Why Social Security Is the Best Retirement Saving Vehicle

Why Social Security Is the Best Retirement Saving Vehicle – Bloomberg:

Although Social Security could theoretically be financed through general revenue (and was, in part, during the payroll tax holiday in 2011 and 2012), there is strong political pressure to ensure that Federal Insurance Contributions Act tax revenue and benefits paid stay in line over the long term. This means that any major benefit increase would have to be accompanied by a FICA tax increase, ensuring that benefits do not rise above a level that is fiscally and politically sustainable.

So what is the policy upshot? One option, as I argued last week, is to expand Social Security to finance a larger share of retirement costs. Another option is to transform defined benefit and defined contribution systems so they mimic Social Security’s virtues: That is, they would invest in lower-risk assets expected to grow roughly in line with GDP or wages and not chase yield by taking on excess risk.

Despite the rhetoric commonly heard from conservatives, libertarians, and conservatives who like to call themselves libertarians, when it comes to the risk involved in financing Social Security is actually an example for other retirement systems to follow.

Serious problems found in study that supported austerity

Well that’s embarrassing:

This error is needed to get the results they published, and it would go a long way to explaining why it has been impossible for others to replicate these results. If this error turns out to be an actual mistake Reinhart-Rogoff made, well, all I can hope is that future historians note that one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel.

Long story short, the original study vastly overstated the correlation between high debt and low growth.

So much for Bobby Jindal’s new tax code

Bobby Jindal’s Political Collapse Is Dangerous News For The National GOP | TPMDC:

Governor Bobby Jindal (R-LA), considered a leading presidential contender in 2016, is suffering a political meltdown in his home state. His approval rating plummeted to 38 percent in a poll last week by the non-partisan Southern Media Opinion & Research, down from 60 percent just a year ago. In an ominous sign for national Republicans, the immediate cause is a sweeping economic agenda with strong parallels to the House GOP’s latest budget.

On Monday, Jindal scrapped his own proposal to eliminate the state’s income and corporate taxes and replace them with a statewide tax on sales and business services. His retreat was a concession to the reality that the proposal was headed towards a humiliating defeat — and taking Jindal down with it along the way. Jindal said in a speech to lawmakers that the backlash against his plan “certainly wasn’t the reaction I was hoping to hear,” but that he would respect the public’s wishes and start again.

Not even a majority of Republicans in the state supported the plan. How did Jindal’s team think this would go down?

“The euro is the gold standard minus the shiny rocks”

Why the Euro Is Doomed in 4 Steps – Matthew O’Brien – The Atlantic:

The euro is the gold standard minus the shiny rocks. Both force countries to give up their ability to fight recessions in return for fixed exchange rates and open capital flows. But giving up the ability to fight recessions just makes it easier for recessions to turn into depressions. And that puts all of the pressure on wages to adjust down when a shock hits — the most painful and destructive way of doing things.

European nations that start downward spirals have trouble getting out of them because they don’t have the option of utilizing monetary policy. Rather than having a central bank reduce the value of their currency compared to other countries to boost exports, these countries are forced to lower wages relative to their competitors. Obviously this hurts workers and further drives down the economy.

The last 5 years have proven that this arrangement isn’t a good deal for the nations who are doing well or for the nations who are suffering. Either the European Central Bank needs to take stronger steps to help the PIIGS/Slovenia/Cyprus or the euro needs to go away.

Historians need to stop treating the founding fathers as ‘sacred’

Jonathan Freedland, reviewing ‘Karl Marx’ for the New York Times:

Not that this relatively soft treatment of Marx’s anti-Semitism detracts from the overall achievement of the book. Sperber forces us to look anew at a man whose influence lives on. And he also offers a useful template for how we might approach other great figures, especially the great thinkers, of history — demystifying the words and deeds of those who too often are lazily deemed sacred. For all the books that have been written about America’s founding fathers, for example, we still await the historian who will do for them what Jonathan Sperber has done for Karl Marx.

Like the Smithsonian’s The Dark Side of Thomas Jefferson, Karl Marx: A Nineteenth-Century Life portrays Marx for all his human faults. It would be nice if we’d stop treating the founding fathers of the United States as some kind of moral guides.

United States flies bombing exercise over Korea

North Korea readies rockets after U.S. show of force | Reuters:

On Thursday, the United States flew two radar-evading B-2 Spirit bombers on practice runs over South Korea, responding to a series of North Korean threats. They flew from the United States and back in what appeared to be the first exercise of its kind, designed to show America’s ability to conduct long-range, precision strikes “quickly and at will”, the U.S. military said.

I really hope this situation doesn’t escalate to the point where either side actually thinks it’s a good idea to use nuclear weapons.

What do Republicans do when everyone is considered a welfare queen?

Republicans’ New Welfare Queens | New Republic:

Is Sessions a math dunce? No, he just subscribes to an unrecognizably maximalist definition of “welfare,” one that includes every single federal program that’s means-tested. He includes Medicaid and the Children’s Health Insurance Program, usually described as health care programs, which account for nearly half his total. He also includes Pell grants, job training programs, and various other functions that are “welfare” in roughly the same sense that all government spending is “socialism.” By stretching welfare’s meaning until it has almost none, Sessions is able to calculate the total welfare tab not at an underwhelming $96 billion, but at $746 billion, which is indeed more than the tab for Social Security, or Medicare, or defense. Then he adds in the state-funded part of these programs so he can say the total exceeds $1 trillion.

