Social Security: The Economic Issues
The seemingly minor Social Security shortfall -- just 0.7% of the GDP -- belies the complexities of finding a remedy to a real problem

President Bush has proposed a major reform of the Social Security system that would mark its first overhaul since the Greenspan Commission reforms under President Reagan. The system continues to suffer from resources insufficient to support the promises made to retiring baby boomers. Neither tax revenues nor the trust fund can support the growing population of retirees.

The Social Security problem is, however, small enough to fix. The aggregate deficit, although huge [$3.7 trillion], is spread out over 75 years. Keeping reserves up to full funding at the end of that period adds $300 billion to the gap [total: $4 trillion]. But a growing economy means the shortfall amounts to only 0.7% of gross domestic product over the entire period. There are many ways to overcome this shortfall, but the accounting deficit represents only part of the problem.

MIXED BAG. Most other industrial countries' systems have fallen into even worse shape than America's. Europe and Japan have slower growing or declining populations, largely due to the lack of immigration, which will result in even higher ratios of elderly-to-working-age populations. Europe's earlier retirement ages and generally richer public retirement programs compound the problem. Only Britain, which partially privatized its system in the early 1980s under Prime Minister Margaret Thatcher, has a manageable load.

The Social Security program has always consisted of a mix of insurance, retirement savings, and transfer programs. The political consensus as to the relative importance of these goals has varied over time. At the beginning, of course, the first generation to receive Social Security had put nothing into the kitty. But few people were collecting. The government set the retirement age at 65, in 1937, when the average American's life expectancy was only 63. Most people never collected Social Security, and the plan was designed as insurance against becoming disabled or growing too old to work.

The program began during the Depression because the elderly were literally starving. Social Security allowed them to live in more dignified circumstances although, in absolute terms and as a percentage of average earnings, benefits were much lower than they are today. The program placed only a small burden on the working population. The low life expectancy meant 40 workers for each retiree. But as life expectancy rose, that ratio dropped to 16 to 1 in 1950 and 3.3 to 1 today. By 2050, it will likely reach 2 to 1.

"LEGAL FICTION." Although the government originally set up Social Security on a pay-as-you-go basis, Americans began to think of it as a pension program, with a trust fund behind it. The Greenspan Commission enshrined this view and sought to make Social Security solvent by increasing the trust fund enough to pay the benefits promised. However, life expectancy caught up with the trust fund, and not all potential retirees are working as late into retirement as Alan Greenspan is.

But a more serious issue remains: For the most part, the trust fund represents a legal fiction. Its only asset consists of a giant IOU signed by Treasury Secretary John W. Snow, because the fund holds only Treasury securities by law. And, on average, for the life of the fund, the federal government has been running deficits larger than the additions to the trust fund. In fact -- if not in law -- benefits will have to come from current taxpayers, not out of this semi-fictional trust fund.

Paying these benefits will require dramatic increases in tax rates or enormous borrowing. If the U.S. does nothing about benefits or tax rates, government debt will rise to 239% -- from its current 65% -- of GDP by 2050.

The President has proposed addressing the problem by privatizing Social Security accounts, allowing individuals to put part of their contribution into a private account. Benefits would be reduced proportionately, in such a way that the system would not have further accrued net liabilities. In spirit, the system resembles the British program put in place more than 20 years ago, as well as those in Chile and other countries. Britain, however, was the only major country to convert to such a system, while the others created public pension systems de novo.

CHILEAN EXAMPLE. Britain enjoyed several advantages in creating its system. Most important, its baby boomers had 30 years before their retirement to build up these private accounts. The U.S. has no such luxury, with retirement fast approaching for its baby boomers.

Even with its time advantage, however, Britain's system has its problems. The baby boom generation is approaching retirement with too little saved, and many worry that retirement will be impossible. On the bright side, Britain has a cradle-to-grave health coverage [run at half the per-capita cost of the U.S. system] and a public housing system that guarantees some form of shelter.

The average British citizen will thus need less in personal retirement funds -- but nonetheless those funds remain in questionable supply for many who are now approaching retirement. Already, one-third of British elderly receive supplementary welfare benefits.

Many of the newer systems, such as Chile's, began because existing systems were bankrupt or nonexistent. Some observers cite the Chilean system as an example of successful privatization, but it covers only 40% of the country's population.

ADDRESSING THE SHORTFALL. The Bush Administration has said that its proposed changes will apply to no one currently past the age of 55, and will not affect accrued benefits for those under that age. This leaves an accrued deficit of about half the total, with less funding to cover the benefits. The proposal to borrow the amount merely postpones the problem. The debt service on the loan will require future revenue.

Several ways have been discussed to address this shortfall. The Administration has not made a proposal but seems amenable to doing something about it. The most popular solution: raising the $90,000 limit on Social Security taxes, or shifting to consumer-price-index indexation of benefits. If no one funds the shortfall, the proposed solution could exacerbate, rather than alleviate, the problem.

In principle, the Administration proposes to cut benefits but partially offset the reduction by allowing individuals to invest their own funds. The proposal eliminates further increases in the accrued shortfall but fails to close the gap already incurred. Presumably, someone will come up with a proposal to address that problem well. [See more detail of the Administration's plan.]

PERSONAL SAVINGS. The private accounts will affect financial markets, but the extent depends on how households invest their funds. As a first approximation, the impact is small. Government debt will rise by $700 billion, while the private accounts increase to offset the amount over the next 10 years. This has first-order impact on the national savings rate, and thus none on investment or returns. In fact, if all the private accounts are invested in the government debt, there's clearly no impact at all.

If, however, investors do what the government expects -- invest much of the accounts in equities -- that will have a significant effect. Since the national savings rate still doesn't change, the overall rate of return in the economy won't vary either. However, demand will increase for equities and Treasury debt. As a result, the price of bonds will drop, and that of stocks will rise. [Conversely, bond yields rise, and the expected return on equities declines.]

The impact turns murkier with the prospect of possible reaction in the household savings rate. If individuals consider these accounts their own savings, while they lacked faith in the return on Social Security, they may reduce the savings accumulated elsewhere as they fund their individual accounts [or, alternatively, increase their borrowing against their new assets].

In this event, the national savings rate will decline, reducing investment and lowering growth but slightly raising the average return on capital. The size of the impact depends on many factors, including whether foreign investors grow nervous about the additional government debt. I think it's likely to be small, but I may be placing too much faith in the prospect of households behaving rationally.

"DON'T WORRY, BE HAPPY"? Alternative proposals have been made, but a strong dissenting voice advocates ignoring the problem. Alternative economic projections can erase the shortfall by assuming that revenues will increase enough or benefits rise slowly enough to keep the trust fund solvent. This "Don't worry, be happy" school argues that America should acquaint itself more closely with the problem before addressing it.

But the later it gets, the bigger the problem grows. Several solutions exist, but they seem impossible politically. If the country waits until the Social Security fund goes broke, there will be no solution other than a drastic increase in tax rates or a drastic cut in benefits. Is it right to leave that problem sitting there for the next generation?

Another problem: The assumptions needed to close the gap look unrealistic. Stronger productivity growth offers little help. It would increase future revenues but, because future benefits are tied to average wages, it would also increase future payments.

IMMIGRANTS TO THE RESCUE? The assumptions that actually improve the situation are less pleasant. One is that people will work later in life, thereby both increasing revenues and reducing benefits. As the baby boomers retire, the resulting labor shortage could persuade more people to continue working, at least part-time, into retirement. But the retirement age would have to rise to near 70 to provide significant help. Raising the legal retirement age would help more, because it reduces benefits for early retirees.

Higher immigration rates can postpone the problem, because most immigrants come in as young adults. Their increase would keep the ratio of workers to retirees higher than the 2 to 1 that is now expected, but the entrance of so many presumably less-skilled, less-educated workers would create problems for other government spending -- especially education.

