Burnt Orange Report

And don't forget Plame-gate...

Bush is in a losing position right now and we need to team up with the right flank of the GOP to ultimately weaken him for 2004.

To make this analysis sound like anything other than wishful thinking, you must make the case that the far right is so upset with these issues that they literally will vote for Howard Dean against GW Bush next year.

Gimme a break.

Any ideological grousing is for intra-party positioning, and no threat whatsoever to GW's inevitable reelection.

Andrew,

Hey, I'm all for domestic spending cuts, and if you guys are willing to work with us to force Bush to accept them, so much the better.

My point, though, is about personal retirement accounts for social security. Granted, we will have to partially fund the transition to them with spending from the general fund, i.e. increasing the public debt. However, we still save tons of cash by moving to personal accounts. Social security has something like $17+ trillion in unfunded liabilities right now, which are equally part of the federal debt, they just don't appear on the ledger. We still have to pay that cash, or cut benefits, which is highly improbable. The numbers I've seen indicate that taking half of the payroll tax and devoting it to private accounts reduce the unfunded liabilities to something in the $3-$6 trillion range (I don't remember which, exactly). So even if the public debt portion of future government liablities goes up a trillion or two, the Federal government's overall balances have improved substantially in the process.

My point is, simply saying that moving to a personal savings account system is expensive doesn't really say much. Sure it is, but NOT moving to personal accounts is much much more expensive.

Sherk

Andrew,

Hey, I'm all for domestic spending cuts, and if you guys are willing to work with us to force Bush to accept them, so much the better.

My point, though, is about personal retirement accounts for social security. Granted, we will have to partially fund the transition to them with spending from the general fund, i.e. increasing the public debt. However, we still save tons of cash by moving to personal accounts. Social security has something like $17+ trillion in unfunded liabilities right now, which are equally part of the federal debt, they just don't appear on the ledger. We still have to pay that cash, or cut benefits, which is highly improbable. The numbers I've seen indicate that taking half of the payroll tax and devoting it to private accounts reduce the unfunded liabilities to something in the $3-$6 trillion range (I don't remember which, exactly). So even if the public debt portion of future government liablities goes up a trillion or two, the Federal government's overall balances have improved substantially in the process.

My point is, simply saying that moving to a personal savings account system is expensive doesn't really say much. Sure it is, but NOT moving to personal accounts is much much more expensive.

Sherk

Whatever Dubya's problems may currently seem to be, let's not forget that he has the powers of an incumbent president and will go into the general election with a war chest greater than the GDP of several developing countries.

If Dean is the Democratic nominee, he and the DLC have to kiss and make up, no matter how distasteful that may seem to the zealots on both sides.
If Dean does not get the nomination, his followers can't have an electoral hissy fit and support some nitwit minor party candidate or stay home on election day.
The one thing that's clear is that the Democrats will not win next November unless thay are as rabidly united as they were in 1992.

BTW, Shields & Brooks had an interesting discussion on Friday's NewsHour touching on the prospects for both parties in the 2004 general election.
http://www.pbs.org/newshour/bb/political_wrap/july-dec03/sb_12-26.html

First, let me apologize from my absence of late- the holidays and a slow dial-up connection here at home have slowed me down. Hope things are going well for all of you.

Mark-

I'm not saying that the hard Right will vote for Dean, I'm saying they won't vote at all. That is problematic for Bush. Furthermore, these decisions put him in a position that will hurt him with swing voters- either cutting services or raising taxes will piss people off, buddying up with Libya will piss everyone off and cutting into Social Security will piss these same people off. So with the combination of stay at home right-wingers and Dem-voting swing voters several close states could go the Democrats' way.

Sherk-

Indeed you may be right, but the immediate costs will require immediate funds of some sort, even if its selling bonds and adding this huge tab to the national debt. Voters don't see the longterm costs of not reforming on the evening news, but the dramatic up front costs of reform will be there. It would be a fiasco.