I’m sure that many conservatives and libertarians do subscribe to the belief that any means-tested program is basically welfare. It’s interesting to see the extent to which there’s a “What’s the Matter with Kansas?” effect going on – how many white Americans with a thing against welfare have children getting free school lunches or attending private schools because of voucher programs or are actually receiving welfare? 

Oh right, about the same number as blacks. [Yes, I’m implying that much of the ire against welfare is based on racism.]

Republicans are putting themselves in a weird position for the coming elections. They’re already associated with 47% rhetoric (GOP strategists must love Mitt Romney). They’ve lost the black and likely the Latino vote for at least another few election cycles. They rail against welfare despite the fact that a significant portion of the remaining electorate even considering voting for them is taking advantage of the programs they claim they would do away with (or which would have to be eliminated to make up for magic asterisks in their budget proposals). They’ve completely lost the youth vote (compare the GOP of today to Reagan, who won the youth vote  by 20 points in 1984). How does this party stay relevant when they no longer represent any major demographic?

Let’s all take a moment to not take Liz Cheney seriously

Liz Cheney for The Wall Street Journal:

President Obama is the most radical man ever to occupy the Oval Office. The national debt, which he is intent on increasing, has passed $16 trillion. He believes that more government borrowing and spending are the solution to every problem. He seems unaware that the free-enterprise system has lifted more people out of poverty than any other economic system devised by man.

I wonder what drugs you have to take to get to the reality that Liz Cheney lives in. My guesses are shrooms or mescaline.

Seriously, Andrew Jackson did the Trail of Tears and Obama is the most radical President ever? Get the fuck out.

Americans strongly support government job creation proposals

Americans Widely Back Government Job Creation Proposals:

Job creation proposals enjoy widespread public support, including majority backing among all party groups, even when the issue of government spending is raised in an era when deficit reduction is one of the major priorities for the federal government. Despite the high levels of support for the job creation proposals, the political realities in Washington are such that Congress has not passed any of the proposals since President Obama first advocated many of these more than a year ago. The major sticking point with jobs legislation — as with most other measures being considered in Washington — may not be whether the programs should be pursued but whether the government should pay for them through increased taxes or cuts in other government programs.

I wonder what Obama would have to put on the table to get a job creation bill out of House Republicans. Food stamps? Medicaid? The Cadillac subsidy included with welfare?

The CMED Act: tax oil companies to provide quality education, aid cities, and create jobs

oil drilling california

In 2011 alone, California produced a grand total of approximately 200 million barrels of oil and 230 billion cubic feet of natural gas, making our state the fourth largest producer of oil and the tenth largest producer of natural gas in the country.

Yet, despite this, California does not get a dime for the resources that are extracted from our state and sold on the global market. This is because, unlike every other major oil and natural gas producing state in the nation, California has not enacted an extraction fee on the energy that is taken right from under our feet.

Let’s think about this for a moment.

California, the ninth largest economy in the world, is ranked 43rd in the country in terms of K-12 spending per pupil. The University of California, the flagship public university system of the nation, has seen a 14% decrease in funding since 2010.

And at a time when a quality college education has never been more important, tuition is skyrocketing, making a diploma unaffordable for an increasing number of young Californians. Meanwhile, at 9.8% unemployment, even those who have graduated from college find themselves without work or working at jobs they are tremendously over-qualified for. The appalling disrepair of our municipal infrastructure only discourages employers from bringing more jobs to our state. But our state government has its hands tied behind its back. The $250 billion dollar state debt all but assures that there will be no additional funding for education and infrastructure in the near future.

And we are giving away our oil and natural gas. We have the wealth to fund the investments that California needs and deserves and we are giving it away. This is to say nothing of that fact that by not charging an extraction fee on oil and natural gas, our state, which prides itself as a leader of reducing CO2 emissions, is not putting a price on the CO2 that eventually makes its way into the atmosphere. To say this is ridiculous would be an understatement. It is an outrage.

The California Modernization and Economic Development Act (or CMED) would put an end to it. By implementing a modest 9.5% extraction fee on oil and natural gas (Alaska, hardly an enemy of big oil, has implemented a fee of 24% on oil and natural gas that’s extracted from the state), CMED would raise between 2 and 2.5 billion dollars in revenue for California. A little more than half, 1.2 billion dollars, would be allocated in four equal parts for K-12, California Community Colleges, Cal State Universities, and the University of California for the purposes of increasing quality and restoring tuition to 2010 levels. 400 million dollars will be used to support small businesses by aiding their transition to cheaper, carbon-free and carbon-reduced forms of energy, which would in turn empower them to expand, hire additional workers, and reinvest. An additional 300 million dollars would be apportioned to the general funds of California County Governments for the purpose of upgrading and better maintaining municipal infrastructure, funding the conservation of regional park land and providing a multitude of other public services.

These are more than investments, they constitute a complete vision for responsible economic development in California. Making that vision a reality is as easy as ending the giveaway of our oil and natural gas, but it’ll take a popular movement if we truly want to realign the policies in Sacramento with the wishes and desires of Californians. Simply by taking a few moments, right now, and visiting www.cmedact.org, liking our Facebook, following us on Twitter, telling your friends or donating anything you can, even $5, you can provide the crucial grassroots support we need. It’s that easy. You could be the difference between failing to qualify and qualifying CMED on the 2014 ballot, so that Californians can have a chance to pass it democratically.

We can do this California, but not without your support. If you think it’s ridiculous that we are giving away our oil and natural gas at a time when California is more cash-strapped than ever, join our cause. It won’t be easy, but together we will qualify and pass the California Modernization and Economic Development Act and put our state back on the right track.