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January 19, 2006
Winning the Future Part 2
I forgot to mention something in the previous Newt post. He brought up a favorite argument of mine in favor of reforming social security: in its current form it is a wealth transfer system that takes money from poor minorities and gives it to rich white people. There are two main reasons for this: the life expectancy for black males means that the average black male in this country will not get any retirement benefits from social security because he will die before he becomes old enough to receive any. For Hispanics the problem is that they are as a group relatively young and thus pay more than they will get out. White people, on the other hand, are the richest and oldest part of population and pay the least in taxes relative to the benefits they get back. Private accounts would solve part of this problem by allowing the wealth minorities save to pass onto their heirs. The other issue Newt talked about some was how social security is a drag on the economy in the sense that it discourages people for saving because they think social security will be their for them (he cites a savings reduction rate of around 60%) and that the taxes taken by social security are spent inefficiently by the government if they are not used to pay benefits. He also talked about the posibilty of organizations like the NAACP setting up minority focused annuities that would pay higher returns because of lower life expectancy for blacks, but I think you might have trouble getting actuaries to sign off on that, there might be some legal discrimination issues involved if you did, and most importantly no one annuitizes their annuities anymore anyways. When I worked in financial services and received training on annuities I was told that only around 1% of annuity owners ever actually annuitize their money and instead use the annuity as a regular savings vehicle.
Newt also talked about the possible rise of intergenerational bitterness. I think he is a bit late on this and that bitterness is already there. The baby boomers screwed us. No one my age that I know believes social security will be there for us when we retire in anyting near its present from. As Newt points out with one of his many polls, more people my age believe in UFOs than in the long term solvency of social security. The boomers have had their entire lives to fix the social security and Medicare funding problem and they still have only made minor changes. I am still annoyed at Bush for making Medicare even bigger, which while it may make people happy now (or not) there is no money for it twenty years from now and that was before he added more benefits.
The section I am on now is talking about the importance of God in defining our national civic life (our rights come from our creator not the government etc.). While I agree with that, Newt seems too focused on government policy in what should be a non-governmental effort to add God back. He complains about some government issues like textbooks giving an inaccurate view of the founders views on God; on the whole this is more of a culture war than a government policy issue. As much as I think it is silly that the courts are considering whether to remove one nation under god from the pledge, for the most part I do not think this ranks as important as the pending bankruptcy of social security or the war on Islamist terror. Again Newt is too populist for me because he called the Supreme Court illegitimate if it disagreed with an overwhelming majority of the population on issues like this. The Supreme Courts job is to decide based on the law, not on what the population thinks. Often times the Supreme Court makes the wrong call in deciding the law, but if the population does not like particular decisions it can amend the constitution or change the relevant law.
Posted by Pete at January 19, 2006 08:45 AM
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