Another argument: Because the Social Security problem pales in comparison to the health-care issue, the government should ignore it until it finds a solution to the bigger problem. I've never quite understood this position. It seems to me that if a problem exists, it should be solved, even if a bigger one lurks around the corner.

CONSPIRACY THEORIST. A more realistic argument states that the Social Security system should be viewed as a pay-as-you-go system rather than a funded pension plan. After all, the first generation to receive benefits put nothing into the program. From an economic viewpoint, the resources to support the elderly have to come out of current production in any event, and to pretend otherwise [especially when the trust fund consists solely of government debt] is just fooling ourselves.

This fundamental argument can be made in either direction. The conspiracy theorist alleges that the argument for a pay-in-advance system is just an excuse for making the tax system more regressive. A tax is a tax, and more money comes into the government from the regressive Social Security and Medicare taxes than from the progressive income tax. Since the Social Security surplus is used just to fund general government spending [with only an accounting fiction of a trust fund], the total tax system is in fact regressive, not progressive.

The relatively manageable size of the Social Security shortfall makes many solutions possible. The Democrats would prefer to concentrate on raising revenues rather than lowering benefits or transforming the program into a semiprivate system. Republicans would prefer to cut benefits and leave taxes alone. Proposals from the AARP and the Democratic members of Congress have focused on eliminating or raising the income level on Social Security contributions from its current level of $90,000. A 2-percentage-point increase would essentially close the shortfall. Eliminating the income cap would get rid of the already accrued shortfall but with only 10% of Americans earning more than $90,000, would not totally fund the current program.

DELAYING RETIREMENT. Benefit cuts involve either reducing the indexation of benefits or raising the retirement age. When phased in, the 1983 Greenspan Commission reforms gradually increased retirement age to 67. Increasing it further would reduce costs and possibly also increase revenues, since Americans might continue to work into later life.

The extent of the reduction depends on what the response would be. If workers actually retire later, the change helps the deficit more than it would if they still retire at the same age but take reduced benefits. [Of course, retirement is often not completely voluntary. In a 2001 Labor Dept. survey, 60% of early retirees said their decision was at least in part forced.]

I think the most likely result would be a pattern of partial retirement, with workers shifting to fewer hours as they near 65, but delaying taking Social Security. Obviously, not all workers may be economically or physically able to delay retirement but, with health improving, many would. Still, the extent to which this would reduce the Social Security deficit is hard to estimate.

REPLACEMENT RATIO. Some observers have proposed reducing the indexation to help close the accrued deficit. Under current law, Social Security benefits index to average wages. Indexing them instead to consumer prices has been suggested. How much this would help depends on assumptions regarding productivity growth, but if productivity averages the 2.5% growth of the past 50 years, it could close most of the current gap.

It should be noted, however, that if productivity growth reverts to the 1.5% average of the 1970s and 1980s, this change would add up to much less of a benefit. Congressional Republicans seem to be pressing for a combination of CPI indexation and privatization as a solution to the problem.

This change would reduce the replacement ratio for Social Security recipients in the future. Currently, Social Security replaces 42% of the average workers earnings, in line with the 40% assumed by the Greenspan Commission in 1983. A shift to CPI indexation could cut this ratio to 29% by the time it fully phases in, depending on productivity assumptions.

Representative William Thomas of California, chairman of the House Ways & Means Committee, put forth one of the most interesting proposals. He has advocated shifting to a national sales tax as a substitute for payroll taxes. The proposal has several major advantages: It would provide Medicare with an adequate funding source. It would eliminate the discouragement of employment inherent in a payroll tax. Also important, it would bring the U.S. tax code closer to that of other major countries, reducing the relative discouragement of exports and encouragement of imports.

The following table gives a rough estimate of the options to closing the estimated $4 trillion Social Security shortfall:

Alternative Policies to Close the Gap Proposal 75-year Impact [Trillion $]

Partial privatization with proportionate reduction in benefits 1

Raise contribution cap to $140,000 1.5

Use CPI instead of wage indexation 3

Raise retirement age to 70 3

Raise payroll tax one percentage point 2

In a recent survey, the National Association for Business Economics [NABE] found most support for raising the retirement age and eliminating the cap on contributions. Support for privatization was lukewarm.

RAMPANT SKEPTICISM. The Administration and Congress are not yet close to agreement. The President has stated that he expects action next year, not this year. Even that may be optimistic given the lack of consensus. There's no sense of urgency yet in the national debate, and emotions run high against change.

However, something must be done, and the longer change is postponed, the more difficult and disruptive it will be. Social Security would be better off now if changes came 20 years ago, at the time the Greenspan Commission put forward its reforms and Britain changed its program. But America can't go back. Now is not as good as earlier, but it's much better than later.

Nevertheless, skepticism runs rampant. In a recent survey, the NABE found only a 36% probability that Congress will pass any major Social Security reform. The public is losing its enthusiasm for the Administration's reforms as it realizes the new accounts aren't free. Congress seems likely to delay action until the crisis is much nearer.

Editor's Note: Related video clips can be found under under "Hot Topics" on S&P's Web site

Copyright © 2005 The McGraw-Hill Companies Inc. All rights reserved.

Salon.com | Bush's Social Security mess:

March 5, 2005 | The Bush administration's historic assault on Social Security is stalling, as voters learn more about the costs of the president's privatization proposal and the drastic benefit cuts that would inevitably accompany such a radical change. Republicans in the Senate and House are openly skeptical of passing any legislation that resembles the president's scheme, while Democrats have remained unusually united in opposition.

The findings of the latest national opinion surveys are unanimously and stunningly negative regarding the Bush plan. Worse still, from the president's perspective, is that the more people learn about his plan, the more inclined they are to reject it.

A poll taken for the Associated Press by Ipsos-Public Affairs in late February found that 56 percent disapproved of Bush's handling of Social Security and wanted no part of privatized investments. A poll conducted for the New York Times and CBS News last week showed 51 percent opposed private accounts, with 69 percent opposed after being told that the privatization also would require cutting benefits. Surveys taken for USA Today and National Public Radio discovered similar levels of popular disapproval. No matter how much lipstick the president and his allies apply to their renamed pet pig, the public isn't buying.

Those poll numbers aren't just liberal media propaganda, as Republican members of Congress learned to their dismay during the February recess. Taking the president's plan back to their districts at town meetings -- under orders from House Majority martinet Tom DeLay -- they found their constituents overwhelmingly rejecting it. That tended to dampen their own enthusiasm for the scheme considerably. When a smiling Bush tool like Katherine Harris, R-Fla., withholds her support, it should be obvious that his plan is sinking in some very deep doo-doo.

But the conservative campaign to abolish Social Security, which began back in the Reagan era as a quixotic crusade on the fringe of national politics, won't be derailed by such immediate setbacks. Having achieved so little for so long, the privatizers are encouraged because they have convinced the public that the program faces eventual insolvency. With the president's determined support, they will soon spend tens and perhaps hundreds of millions of dollars on propaganda advertising. And if their ads can persuade people that the system must be changed, a version of their destructive "reform" could still prevail.

For the moment, though, the polling data says otherwise. While most Americans worry that the Social Security system is in fiscal peril, their preferred solutions differ sharply from those offered by the president and his party. Not only do voters reject privatization but they also want no part of benefit cutbacks, revised wage and price indexes, or delayed retirement. Instead they strongly favor what the president, until two weeks ago, vowed he would never allow: increase the cap on Social Security taxes above the current $90,000 level.

Indeed, Bush's recent suggestion that he would consider raising the cap meant that despite all his bluster, he knows his plan is in trouble. Aside from staunching the damage done by negative polls, his concession presumably was intended to draw congressional Democrats into negotiations -- so that he can blame them next year if no legislation emerges.

The Democratic leaders would be foolish to take that bait, not least because Bush has yet to outline a complete plan, let alone send a bill to Congress. While they wait for him to finish his homework, however, they ought to be devising their own alternative to his failed plan. Among the truest clichés in politics is that you can't beat somebody with nobody; and in this instance, the likelihood is that you can't beat something with nothing.

