellow President Bush has nominated for the other side of the bench, Attorney General Nominee Alberto Gonzales. As you form your opinion about this man, you must remember that he is the fellow who helped write the rules on interrogation techniques that are in use at Abu Gharib and Guantanamo. You also need to know that the White House is trying to gloss over that fact. They wouldn’t hide it if they were proud. Regardless of what you think of the people being held in those facilities, the fact remains that anything we do to them becomes fair for enemies of our nation to do should they capture American soldiers as Prisoners of War. If you need a reason why torture is bad, there you are.

The other thing that your elected officials need your opinion on is Social Security. There is still some hope among moderate Democrats that a truly bipartisan solution to “reform” can be made. I think such appeasement strategies are doomed to failure. Private Retirement Accounts are not going to work. If the goal is to increase the amount of retirement funds Joe and Jane Average has in the stock market, then increase the amount they can contribute to their IRA, but don’t pretend diverted Social Security money won’t be eaten by fees and unpredictable returns. A terrific summary is available from a guy I generally don’t like, Mark Cuban. A choice bit:

[W]hen companies were given the chance to make investments to meet their obligations to their pensioners, they were unable to do so. They had the option of taking on more risk, or playing it safe. They took on the risk and lost…. [W]hen it was all said and done, when corporations took on the job of investing for the financial security their retirees, they were unable to do so. They are now turning to the government funding of The Pensions Benefit Guaranty Corp with the expectation of being bailed out. If the experts that run our pension system had the expectation of financial protection by the government if they failed, do we really think that all of us wont have the same expectation?

The other thing to remember about what we are told is an impending Social Security Crisis is that the nice folks at the Social Security Administration have been aware of the Baby Boomers for quite some time. So they have taken the surplus they have now and put it in nice, safe United States Savings Bonds. This leads economists such as Paul Krugman to say:

The short version is that the bonds in the Social Security trust fund are obligations of the federal government’s general fund, the budget outside Social Security. They have the same status as U.S. bonds owned by Japanese pension funds and the government of China. The general fund is legally obliged to pay the interest and principal on those bonds, and Social Security is legally obliged to pay full benefits as long as there is money in the trust fund.

There are only two things that could endanger Social Security’s ability to pay benefits before the trust fund runs out. One would be a fiscal crisis that led the U.S. to default on all its debts. The other would be legislation specifically repudiating the general fund’s debts to retirees.

That is, we can’t have a Social Security crisis without a general fiscal crisis – unless Congress declares that debts to foreign bondholders must be honored, but that promises to older Americans, who have spent most of their working lives paying extra payroll taxes to build up the trust fund, don’t count.

It is time to make your voice heard. Write your Senator and Representative. After that, if you’d like something literally fluffy to think about, here is a map of library cats around the world.

Happy New Year

May 2005 find you happy and healthy, and may there be Peace on Earth.

One thing a lot of people do at this time of year is review their financial situation. As you know, this is not a joyous thing for many people. Way, way back, I wrote a little piece on Investing. Not only do I have a lot more readers now, but it bears repeating anyway.

Investing (n.) spending money with the reasonable expectation of receiving more money in return at a later date.

Please notice, there has to be money spent, and it has to be reasonable to get more money back. Thus, neither lotto tickets nor insurance are investments. If someone comes to your house to talk to you about investments and starts talking about life insurance, throw them out; you have to die to collect.

The other thing to remember about investments is that you are falling behind if your return is less than the interest you are paying on your debts. It’s one thing to say real estate is an investment with 6.34% average annual return since 1968 and 10% in 2004 when the interest rate on a standard 20 year mortgage is 5 7/8%. If, however, interest rates continue to slowly rise — as economists expect — this may no longer be obvious. I do not include the mortgage deduction when figuring this because a deduction is not money you receive, but rather a discount on the taxes for money you have already spent.

Using similar logic, you should really look closely at the brokerage statement if you have returns of 9.3% (assuming you matched the S&P 500) and are paying more than that on your credit card balances. This is a big, common problem, and if you can get rid of some debt, that is better than having underperforming “investments.”