Tim Z-

You are right- it is time to start uniting. I really think that things will be better once we have a candidate, whoever it happens to be, but the Gephardt/Kerry et al attacks on Dean are pretty despicable. Attacking him from the Left is one thing- Bush is unlikely to coopt those arguments or use those to show that "even fellow Democrats don't trust Dean" but attacking him from the Right as they are now doing just strengthens Bush's hand in the general. Still, Dean will need to reach out to the "Stop Dean" crowd after his nomination, probably by picking a DLC/Stop Dean running mate. For this reason I tend to shy away from a Bob Graham selection- it'll do nothing to quiet that faction of the party that'd rather have 4 more years of Bush than any years of Dean. I think that Wes Clark, Evan Bayh or some other anti-Dean candidate with foreign policy credentials would win us more votes.

Andrew,

Yes, the up front costs will be horrific, but as far as election '04 goes, it is not going to get through congress. Even without a filibuster, our margin is probably too small in the Senate to push it through. Tom "Superman" DeLay can work miracles in the House, but Sen. Frist is, sadly, no Tom DeLay. I think the point of what the GOPers are doing on the Hill is laying the groundwork to push it through, assuming Bush wins next year, as I believe he will.

My best guess is that Bush wants a mandate to move to personal accounts when he is re-elected. It is hugely popular with the public at large, but opposition from your party, and quite a few RINO's in congress is intense. If Bush wins after campaigning on the third rail it will have a major effect on some of the moderates. Also, we should pick up a few seats in the Senate (even if GA doesn't really count as a pick up, since Miller reliably votes the Repub. Party line), and a handful in the house (that a forthcoming court ruling could turn into a few handfuls). So post election, we should be in a better position to pass it through congress than we are now. I don't know if we would (could) try and do anything funky with reconcilliation to bypass a filibuster in the Senate. If not, I'm not sure how we pass it if the Dems maintain party unity like they usually do in the Senate, medicare handout not withstanding.

One other point, no matter how hugely expensive personal accounts are in the short run, once they are passed into law, they can never be undone. It would be even more of a third rail than Soc. Security is now, as it would be effectively confiscating someone's personal retirement savings. There isn't much you can say to sugar coat that, and it would be suicide for any pol. who tried to. Taxes are unpopular enough, but they are levied on money after you see it. Expropriating wealth someone has already earned and invested ... not going to happen. Especially since it wouldn't be senior citizens who had the accounts, but most working Americans, an even larger voting block. Even freezing the accounts and not allowing further investment would be quite unpalpatabe, especially after people see how well they perform.

Sherk

I think that Gephardt and Kerry have discredited themselves with their slimey tactics. And the rhetoric they and Lieberman have used against Dean is totally over the top. These are not the actions of pokiticians in search of party unity.
Clark and Edwards have been more circumspect.

I do worry about some of the recent extraneous sniping going on between the Dean and Clark campaigns. Are Dean's people trying to paint Clark as the "anti-Dean"? In the past, frontrunners have easily brushed aside organized movements to stop them. By successfully portraying Clark as the "stop Dean" candidate, Dean can neutralize the ability of Clark to appeal to the 60% to 70% of Democratic voters who currently don't support the former VT governor. The problem for Dean is that the differences between him and Clark have more to do with personality and background than policy and ideology. Dean certainly cannot afford to unnecessarily offend voters whose views are not all that different from his.

Andrew,

What can be said about privatizing Social Security to someone who is obviously so young that you have never seen a prolonged down market.

All we really need to do to save Social Security into the next century is just raise the cap on the taxable income above $80000. It will go on forever if that is done.

Go read the Century Fund's report on Social Security to see that your assumptions that private accounts will yield higher returns is just a piece of malarkey that people like Sherk want you to believe. (google The Century Fund, formerly the 20th Century Fund or it's web address is tcf.org, I think)

Private accounts are just like 401K's and not like traditional guarenteed pensions. Guarenteed pensions are defined benefit plans like Soial Seurity and IRA's are defined contribution plans ; they have no guranteed benefits and indeed could yield nothing. A guarenteed pension is insurance that you will reeive a minimum amount. It is meant to be secure and be risk free; just like Social Security. 401K's and IRA's have melted away in this last down market, averaging 40-60% losses. And remember to make up a 40% loss you need to grow by @70% and a 60% loss by about 120%. Mine lost 60% and I know people who lost close to 90% and now look forward to a very long work life.( I am using myself as an example not asking for pity , I'm still more than okay.)