Although Americans don't want Bush's plan, they appreciate his audacity and conviction in proposing it, according to a new survey released this week by Democracy Corps, the think tank operated by strategists James Carville and Stan Greenberg. At the same time, they continue to regard the Democrats as anemic and uncreative.

If Bush's ideas are the only ideas for solving the future challenges to Social Security's solvency, then the risk is that someday, in some form, they will be enacted. But if the Democrats want to save Social Security, then eventually they will have to articulate a set of positive proposals in response to Bush and force him to negotiate with them.

The outlines of a progressive reform plan are not too difficult to imagine. Besides raising the cap on Social Security taxes, which the public is prepared to endorse, another step might be to create new personal retirement accounts in addition to Social Security, financed by tax credits, such as the USA accounts President Clinton proposed toward the end of his second term. Such accounts would encourage working families to save, improving their financial prospects and adding to capital investment.

Beyond any specific answers, however, the Democrats must speak to far broader issues than the obvious defects in the president's scheme. Are they willing to say that the federal government should guarantee a decent retirement to every working citizen? Will they fight for that principle with innovation as well as resistance? Who and what do they represent?

Greenberg and Carville explain that this is a debate not just about growth rates and actuarial tables but "a battle about values and convictions," and ought to be waged in those terms. The Democrats could not ask for more favorable terrain on which to define their party and defend the nation's future, if only they have the will and the wit to do so.

Four Boxes of Matzah
By Stan Lapon

Once upon a time in a small city in Midwestern America, there lived a very kindly and generous rabbi named Rabbi Shmotkin. Every year it was his practice, at Passover time, to mail out boxes of Shmurah Matzah in order to bring a feeling of celebration to the Passover Festival. This is the story of four boxes of this Shmurah Matzah.

The first box arrived at the home of a friendless, middle-aged accountant, who lived alone and whose sole companions were his tank of tropical fish. Since tropical fish were not known as big talkers, our accountant often sat at home at night listening to the radio and wondering.

He remembers going to the door that afternoon to pick up his mail. When he opened the door, a cardboard box fell at his feet. At first he thought it was a medium size pizza that had been wrongly delivered to his home, but when he opened it up and saw the letter inside, a smile came to his face, a rare one for that time in his life, and he said a special thanks to Rabbi Shmotkin, just for remembering him.

The next afternoon, the friendless little accountant again went to the door to collect his daily portion of "occupant mail." Again when he opened the door, another cardboard box fell at his feet. He examined it closely and again found that it was Shmurah Matzah from Lubavitch House. "Strange," he thought, "one box was nice, but two seems a bit extravagant on the Rabbi's part." "Maybe Lubavitch have more money than I think," he said to himself, "perhaps I have been giving in excess," he noted in his accountant-like brain.

The afternoon after that, our sad accountant again went to the door for his mail. This time he noticed a certain trepidation in his step and a slight hesitation as he opened the door. You guessed it, in fell another box of Shmurah Matzah.

Now you must understand that this accountant knew a thing or two about computers, so that his initial thought was that maybe he was in some sort of Chassidic computer loop, like when the government forgets that it has sent you your tax refund and decides to send you the same tax refund every week for the rest of your life. "Why," he pondered, "couldn't I get into a government refund loop, instead of a Shmurah Matzah loop? Just my mazel," he said to himself, "everyone else gets money when there is a mistake, I get Matzah."

The afternoon after that, he went as usual to get his mail, opened the door and... you guessed it, in fell a fourth box of Shmurah Matzah. "Shmotkin is trying to tell me something," our accountant thought to himself, "but what could it be?

"Four boxes of Shmurah Matzah has to be a sign, like the four questions, only more expensive," our little friend pondered. "What shall I do? What shall I do?" Finally, after an excess of soul searching, he decided to do exactly as Rabbi Shmotkin had done--to give the Shmurah Matzah away. Since he didn't know many people, he gave away two of the boxes to people at work, one to a Jewish woman who had married a Christian and one to a Jewish man who was married to a non-Jewish woman. The third box he took with him to his Seder dinner and the fourth he kept for himself.

The little accountant's Seder dinner was most depressing. His father's wife was quite ill and could barely sit at the table. Her days were not to be long, it seemed to all assembled, who nodded among themselves with little knowing looks. When it came time to display and taste the first Matzah, the accountant's stepmother brightened up. "Who brought the Shmurah Matzah to the Seder?" she asked, rather strongly, everyone thought.

"Why I did," responded the little accountant.

"I really want to thank you," she said. "Every day to me is now very precious, and with this unexpected gift, you have done the impossible, for you have made this day somehow even more precious to me than usual."

Everyone was beaming at the table and somehow a very sad and distant night had turned into a very close knit one. "Rabbi Shmotkin is doing something right when he gives this Matzah away," the accountant thought to himself.

Three days later when he returned to the office, the man he had given the Matzah to approached the accountant almost before he had had a chance to have his morning coffee. "You know," he said, "that special Matzah you gave me for Passover, it had a rather profound effect on my wife, who not only isn't Jewish, but she's not even very religious. We don't have a Seder at my house on Passover any more, but I passed out your Matzah and she was fascinated by it. She could not believe how ancient it looked, and she said it gave her a feeling of connection with a past she barely knew existed.

"And you know what's really surprising? She made me take down our dusty unused bible and that very night, (it happened to have been Passover eve) she had me read the entire story of Exodus out loud to her and the kids. You know women never cease to amaze me."

"Well that's just astounding," the little accountant thought. "It's hardly a conversion, but this program of Rabbi Shmotkin's certainly has had an effect in the most unexpected of fashions."

He walked slowly toward his office, when the Jewish woman who had married the gentile virtually accosted him in the hall. "I really want to thank you for that Matzah you gave us for Passover. You know every year my daughter, husband and I go to my parents' house for a semi-Seder. It's really just a meal, because my husband isn't much interested. When our daughter opened the Matzah box at the house and gave everyone a piece and then she read the rabbi's letter that came with the Matzah out loud, you know, my husband said to me, 'She really likes this service stuff,' and he agreed to let me send her to Hebrew Sunday school. Before that night he was against the whole idea, I don't know what changed his mind, but I think the rabbi's Matzah had something to do with it."

Needless to say, I was in a state of shock from these revelations, and had no small feeling of guilt about hanging on to my own box. Look at the good I could have done for someone else, if I had given all of Rabbi Shmotkin's Shmurah Matzah away.

But then I remembered how I felt when I got my first box and was kind of glad that I had set it aside.

The New York Times > Washington > It's 'Private' vs. 'Personal' in Social Security Debate

washingtonpost.com: Israeli Settlement To Reach Jerusalem: "JERUSALEM, March 21 -- Israeli Prime Minister Ariel Sharon has approved the construction of 3,500 new homes for Jewish settlers that would link the largest settlement in the West Bank to Jerusalem.

See the picture (it is an eye opener) and read the story... It is hard to image that the Post is telling us this stuff. No permits, No permission, Palestiinians say its a violation of the peace process, and I have been to the spot... This is what the post says:

Sharon accepted the Defense Ministry's final plan on Sunday for a swath of houses, apartments and public facilities that would connect the settlement of Maleh Adumim to the eastern borders of Jerusalem, Raanan Gissin, the prime minister's spokesman, said Monday.

The Israeli government gave initial approval to the expansion plan in 1999, and work on the project began last September. But construction was soon halted after inquiries by The Washington Post confirmed that it was being performed without required building permits and in violation of Maleh Adumim's master development plan.

Gissin said the plan was formally approved by the government after "some changes in location, not in the overall plan." He said the expansion was "for strategic importance."

Palestinian officials denounced the project as a violation of the U.S.-backed "road map" peace plan and said it threatened to undermine future negotiations.