In closing, I bring you the 25 Dumbest Quote of 2004, a thoroughly bipartisan list including President Bush, John Kerry, and even pop star Jessica Simpson. Or, this account of the Christmas Tsunami and the scientists who didn’t know who to call from the New York Times. I must say, it reads better than the script to last spring’s awful made-for-tv movie, “10.5.” Finally, the BBC tells us about something that might actually be evidence of climate change near the arctic circle, if not global warming.

Tis the Season to Get a Gym Membership

Christmas is over, the clearance sales are picked over, the Christmas cookies are getting stale, the roast beast is mostly gone, and the time has come to consider the New Year fast approaching.

Once more, retail-land is getting rid of those winter clothes, because goodness knows we all want to buy shorts for January. And of course, if you want to look good in those shorts, you may want to pay attention to how much of this week’s Target circular is dedicated to workout gear.

You’ve heard the figures before, and they aren’t getting better: about 2/3 of Americans are overweight or obese. The best thing we can say is yeah, but at least Americans are smoking less.

I have written my thoughts concerning weight loss before, but some things bear repeating, revising, or additions. Disclaimer: I lost a bunch of weight some years back and kept it off; so did certain other members of my family; right now I know people who are in the process of losing what I consider to be a lot of weight, and I would like congratulate them for their progress in a very difficult task.

First, BMI is not a crock. It is not the only thing a person should consider when looking at his or her weight, but it does mean something. Unless you are a professional athlete –in which case, defer to your trainer’s judgment — it is worth getting your BMI to 25 or lower. Frankly, the overwhelming majority of people who talk about the inaccuracy of BMI are overweight or obese.

You don’t have to buy her book, but one thing Susan Powter was right about is that you do have to move and you do have to eat. Losing weight is not as simple as skipping meals or bouts of self-destructive exercise. In fact, skipping breakfast or lunch is counterproductive, as your body thinks it is smarter than you and will hoard calories until the self-induced “famine” is over. Breakfast really is important, and should ideally be something nutritious.

Next, added sugar is still the deadly enemy of weight loss. I am not talking about the natural sugars you will find in fruits and vegetables, I am talking about sugar, corn syrup, dextrose, fructose, glucose, and sugar by any other name. New research keeps saying so, much to the displeasure of the Corn Refiners Association. As I have said before, Dean Ornish never said you could lose weight by switching from Snickers bars to (fat free) Twizzlers.

Calories still matter. You can’t eat huge quantities of even healthy food and expect to lose weight. A thousand calories worth of fresh fruit is still a thousand calories. You have to pay attention to serving sizes, and sometimes what a package calls a serving is unrealistically small. For that matter your body still needs protein. If you fail to eat enough protein, your body will take what it needs out of your muscles, making you less fit. This is particularly true if you do not exercise.

You don’t need prepared foods. This one is tough, but eating a pear is better for you than eating a canned pear (which has added sugar) or pear juice (which has less fiber). You don’t need someone to add sugar, preservatives, colors, and/or unpronounceable chemicals to your food. This counts double for at least 90% of reduced fat, reduced carbohydrate, or other “diet” foods.

Anybody who is trying to lose weight should not consume “sports nutrition” products. If a half hour on the stationary bike is burning 130 calories, and a 20 oz bottle of Gatorade is 140 calories, well, you see my point.

Don’t forget to drink water. If you have to put something in your mouth, let it be water. You might not need 8 cups of water every day, but it’s better for you than a lot of things.

Don’t forget to move your body. I am not saying that you need to buy large pieces of exercise equipment, or sign up at the YMCA. I am saying that physical activity is good, even if it’s a brisk walk around the mall — without a latte! It has to be something you can (and can stand to) do 3 to 6 days a week, every week. If you are claiming lack of time, maybe you can find or think of an exercise regimen that can be done during your favorite TV show. Don’t worry if it isn’t “fun.” It isn’t about “fun;” it’s about how you look in the mirror.

Finally, your body is the result of your lifestyle. This means several things. First, you will have to make changes to lose weight. Second, you will have to maintain certain of those changes if you intend to keep weight off. Funny thing, if you go back to what made you fat in the first place, you will get fat again.

You can do this. In fact, you are the only person who can get you to do it.