You could wind up retiring in the midst of an over 10 year down market like the 70's

The idea that you(generically , the population at large and not you individually which could or could not happen) do better with private accounts is frankly just fool's gold.

Debra,

A ten year down market, where the entire economy is sinking for ten straight years? That didn't even happen in the Great Depression, which saw stocks rising again after 1933 or 1934 (can't remember which, offhand). Look, if we have a situation where for ten straight years stocks, (non-government) bonds, and every other form of investment has negative returns, what makes you think the government's finances will be in good enough shape to pay out the promised benefits? If the economy sinks so badly that the entire private market can't make a positive return for an entire decade, then the government will be hurting badly too.

Look, soc. security as it is now might be "risk free" relative to any other investment, but people retiring now are guaranteed a 1% rate of return, and my generation is guaranteed a negative return. Even the safest (assuming non-gov't bonds) bond mutual fund will pay you above 5-6% a year, which you are pretty much guaranteed to get unless every corporation in America goes under. Sure it is not *as* safe as the government which can tax the citizens to pay benefits, but it is very close. Even if some companies do go under, a mutual fund is diversified so that it only affects you slightly. Unless half of corporate America goes bankrupt all at once, people are much much better off with diversified private accounts.

Why should people be forced to accept practically non-existent returns on their savings in order to eliminate every last vestige of risk? From what I understand of the proposals, anyone who wants to can stay with the current system, but those who would actually like to have something to retire on, and are willing to accept the small risk associated with doing so, are free to invest in diversified mutual funds. Why should other people have the right to demand that younger workers must accept negative returns on their savings?

Additionally, it can be risky to invest all your wealth in the market over a short period of time. But that isn't what personal savings account do. If your investments are made over four decades, then you will invest some in up years, and some in down years, and on the whole it will average out to a return of 6-11% a year, depending on the mix of stocks and bonds, and how safe your investments are.

Why should liberals be opposed to this? I just don't get it. It isn't like your side wants people to be poor (at least, I've never heard a liberal say so, though I would argue your policies imply otherwise, but that is another argument...), and someones retirement savings earning returns of 6-11% a year are much much larger than a current retiree who is getting soc. security that pays only 1%, not to mention my generation that gets screwed. If Soc. Security had been set up as a personal retirement account system from the beginning (OK, not a political reality during the great depression, but that isn't the point), then current retirees would have between double and triple the monthly benefits that social security pays now, plus a sizeable bequest for their decendants. A lot of people who had been poor and lower middle class all their working lives would be retiring with sizeable savings, and could give their children and grandchildren the opportunity to achieve even more than they had. Isn't this part of the American dream? Don't you want to see people do better, particularly the poor, whom PSA's would make the most difference for? I just don't get why Dems are so opposed.

Sherk

The average annual return of the stock market over the last 200 years, including a couple of serious recessions and the Great Depression, is 7%. Stocks are a very safe investment, but if you are unsure, I think that you ought to have the option of "investing" in the current system or choosing from several private systems of various risk levels. You can take as much risk as you wish and thus as much return as you wish. This will move us to a solvent system with higher levels of return for our retirees and furthermore its a way of doing it without getting tagged as "tax and spend" Democrats. I support this system but it will require some short term struggle and its still unpopular- two things that would make Bush unpopular. If he mentions it in his campaign we ought to slam him on it- it is the third rail and it could cost him Arizona, West Virginia, Arkansas or Florida- all are necessary for him to win and all have sizeable older populations voting.

It doesn't surprise me that the GOP is trying to spin the White House's deal with Gadafi into some sort of vindication of Bush's pre-emptive invasion of Iraq, but it just isn't true. Gadafi is as much a brutal dictator as Saddam Hussein was, possibly moreso, and he definitely has greater ties to anti-U.S. terrorism than Saddam ever did, yet Bush's deal will strengthen Gadafi and allow this brutal terrosist dictator to remain in power.

Even though I protested against the invasion of Iraq, Bush did have the right idea, which is that the formula for success = disarmament + regime change. With Libya, Bush is applying only half of the formula. In doing so he is making a deal with a terrorist dictator who is responsible for the murder of Americans. That is simply unacceptable to this Texas Republican. Bush should insist that any deal with Libya include regime change as well as disarmament. In failing to do so, Bush is betraying the victims of Gadafi's terrorism.