"If they carry out this scheme, they're going to be shutting the door for peace," said Saeb Erekat, the chief Palestinian negotiator, who accused Sharon of "abandoning negotiation and continuing the facts on the ground as the negotiation tools."

Later Monday, the Israeli military announced that Palestinian security forces had been given authority over the West Bank town of Tulkarm and nearby villages as of 8 p.m. A military spokeswoman said the roadblock separating the town from the villages would be removed Tuesday morning. Israeli forces will continue to control the Tulkarm gate in the barrier built by Israel to wall off the West Bank, the spokeswoman said.

Tulkarm is the second of five West Bank towns where Israeli officials have said they would allow Palestinian police to resume authority after nearly three years of occupation or checkpoint controls by Israeli forces. Israel allowed Palestinian police to take control of Jericho last Wednesday.

The expansion of Maleh Adumim -- the West Bank's largest Jewish settlement with 30,000 residents -- is part of an Israeli government plan known as E-1, which anti-settlement activists have called the final step in sealing off Palestinians living in the West Bank from north and east Jerusalem. The development is also part of a plan to cordon off Jerusalem's Old City and its disputed holy sites.

The final status of Jerusalem and access to its holy sites are among the most contentious issues dividing Palestinians and Israelis, who both claim the city as their capital. U.S. officials, including President Bush, have said the final status of Jerusalem should be determined by negotiations between the two parties.

In Washington on Monday, State Department spokesman Richard Boucher told reporters that he had no information regarding Sharon's move. However, he said the road map peace plan "calls for an end to settlement activity and action against terrorist infrastructure. Those are important commitments that both sides have made and that we look forward to both sides following through on."

But Gissin, Sharon's spokesman, cited a letter delivered to Sharon by Bush last April to buttress Israel's argument that the expansion was legitimate.

Bush said "new realities on the ground, including already existing major Israeli population centers" -- a reference to major settlements -- would likely preclude "a full and complete return to the armistice lines of 1949" -- the Green Line separating Israel from the West Bank.

The approval of the Maleh Adumim expansion was granted barely two weeks after a government-sanctioned report accused Israel of funding and building Jewish settlement outposts across the West Bank in violation of its own laws and international mandates.

Gissin said the expansion of Maleh Adumim, which he said was initially approved five years ago, had "nothing to do with outposts," adding, "Everything was done there with the approval of every Israeli government and in accordance with the law."

Last summer, construction crews began leveling a space the size of four football fields on a hillside just outside Jerusalem for a new police station. After an inquiry by The Post, Israel's highest development authority in the West Bank, the Supreme Planning Council, stopped the project on Sept. 13 because it was started without building permits or approved plans and "violated the laws of planning and construction," according to Lt. Talya Somech of the Israeli army, who serves as a spokeswoman for the military in the West Bank.

"

Cheney Joins the Social Security Campaign (washingtonpost.com)

The pitch: personal Social Security accounts as a safe and smart way to shore up the 70-year-old retirement program.

The result: Strike two... One more and you are out!!!

Independent Sector | Public Affairs

Accountant Jokes

"What's the definition of an accountant?
Someone who solves a problem you didn't know you had in a way you don't understand.

What's the definition of a good tax accountant?
Someone who has a loophole named after him.

When does a person decide to become an accountant?
When he realises he doesn't have the charisma to succeed as an undertaker.

What does an accountant use for birth control?
His personality.

What's an extroverted accountant?
One who looks at your shoes while he's talking to you instead of his own.

What's an auditor?
Someone who arrives after the battle and bayonets all the wounded.

Why did the auditor cross the road?
Because he looked in the file and that's what they did last year.

There are three kinds of accountants in the world.
Those who can count and those who can't.

How do you drive an accountant completely insane?
Tie him to a chair, stand in front of him and fold up a road map the wrong way.

What do accountants suffer from that ordinary people don't?
Depreciation.

Q: When does a person decide to become an accountant?A: When he realizes he doesn't have the charisma to succeed as an undertaker.

Q: How do you drive an accountant completely insane?A: Tie him to a chair, stand in front of him and fold up a road map the wrong way.

Q: What does an accountant use for birth control?A: His personality.

Q: What's the most wicked thing a group of young accountants can do?A: Go into town and gang-audit someone.

Q: What's an extroverted accountant?A: One who looks at your shoes while he's talking to you instead of his own.

Q: There are three kinds of accountants in the world.A: Those who can count and those who can't.

A fellow is walking into a hospital and sees two doctors down on their hands and knees in one of the flower beds. He goes over and says, "Can I help? Have you lost something?" "No," says one of the doctors. "We're about to do a heart transplant on an accountant and we're looking for a suitable stone."

An accountant is someone who knows the cost of everything and the value of nothing.

An accountant is having a hard time sleeping and goes to see his doctor.
"Doctor, I just can't get to sleep at night."
"Have you tried counting sheep?"
"That's the problem - I make a mistake and then spend three hours trying to find it."

Did you hear about the constipated accountant? He couldn't budget so he had to work it out with a pencil and paper.

A fellow walks into a hospital and sees two doctors down on their hands and knees in one of the flower beds. He goes over and says, "Can I help? Have you lost something? " "No," says one of the doctors. "We're about to do a heart transplant on an accountant and we're looking for a suitable stone."

Q: Why are they putting the accountants at the bottom of the ocean? A: They found out that deep down they're really not so bad.

Sitting in a compartment on a train were the tooth fairy, an expensive accountant and a cheap accountant. On a table between them was placed a briefcase full of money. Suddenly the train entered a tunnel and everything went dark. When the train exited the tunnel and the light returned, the briefcase was gone. Who took the briefcase?... Well, it's obvious really. It had to be the expensive accountant as there's no such thing as the tooth fairy or a cheap accountant!

The doctor comes to see his heart transplant patient."This is good news. It is very unusual, but we have two donors to choose from for your new heart."The patient is pleased. He asks, "What were their jobs?""One was a teacher and the other was an accountant.""I'll take the accountant's heart," says the patient. "I want one that hasn't been used."

A lost balloonist lands in a random field and asks a man out walking his dog "Where am I?" The man replies "you are three feet in front of me in the middle of a field" "You must be an accountant!" retorts the balloonist "How did you know that?" the man asks incredulously "Easy. What you just told me is 100% accurate but absolutely useless!"

Q: Who was the world's first accountant? A: Adam. He turned a leaf and made an entry!

Q: What is the difference between a tragedy and a catastrophe? A: A tragedy is a shipful of accountants going down in a storm.... A catastrophe is when they can all swim!

Q: What do you call 500 accountants at the bottom of the ocean? A: A good start. Q: How do you save a drowning accountant? A: Take your foot off their head.

Q: What's the difference between an accountant and a vampire? A: A vampire only sucks blood at night. What is the definition of an accountant?Someone who solves a problem you did not know you had in a way you don't understand.How many accountants does it take to change a light bulb? How much money do you have?

What is the definition of a good tax accountant?Someone who has a loophole named after him.

When does a person decide to become an accountant?When he realizes he doesn't have the charisma to succeed as an undertaker.

What does an accountant use for birth control?His personality.

What's an extroverted accountant?One who looks at your shoes while he is talking to you instead of his own.

What is an auditor?Someone who arrives after the battle and bayonets the wounded.

Why did the auditor cross the road?Because he looked in the file and that's what they did last year.

How do you drive an accountant completely insane?Tie him to a chair, stand in front of him and fold a road map the wrong way.

What do accountants suffer from that ordinary people don't?Depreciation.

If an accountant's wife cannot sleep what does she say?"Darling, tell me about your work."

When the accountant laughs loud?When some one asks for a raise.

A businessman tells his friend that his company is looking for a new accountant.His friend asks, "Didn't your company hire a new accountant a few weeks ago?"The businessman replies, "That's the accountant we're looking for."

