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14.8.08

Landrieu attack distracts from her inability to solve crisis

At least the Democrat Sen. Mary Landrieu campaign can, unlike its candidate, keep its attention focused on something for more than a sound bite. Its latest attack commercial on Republican opponent state Treasurer John Kennedy accuses him wanting to snatch old people’s “insurance” payouts, better known as Social Security, from them via privatization of the system, staying with the “confused” theme since Kennedy once opposed that. Perhaps this is to distract voters from the fact that Landrieu’s actions on this issue fit the theme of fiddling while Rome burns, if not throwing gasoline on the fire.

The idea that privatization of Social Security, proposed in 2005 on a voluntary basis to a small proportion of the assets “held” for investment, would threaten a general reduction of payout amounts not only is blather, but in fact would prevent a reduction of payout amounts. The system is going belly-up: in two years the annual surplus being taken into the system will start to decline; by 2018 that will become and annual deficit, and by 2041 the fund will be “exhausted.”

(Note: technically, the fund is exhausted now and has been for decades because Congress consistently has borrowed any yearly surplus and will have to pay trillions of dollars to put it back. That luxury stops in a decade and close to the end of the century the deficit will have grown to over $7 trillion. This borrowing occurs because while the system was supposed to be insurance – pay now to get it back later if you live long enough or become disabled – instead through history it has been treated as pay-as-you-go – current workers are paying for the benefits of current retirees. This is why there will be a funding crisis, as the proportion of retirees relative to workers increases over the next few decades.)

Serious research shows overall that allowing a small portion of a retiree’s contributions to the system to be invested in private markets can prevent underfunding of Social Security – as opposed to the solutions bantered around by which include a payroll tax hike of nearly 2 percent (or much more if applied only to higher-income earners), removing the ceiling of around $90,000 on taxing income (favored by Democrat candidate for President Sen. Barack Obama), or, yes, reductions in benefits (again, more drastic if limited to higher-income earners). Thus, Kennedy’s present issue preference, even if it involved a migration from the opposite view, is not just the best solution to the problem, but the most responsible.

This stands in stark contrast to Landrieu, who has offered nothing in the way of realistic solutions to the problem except tacit approval of higher taxes or reduced benefits, especially if done on the backs of the few who pay the vast majority into the system, the biggest contributors to economic growth that would be sapped with larger contributions resulting in an even bigger deficit. In essence, Landrieu’s latest salvo is to try to scare unknowledgeable people concerning Kennedy’s preference when in fact his approach solves the problem, while she herself has done nothing to try to solve it in a responsible way.

It’s better to have someone who flip-flops to the correct decision as has Kennedy rather than to have Landrieu who has been consistently wrong on this issue.

1 comment:

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