Bush Unveils Economic Priorities("Ownership" of any health/pension problem

[papau]

http://online.wsj.com/public/article/0,,SB109209099630186907,00.html?mod=todays%5Ffree%5Ffeature

Bush Unveils Economic Priorities("Ownership" of any health/pension problem)

President's Proposals Frame Contrast With Rival Kerry, but Strike Some as Timid
By JACOB M. SCHLESINGER and JACKIE CALMES
Staff Reporters of THE WALL STREET JOURNAL August 10, 2004; Page A3

WASHINGTON -- Handcuffed by big budget deficits but eager to show voters a fresh economic agenda, President Bush laid out the central economic theme of his re-election campaign: He is pledging to create an "era of ownership" that will include proposals to partially privatize Social Security, and liberalize tax breaks for health care, savings and job training.

Most of the specific White House campaign proposals are likely to be small-scale, and will leave some of Mr. Bush's backers yearning for bolder steps to assuage voter anxiety over issues such as jobs, and lay the groundwork for a sweeping, conservative legacy. Most will also likely just repeat previous proposals, albeit in somewhat revised or expanded form. In large part, the Bush advisers feel constrained by the president's pledge to cut the budget deficit to $260 billion by 2009, down from the projected $445 billion this year. The White House economic team's caution toward new initiatives also reflects the risk-averse attitude of a campaign facing a close election.

The new Bush economic push will, however, set up a striking philosophical contrast with Democratic challenger John Kerry, whose economic plan centers on higher taxes for the most affluent households, and expanding government funding for health care, education, and other areas. The president is arguing that he has a different theory of economic stewardship.

"There's a philosophical divide in this campaign," Mr. Bush said in a town-hall forum at Northern Virginia Community College near here yesterday. "My judgment is government ought to be empowering people by giving them more control over their lives," he added.<snip>

Era of Ownership vs. Middle-Class Squeeze
President Bush's economic campaign theme, highlighted in a new ad, promotes "an era of ownership." John Kerry's economic plan focuses on alleviating the "middle-class squeeze." Here's how their proposals differ:

.........................................................................BUSH........................................ KERRY
SOCIAL SECURITY Divert some payroll taxes to private retirement accounts..... Preserve current program.
HEALTH CARE Promote tax-free, flexible Health Savings Accounts. Create government subsidies for expensive cases; allow people, ....................................................... aided by credits, to buy into government-sponsored programs.
JOB-TRAINING AND EDUCATION Give workers vouchers to choose training, or let them use IRA-like savings.. .......................................................................Preserve current programs; expand tax credits, subsidies for college tuition.
TAXES Make the tax cuts for estates and high-income families permanent, arguing it helps small-business owners .............................................................Repeal those breaks to curb deficit, pay for initiatives like health care.

[havocmom]

1. Privatizing Social Security = Welfare for Schwabb & the likes

Now that most everybody has no $$ left for any more market investmensts, the big brokerage houses need propping up?

Sure, we want those corporate officers who falsified financial statements to get investors $$just before selling their own stocks and declaring bankrupcaies to have SS money to tinker with now... sure we do. NOT!

[papau]

2. It will only cost 2 trillion more - with no additional benefit or pension

for anyone!

A cheap gov provided Term ins for the value of the account before retirement gives 100% of any benefit claimed as to "ownership"

And the value of equity investing can be obtained by investing the Trust funds in equity - rather than using then to finance the tax cut for the rich via their buying gov bonds to finance the deficit.

[TahitiNut]

6. I'd argue for trust funds to be solely invested in debt instruments rather

... than equities. Municipal and state bonds, invested in infrastructure, are a far more effective national investment than 'greater fool' equities inflation.

[TahitiNut]

3. I agree. It's purely a profiteering interest.

Current payroll taxes are 30-35% greater than required to pay for current retirees. This surtax was begun in the 80's to build a huge reserve (trust fund) against 'baby boom' retirements, and that reserve has been exploited to subsidize federal deficits. That reserve, however, is about to decline as ongoing payroll taxes fall below that which is required to pay current retirees. As the reserve declines, it'll require the refinancing of the Federal Debt held by that trust. By re-channeling current payroll taxes into accounts which DO NOT PAY CURRENT BENEFICIARIES, the reserve will fall far more rapidly. That means huge amounts of private financing, driving up the interest rates (i.e. return on investment) in the bond/borrowing side of the investment teeter-totter.

In the most simplistic sense, I believe, the equities markets have always been at "war" with the debt/borrowing markets. When interest rates fall, equities rise and vice-versa. When government borrows, mortgage rates go up. When mortgage rates go up, home construction and a whole cascade of durable goods industries decline. When those industries decline, market capitalization goes down and existing equity interest shrinks.

The "ownership class" adores equity inflation ("greater fool" investment) and pales at equity deflation. Driving blind fleece-laden sheep into the equities markets is a windfall to both shearers and wolves. Goodbye sheep.

---

Debt instruments are far more effective in financing the debtor than equities are in financing public companies. The loaned money goes directly into the enterprise or entity and the cost to the entity is burdened at a far lesser rate. Less than 1% of total market capitalization in the equities markets has actually reached the enterprises in which the equities are held. Equities enrich the wealthy, with far less long-term benefit to the economy, more than debt.

[CBHagman]

4. So much for being a Christian.

Quote from Bush:

"Because I understand if you own something, you have a vital stake in the future of America."

Quote from Bush's supposedly favorite philospher:

"A man's life consists not in the abundance of the things which he possesses." Gospel of Luke 12:15

[tom_paine]

5. Well, Bunnypants* IS the Third Antichrist, after all

One would expect his words to be the opposite of Jesus' original teachings.

As unremarkable as Hitler making an anti-Semitic comment.