An accountant is having a hard time sleeping and goes to see his doctor."Doctor, I just can't get to sleep at night.""Have you tried counting sheep?""That's the problem - I make a mistake and then spend three hours trying to find it."

The New York Times > Opinion > Editorial: Mr. Bush's Stealthy Tax Increase: "Mr. Bush's Stealthy Tax Increase

President Bush is presiding over a big middle-class tax hike.

As recently as 2000, only about one million taxpayers owed the alternative minimum tax, created by a provision in the federal tax code that is supposed to prevent multimillionaires from using loopholes to avoid paying their fair share. But by the time Americans file their 2005 taxes, some 3 million taxpayers will owe the alternative tax and by 2010, nearly 30 million taxpayers will be hit - among them, a staggering 94 percent of married filers who have children and make $75,000 to $100,000.

Big families in high-tax states - New York, New Jersey, California and Massachusetts - will bear the heaviest burden, largely because the alternative tax increasingly disallows write-offs for dependents, state income taxes and local property taxes. On average, by 2010, people who make under $100,000 and owe the alternative tax will pay an additional $1,321 in federal income taxes, while alternative tax payers who make between $100,000 and $200,000 will owe an additional $2,592.

Meanwhile, and most outrageous, only 35 percent of taxpayers who earn $1 million or more will owe the alternative tax.
....
Why does the alternative tax increasingly afflict middle-rung taxpayers for whom it was never intended, while largely ignoring the highest-end taxpayers it is meant for?

First, the alternative tax is not adjusted for inflation, so over time, more and more middle-income taxpayers find themselves owing it.

Second, and crucially important, is the interplay of the alternative tax and Mr. Bush's first-term tax cuts. When the tax cuts were enacted, no long-term corresponding changes were made to the alternative tax system - even though the administration was well aware that was a recipe for disaster. Not only will many families that thought they were in for lower income taxes wind up feeling shortchanged, some will find that the Bush tax cuts have done nothing at all to cut their taxes.

Here's why: The alternative tax applies to people whose income tax bills are low relative to their income. So as tax cuts reduce the liability on a filer's Form 1040, the alternative tax kicks in. In effect, it claws back all or part of the supposed savings from the Bush tax cuts. By 2010, the Bush tax cuts alone will cause an additional 17 million taxpayers to owe the alternative tax. By 2014, assuming the Bush tax cuts are made permanent, 40 million taxpayers will owe the alternative tax, nearly half of whom would never have faced it but for the tax cuts.

Meanwhile, the people who should be paying the alternative tax do not. Mr. Bush's administration, more than any other, has bestowed tax breaks on wealthy investors in the form of superlow rates on capital gains and dividends. But the alternative tax system - which regards deductions for property taxes or state income taxes as a kind of tax shelter - does not recognize this preferential treatment of investment income. That is a huge loophole. The alternative tax, whose very purpose is to prevent excessive sheltering, ignores the biggest tax breaks of all: special, low rates on capital gains and dividends that allow investors to avoid paying tens of billions of dollars in taxes every year.

Ever since the first round of Bush tax cuts were enacted, Congress has passed temporary relief measures to keep most middle-income taxpayers from owing the alternative tax, but the problem is becoming too big, too fast, for stopgaps to keep working. Mr. Bush, for his part, says that he wants to shield the middle class from the alternative tax and that his tax reform commission will recommend a solution when it makes its report in July.
•
But Mr. Bush needs the alternative tax - he relies on its projected revenue to mask the debilitating cost of making his tax cuts permanent. Congressional estimates say that extending them permanently will cost $281 billion in 2014. But that estimate assumes that nothing will be done to prevent the alternative tax from further burdening the middle class. If the middle class is fully protected, the cost of extending the tax cuts will mushroom to $356 billion - 27 percent higher than the official estimate. The federal budget deficit would explode.

The obvious answer is to restore the alternative tax to its true antisheltering purpose, by making inflation adjustments that will exempt the middle class once and for all and by fully taxing capital gains and dividends under the alternative system. But Congress and the administration are currently heading in precisely the wrong direction. The Bush tax breaks for investment income are scheduled to expire in 2008, but both the president and Congressional leaders are calling for extending them, at least through 2010, while proposing no corresponding long-term change in the alternative tax.
•
Bush administration officials and their antitax allies seem to believe that if taxpayers become angry enough at having to pay the alternative tax, they will throw their support behind any tax reform plan the administration puts forth. That is fomenting a crisis in order to appear to solve it. Is it too much to ask not to put the country through that kind of cynical exercise yet again?"

Top Ten Things That Cause AMT Liability: "Top Ten Things that Cause
AMT Liability

An overview of some of the things that may cause you to pay alternative minimum tax (AMT).

This page provides a list of items that can cause (or contribute to) liability under the alternative minimum tax. The list isn't complete � there are other items that can contribute to AMT liability. Based on our experience, the items described below are likely to affect more people than other items. For a complete list, see Form 6251, Alternative Minimum Tax � Individuals and the instructions for that form. By the way, if you count more than 10 items below, just consider it a bonus.

Exemptions
Believe it or not, exemptions contribute to AMT liability. The exemptions you claim for yourself, your spouse and your dependents are not allowed when calculating alternative minimum tax. It's pretty rare (though not impossible) to see a tax return where someone had to pay AMT solely because of their exemptions, but the more exemptions you claim, the more likely it is that you'll have AMT liability when all is said and done.

Standard Deduction
Some 70% of American taxpayers claim the standard deduction (rather than itemizing). The standard deduction isn't allowed under the AMT. Usually this isn't a problem because the AMT generally hits people with higher incomes, and these people are more likely to claim itemized deductions. Yet it's worth noting that a deduction that's so widely used can contribute to AMT liability.

State and Local Taxes
If you itemize, there's a good chance you claim a deduction for state and local tax, including property tax and state income tax. For 2004 and 2005, you can claim a deduction for sales tax if you don't claim a deduction for state or local income tax. These deductions are not allowed under the AMT. If you live in a place where state and local taxes are high, you're more likely to be subject to the alternative minimum tax.

Interest on Second Mortgages
The AMT allows a deduction for interest on mortgage borrowings used to buy, build or improve your home. If you borrowed against your home for some other purpose, the interest deduction isn't allowed under the alternative minimum tax.

Medical Expenses
The AMT allows a medical expense deduction, but it's more limited than the deduction under the regular income tax. If you claim an itemized deduction for medical expenses, part or all of it will be disallowed when you calculate your alternative minimum tax.

Miscellaneous Itemized Deductions
Certain itemized deductions are available if your total in this general category is more than 2% of your adjusted gross income. Among the items here are unreimbursed employee expenses, tax preparation fees, and many investment expenses. You can't deduct these items under the AMT, though. If you claim a large number in this area, you could end up paying alternative minimum tax.

Various Credits
Many of the credits that are allowed when you calculate your regular income tax aren't allowed when you calculate your AMT. The more credits you claim, the more likely it is that you'll end up paying alternative minimum tax. Fortunately, Congress has extended relief for the "personal credits" in recent years.

Incentive Stock Options
Generally you don't report anything on your regular income tax at the time you exercise an incentive stock option. But you have to report income for purposes of the AMT. Exercising a large incentive stock option is almost certain to cause you to pay alternative minimum tax.

Long-Term Capital Gains
Long-term capital gains receive the same preferential rate under the AMT as they do under the regular income tax. In theory, they shouldn't cause you to pay alternative minimum tax. In practice, it's possible to be stuck with AMT liability because of a large capital gain. The reasons are a little complicated, but mainly have to do with the fact that a large capital gain reduces or eliminates the AMT exemption amount, which is designed to protect low-income taxpayers from having to pay alternative minimum tax.

Tax-Exempt Interest
Interest that's exempt from the regular income tax may or may not be exempt from the AMT. It depends on complicated rules that are fully understood only by bond lawyers. Bonds that aren't exempt from AMT pay a slightly higher rate of interest to compensate for the fact that they aren't fully tax-exempt. If you invest in bonds that aren't exempt under the alternative minimum tax, you're a candidate for AMT liability.
Many mutual funds that provide exempt interest invest at least some of their money in bonds that aren't exempt under the AMT, to get a higher rate of interest. Their annual statement tells you how much of the exempt interest dividend you received during the year is taxable under the alternative minimum tax.

Tax Shelters
The Tax Reform Act of 1986 severely curtailed the ability to reduce income tax through tax shelters. Yet there are still some legitimate ways of reducing tax liability through investments in certain types of partnership or limited liability company arrangements involving such activities as oil and gas drilling. The AMT provides reduced tax benefits for these activities. You should always explore the alternative minimum tax consequences (among other things) before investing in a tax shelter.

NPR : The Alternative Minimum Tax and You:


You can listen to Sandra Block on NPR-- this tax is a big problem...

"The Alternative Minimum Tax was originally designed to ensure that ultra-wealthy taxpayers don't evade taxes through excessive deductions. But now it is hitting a growing number of middle-income families. And with a rate that hovers from 26 to 28 percent, the AMT can severely alter a tax return.

While the tax itself is fairly obscure to the American public, some of its rules -- and how it works -- are even murkier to many taxpayers. It remains to be seen what Congress and the IRS can do to improve the program. NPR's Steve Inskeep talks with Sandra Block, personal finance columnist for USA Today."

Legal Documents reL Andersen and Supreme Court...

Arthur Andersen
• Defendant's opening brief 2/22/05
• Asking the Supreme Court to weigh in 1/7/05
• Replying to prosecutors 1/05

Prosecutors
• Asking the court not hear the case 1/07/05

Andersen's backers
• U.S. Chamber of Commerce 1/07/05
• The National Association of Criminal Defense Lawyers 1/10/05

Lower courts
• Appeals court upholds conviction 6/16/04.
• Trial judge's controversial charge to jury 6/5/02.

---

Other:
• Chronicle archive of Andersen coverage
• Chronicle archive of Enron coverage

Forbes.com: Arthur Andersen Conviction Before U.S. Supreme Court: "NEW YORK - The U.S. Supreme Court will consider overturning Arthur Andersen's conviction for destroying and altering documents related to Enron's finances.

The justices will decide whether the jury instructions at trial were too vague and broad for jurors to determine what constituted obstruction of justice. Andersen was charged with obstruction of justice relating to the destruction of Enron documents in late 2001 as the U.S. Securities and Exchange Commission began investigating the energy giant's finances"

HoustonChronicle.com - Supreme Court to hear Andersen case April 27: "The key questions before the court are whether the jury was given the proper understanding of whether employees who asked for document destruction were 'corrupt persuaders,' whether employees had to know they were committing a crime and how far along the SEC investigation had to be to trigger a crime. "

spring cleaning...

Here the answer to the spring clean up-- an industrial shredder that eats everything.

Greenspan Calls for Simpler Tax Code

Calling the existing U.S. tax code overly complex with an "overlapping web of deductions and exemptions, " Federal Reserve Chairman Alan Greenspan suggested a consumption tax could spur more personal savings and economic growth.

 

Greenspan spoke Thursday before an advisory panel on tax reform appointed by President Bush. He referred to the last tax code overhaul in 1986. "Changes since the 1986 act have been largely incremental without the appropriate all-encompassing context that broad reform brings to the table," Greenspan told the group, according to The New York Times. "It is perhaps inevitable that, every couple of decades, drift needs to be addressed and reversed."

 

He said many economists would support a consumption tax, "particularly if one were designing a tax system from scratch." Since the United States is not starting from scratch, he said, enacting a consumption tax "raises a challenging set of transition issues.” He noted taxpayers have long planned their financial future based on the existing rules.

 

"Don't try for purity," Greenspan said, suggesting that some combination of a consumption tax and other levies might be appropriate. A consumption tax, which would be based on spending, not earnings, may encourage Americans to save more money, he said.

 

Democrats have expressed concern that a consumption tax, such as a sales tax, is regressive, hurting the poor. "But I would say let's go to the table," said U.S. Rep. Nancy Pelosi (D-Calif.), the House Democratic leader. "Democrats stand ready to sit down with the president to talk about a simplification and fairness in our tax code."

 

The panel, led by ex-senators Connie Mack III, a Florida Republican and John B. Breaux, a Democrat from Louisiana, was given six months to come up with a reform proposal.

 

President Bush's chief spokesman would not comment on how Bush feels about a consumption tax. But he did say, “"Our tax code is a complicated mess."

 

 

'Gates' Ignited Tourism Boom, U.S. Fed Finds - March 10, 2005 - The New York Sun: "'Gates' Ignited Tourism Boom, U.S. Fed Finds "

The Federal Reserve reported yesterday that tourism in New York City "has been exceptionally strong in early 2005," and it attributed much of the spike to "The Gates."

Metropolitan Museum of Art's visitors during "The Gates" nearly doubled from the comparable 16-day period last year, to 350,000....

The economic benefit to the Met is included in the $254 million Mayor Bloomberg estimated "The Gates" brought to New York.... Critics say "the methodology behind that estimate, and whether is excluded increased economic activity unrelated to "The Gates," remains unclear."

The initial totals indicated that more than 4 million visitors came to Central Park to see 26-miles of Christo and Jeanne-Claude's iron and saffron archways in the park. The full economic impact of "The Gates" was felt not only in areas surrounding Central Park, but in hotels, restaurants, and cultural institutions...

The Central Park Conservancy's attendance count found a substantial increase from the approximately 750,000 visits the park usually received during the same two-week period in a typical February and about 1.5 million visitors for "The Gates" were from out of town - an estimated 300,000 of those were international visitors. Usually 13% of tourists are from outside the country, but during the Gates, the international share increased to almost 20%.

"The Gates" drew visitors during what is traditionally the slowest month for New York City's tourism industry.

Yes. We can trust the Fed's study because it was conducted before, and is independent of, the city's and did not project specific numbers. Coming up with that kind of detailed amount, the Fed economist said, is an "imprecise science."

CBS News | GAO Chief: No SS Crisis - Now | March 9

Social Security "does not face an immediate crisis," according to David Walker, the head of the Government Accountability Office, but it does face a long-term financing problem "and it would be prudent to address it sooner rather than later."

Walker also said the impact that private accounts would have on Social Security would depend entirely on how they are funded and what other steps are taken — such as pension-benefit cuts or tax increases — to shore up the system’s long-term solvency.

Walker said that private accounts would not shore up the system if they were financed, or “carved out,” from current Social Security taxes, as Bush proposes, and accompanied by no other changes. By themselves, Walker said, such private accounts would “exacerbate” the system’s problems and accelerate the date for when it would start spending more on pension benefits than it receives in annual revenue.

For the full text of Walker's written testimony, go to www.gao.gov.

I continue to think the system can be tweaked to extend its solvency and that investment accounts are more risky than a guaranteed government benefit....

The hills are alive... Climb every mountain. Mountain after mountain after mountan. America the beautiful. 

Necrophilia among ducks -- and other amusing stories

Necrophilia among ducks ruffles research feathers

one in 10 of mallard couples are homosexual…

Also, man is in the hospital after being shot by his cat.

Community relieved that man on a "public masturbation spree" has finally been captured.

You can’t make this stuff up!

Banerje writes about Bankruptcy's New Chapter

In the blogs today, people across the political spectrum are highly critical of a new bill that will make it very hard to file for bankruptcy. Others are gushing about a British tailor who blogs about his job, and posting about homosexual duck necrophilia and shredders that eat everything.

Bankruptcy's New Chapter: On Tuesday, the Senate "assured final passage" for a bill that would make it much harder for families to file for bankruptcy, and "give lenders and businesses new legal tools for recovering debts." Banks and credit card companies have been lobbying for such measures since 1989.

The conservative Blue Dog Democrats support the changes because "allowing bankruptcy to become a financial planning tool rather than a last resort forces many of our constituents who pay their debts to pay for those who do not." Commenting on the blog Volokh Conspiracy, Todd Zywicki beams, "In an era of Washington partisanship, one would be hard-pressed to find many major pieces of legislation with such broad-based bipartisan support." (Read his longer defense of changes in bankruptcy law here.)

Bipartisan hatred seems much more prevalent in the blogosphere. "Liberals don't like it. Moderate liberals don't like it….Conservatives aren't really very excited about it. And it's sponsored by the credit card industry, which is roughly the 21st century equivalent of being sponsored by the German Bund. So how is it getting such wide support?" asks The Washington Monthly's Kevin Drum, who demystified and lambasted the bill in a previous post.

Libertarian high-priest InstaPundit writes, "[P]eople should have to face the consequences of their bad decisions -- but that includes their bad lending decisions, especially when the lending is, fundamentally, dishonest." He links to this letter to the Senate from a group of non-partisan bankruptcy law professors. They write, "The bill is deeply flawed, and will harm small businesses, the elderly, and families with children. We hope the Senate will not act on it."

Writing in a bankruptcy "special edition" of wonk staple Talking Points Memo, Harvard law professor Elizabeth Warren excoriates senators who voted for the bill. Liberal Sleepykid picks up this Forbes article which says that "MBNA, the largest independent credit-card issuer in the U.S." in 2002, "was also the single largest donor to the presidential campaign of George W. Bush, giving over $240,000." Democratic stalwart Daily Kos features a post called "How Bankruptcy Saved My Life" by a blogger who had health insurance, but went bankrupt after incurring heavy medical bills. An anti-bill commentator on Crooked Timber writes, "[P]eople have to stop repeating the 'half of all bankruptcies are caused by medical bills' meme just because they want it to be true" and links to this study, which purports to debunk the claim.

Read more about the bill here.

Banerje writes about Bankruptcy's New Chapter

In the blogs today, people across the political spectrum are highly critical of a new bill that will make it very hard to file for bankruptcy. Others are gushing about a British tailor who blogs about his job, and posting about homosexual duck necrophilia and shredders that eat everything.

Bankruptcy's New Chapter: On Tuesday, the Senate "assured final passage" for a bill that would make it much harder for families to file for bankruptcy, and "give lenders and businesses new legal tools for recovering debts." Banks and credit card companies have been lobbying for such measures since 1989.

The conservative Blue Dog Democrats support the changes because "allowing bankruptcy to become a financial planning tool rather than a last resort forces many of our constituents who pay their debts to pay for those who do not." Commenting on the blog Volokh Conspiracy, Todd Zywicki beams, "In an era of Washington partisanship, one would be hard-pressed to find many major pieces of legislation with such broad-based bipartisan support." (Read his longer defense of changes in bankruptcy law here.)

Bipartisan hatred seems much more prevalent in the blogosphere. "Liberals don't like it. Moderate liberals don't like it….Conservatives aren't really very excited about it. And it's sponsored by the credit card industry, which is roughly the 21st century equivalent of being sponsored by the German Bund. So how is it getting such wide support?" asks The Washington Monthly's Kevin Drum, who demystified and lambasted the bill in a previous post.

Libertarian high-priest InstaPundit writes, "[P]eople should have to face the consequences of their bad decisions -- but that includes their bad lending decisions, especially when the lending is, fundamentally, dishonest." He links to this letter to the Senate from a group of non-partisan bankruptcy law professors. They write, "The bill is deeply flawed, and will harm small businesses, the elderly, and families with children. We hope the Senate will not act on it."

Writing in a bankruptcy "special edition" of wonk staple Talking Points Memo, Harvard law professor Elizabeth Warren excoriates senators who voted for the bill. Liberal Sleepykid picks up this Forbes article which says that "MBNA, the largest independent credit-card issuer in the U.S." in 2002, "was also the single largest donor to the presidential campaign of George W. Bush, giving over $240,000." Democratic stalwart Daily Kos features a post called "How Bankruptcy Saved My Life" by a blogger who had health insurance, but went bankrupt after incurring heavy medical bills. An anti-bill commentator on Crooked Timber writes, "[P]eople have to stop repeating the 'half of all bankruptcies are caused by medical bills' meme just because they want it to be true" and links to this study, which purports to debunk the claim.

Read more about the bill here.

This is a beauty... I love to see mountains behind mountains, behind mountains. Climb every mountain.  

Are Bloggers Journalists?: "Are Bloggers Journalists?
A judge didn't think so, thus his ruling that three blogs must reveal their sources. The decision has sparked a debate and may chill such sites"

Should bloggers be held to the same rules as Journalists?? One blogger has great ideas on the topic.

The Christan Science Monitor has an article too. The article has a vote and 57% of the 488 readers said that yes, bloggers are journalists, while 43% said no-- no editor, no publisher, no staff and a single point of view...

"Sometimes a blog is just a blog" according to Microcontent Mews, which is a webblong with information for webblogs, and personal publishing. The posting contains a useful code of ethics for Bloggers:

A Proposed Blogging Code of Ethics

1. Amateur Journalists are inherently biased. What's crucial is not pure objectivity, but full disclosure. It is the responsibility of Amateur Journalists to fully disclose their agenda and background somewhere on their site. If a particular aspect of their background is especially relevant to a particular subject, that bias should be highlighted in any article on that subject.

2. Caveats are critical online. Accuracy is still important, but sometimes it's OK to print information that you haven't confirmed with multiple sources. Just make sure that you label it as such. Never ever publish information that you know not to be true. And if there's any doubt as to the accuracy of the information, caveat it clearly so that it's clear.

3. Blogging doesn't magically make you immune from Libel and Slander. If your article isn't clearly marked as opinion, you should give the subject of your piece a chance to respond in print. This means dropping them an email or picking up the phone.

I like it. He has been thinking and workign in this space for a few years, so let's hope he knows and others listen.

Wesiberg: Anyone who says she is a Journalist is one....
Slate's editor Jacob Weisberg writes: "Those who advocate a special legal privilege for journalists must accept that anyone who thinks he's a journalist is a journalist, and figure out how to protect the activity rather than a defined group of people. Properly understood, journalism has never been simply a trade or a profession. In a democracy like ours, it's a basic right."

Poytner online has two valid articles: What Journalists Can Learn From Bloggers and What Bloggers Can Learn From Journalists That is also where I found another topic: A Bloggers' Code of Ethics... Rebecca Blood actually wrote on this topic in her book, In The Weblog Handbook http://www.rebeccablood.net/handbook/index.html I have not seen the book, but saw her post and wow, right on. http://www.rebeccablood.net/handbook/excerpts/weblog_ethics.html

MSNBC - Dan Rather, leaving by the high road: after up 24 years at 'CBS Evening News' with his final telecast tonight.

Dan Rather Weighs Anchor

The end of Rather's run at the Evening News does not mean retirement. He will remain on as a correspondent for both editions of "60 Minutes."

I personally will be sorry to see him go. I am not a big fan of network news... If I watched, I watched channel 4 -- NBC. I did catch CBS -- becuase I watch 60 minutes and Sunday Morning.

Rather has seen so much history and has a feel for what is important. Dan was thre for all the important news for my adult life, just like Brokaw. I did see the the Guard story and was so impressed that CBS was running it before the elections.. It had so much controversary... it was electric and CBS had to do something and Dan had to do something.

Found this on the AARP Social Security Blog...

Before Taking a Position

The American Institute of Certified Public Accountants (AICPA) has recommended that policymakers and the public need to gain a clear understanding of the issues involved in reforming Social Security before taking a position on a possible solution to the funding shortfall. Important questions are raised about evaluating personal accounts proposals:

• To what degree, and over what period, would benefits under the existing system remain in place?
• Will there be a safety net for low-income beneficiaries?
• How much choice will individuals have about: Participating? Investments? Distributions?
• Will benefit payments be subject to tax? If so, at what rate?
• What will the plan “cost” beneficiaries in lost traditional benefits as a trade-off for a personal account?

Read the executive summary of the AICPA recommendations for more details.

“W” has advocated a swift, some might say, imprudent move to resolve the Social Security issue. The aicpa says—take a breath before talking. The topic is a complicated one, but I want to urge you all to take in interest in it. Some of my questions: (1) Who will provide answers? (2) What is the President’s plan? (3) What about cutting benefits? Because we can’t find extra funds from outside the social security program so let’s think about cost savings from inside the program. (4) What about stop spending money like a child who has just cracked open his first piggy bank?

Ex-Aide Questions Bush Vow to Back Faith-Based Efforts (washingtonpost.com): "A former White House official said yesterday that President Bush has failed to deliver on his promise to help religious groups serve the poor, the homeless and drug addicts because the administration lacks a genuine commitment to its 'compassionate conservative' agenda. "

Imagine that... What does this have to do with personal finance. We'll see. Everything!

Let me get this straight: Felons, illegal aliens, and the mentally ill can't purchase guns, but terror suspects can? FBI Director Robert Mueller said, "Inclusion on a terror watch list is not a stand-alone factor that would prohibit a person from receiving or possessing a firearm."

Scary, isn't it? According to the general accounting office, people on the U.S. terror watch list tried to buy guns 58 times last year— and 47 of those sales were approved. Not only are they getting guns, but the purchase records are being erased.

Currently, the FBI purges those documents 24-hours after the sale.

But Sen. Frank Lautenberg wants tougher restrictions and has introduced legislation to block destruction of those records.

And while the gun industry is weary of new restrictions, maybe it's time for Congress to connect the dots. Not all foes are foreign, after all.

I don't know if this a real place... Looks right! People should pick up and dogs should bark... aughhh.  

Go for a walk, clear your head, and have a cup of hot chocolate.

This item did not sell. Found on ebay and would have liked to see it, but not paying $400 or more...  

This is a cute picture... We are worried.. he is NOT. The Nation cover says it to me! We will worry for 4 more years...

Saw some cool t-shirts:

To Do List:
X Afganistan
X Iraq
__Iran
__Blue states
__Canada

Okay, I give up... It's Nucular

Blue State University
We Put Liberal in Liberal Arts..

Red State University
Where the Right People Go...

Salon.com | Beware the coming propaganda juggernaut: "Beware the coming propaganda juggernaut

The public's money is already being spent to sell privatization -- one P.R. firm is being paid $1.8 million by the Social Security Administration."

Conason asks: "Will [the goverment] ... misuse public money -- including, ironically, the proceeds of Social Security taxes -- for its partisan deconstruction project?" Yes-- this is for sure the case.

Supporters of privatization are building up the "crisis" to the point of no return causing fears of "bankruptcy" -- we know that Bush's Brains (aka, Karl Rove) and friends are "raiding the public Treasury -- and using Americans' own payroll taxes to undermine their retirement security."

There should be a law against the outlaws, but they run the government!

Salon.com | Bush's Social Security mess: "Bush's Social Security mess

President Bush is smearing lipstick on his Social Security pig, but the public still isn't buying it. Now it's time for Democrats to step up with their own plan."

Bush has yet to outline a complete plan... but whatever it is.. it is sure to dismantle the promise we have all come to expect. James Carville might have done some reserach but let's see some positive proposal that will fix it so that we can put this topic off the agenda for once and for all.

U.S. Copyright Office - About Us ( Welcome From The Register of Copyrights ): "Welcome to the U.S. Copyright Office. We in the Copyright Office are proud to be part of a long tradition of promoting progress of the arts and protection for the works of authors."

I will have to look at this site... I will be setting up a blog in accordance with the copyright law...

This post contains some music.. listen people!!

And I can't understand why I like this song. (6.7 MB) It's offensive, but not.

4.5 MB

Endless Column (6.9 MB)

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OpinionJournal - Featured Article

The Ownership Card
The best argument for Social Security reform has hardly been tried.

No one ever said reforming Social Security would be easy, certainly not President Bush. But even he may be frustrated at how difficult the effort is proving to be, what with the Democratic leadership and AARP refusing even to discuss personal accounts, the media spreading anxiety, and some Republicans on Capitol Hill searching for the political exits.

The White House is pledging renewed efforts, but in order to succeed it is going to have to change its sales pitch. Part of the problem is that Mr. Bush and his spokesmen have been promoting reform more as a kind of national forced march than as a great new opportunity for individuals to build and control their own retirement nest eggs.

Donning their green eyeshades in the traditional GOP fashion, they've talked about Social Security "solvency," "transition costs," "trust funds" and other accounting abstractions, all in all giving reform the appeal of Marine boot camp without the expensive haircut. "Do your fiscal pushups" will never be enough to transcend the fear-and-loathing thrown up by opponents.

The only political trump that reformers have, and the one the White House has to make its main theme, is ownership. Not just an "ownership society," in the good phrase Mr. Bush often uses, but ownership of your own payroll taxes to build your own retirement assets. This is the nub of the entire reform debate, because it gets to the fundamental issue of who controls the money that Americans pay into the Social Security system.

As it stands, millions of Americans still believe in the fiction that their payroll taxes are being squirreled away in a savings account in their name somewhere in the U.S. Treasury. This is largely because politicians of both parties have spread this fantasy over the years, the better to be able to continue to spend that loot themselves to buy votes for the next election. The undeniable truth is that Mr. Bush's reform is the only idea on the table that would create such accounts, complete with ownership rights written into law.

Americans need to understand that as of now they have no such property right. While politicians have made promises to pay future benefits at gradually rising levels, the Supreme Court's 1960 Fleming v. Nestor decision makes clear that such promises are not an individual asset and that the taxes people pay today guarantee nothing at all down the road.

Meantime, tens of billions of dollars of payroll taxes in excess of current Social Security benefits continue to flow into the Treasury each year, only to be spent today on other things by the same politicians who claim that personal accounts are a "risky scheme." As if putting one's trust in politicians wasn't the riskiest scheme imaginable.
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As Federal Reserve Chairman Alan Greenspan told Congress yesterday in his most vigorous support yet for personal Social Security accounts, one of their virtues "is that money allocated to the personal accounts would no longer be available to fund other government activities." He added that "if existing promises need to changed, those changes should be made sooner rather than later." In other words, the longer Congress waits to reform Social Security, the more likely it is that the politicians will repudiate their benefit promises.
Another potent ownership theme is the right to pass savings on to one's heirs in a way that workers now cannot. An unmarried American who has worked for 40 years but dies tomorrow at age 60 will lose every dime of payroll tax he has paid over his entire career. A non-working spouse would receive a portion of her late husband's Social Security benefits, but if she dies early their children get nothing. With a personal account, a parent's payroll tax contributions would become part of an estate and could be passed along to children.
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Related to this ownership issue is how large these personal accounts are going to be. The Administration's proposal to limit the accounts to no more than four percentage points of the 12.4% payroll levy strikes us as too miserly. Senate Finance Committee Chairman Chuck Grassley is even more ungenerous, talking about two-percentage points or less.

Lower-wage workers in particular need to be offered the financial attraction of larger accounts, which would allow them to build up assets more quickly and in a way that won't seem trivial. They also need to feel their accounts will be large enough not to be eaten up by administrative expenses. The main political point is that Americans aren't going to overcome their normal skepticism toward change unless they come to believe that they themselves will be able to build large personal nest eggs. The larger the accounts, the better.

Only 30 days from the State of the Union address is too soon for Republicans to abandon the President's top second-term priority. But our sense so far is that many Americans are getting lost in the debate over federal accounting and solvency details. Reformers need to make clear that the main issue is who will own the payroll taxes that workers contribute to Social Security: The workers themselves, or politicians.