Tags: Kerry's | War | Against | Profit

Kerry's War Against Profit

Thursday, 14 October 2004 12:00 AM

This is unfortunate and may contribute to his politics demise this November and provide ominous foreshadowing for the Democratic Party. I went to the Kerry-Edwards website looking for Kerry’s solution. Social Security does not have its own header, it is not in the economy section; rather, it is under healthcare.

Kerry presents three “pillars” of his “approach to social security,” including growing the economy, restoring fiscal discipline and going forward in a bi-partisan fashion. That is not a plan, that’s a sound-bite. Next consider Kerry’s primary attack on the President’s set of principles for reforming Social Security; that it will provide a “windfall” for the financial services industry.

Kerry neglects to add that personal retirement accounts will provide accounts that individuals own and control, not to mention considerable wealth creation for all American workers enabling them to become stakeholders in the American Dream.

It seems Kerry would rather have American workers equally sharing the misery of meager social security “benefits” than benefiting from stock ownership and the power of compound interest if it would means that the company they hire to manage their investments might make a profit. Of course companies charged with investing those funds will make a profit; they are the professionals who will provide a service for which there must be some compensation. Do you care that your 401(k) fund manager draws a salary and makes a commission? John Kerry does. The idea that these companies will earn profits for providing financial services is true, but what is difficult to comprehend is why this is a problem. So what if some companies turn a profit, so long as their clients, the American worker, also turn profits off their investments; Profits that would not, could not, materialize under the current Social Security system or under Kerry’s non-plan. In the current system workers neither own nor control their Social Security payroll tax “contributions.” These taxes are not saved or invested, but, instead, pay for current retirees benefits.

If in a new system workers get a higher return on investment and those responsible for investing those funds also make a profit, where’s the beef?

John Kerry’s has elevated his class warfare rhetoric into a political “total war” against profit. Recently, Kerry also renewed his claims that the transition costs of turning to a “privatized” system would force the government to raise the retirement age by six months, cut Social Security benefits, or accept a 25% decrease in available funds. This is simply untrue. If Congress enacts the Ryan-Sununu plan, currently pending in Congress, transition deficits over the next twenty-four years would average $52 billion/year.

New public debt, interest included, would rise by a total of $1.83 trillion, and debt as a percentage of the GDP would actually decline from 38% to 29%.

After 2028, the system would begin running surpluses sufficient to pay down all new borrowing over the next fifteen years, leaving the net impact on the public debt at zero in less than 40 years—whereas the current Social Security system will begin running perpetual deficits in 2018 totally nearly $1.8 trillion by 2028 alone! Social Security reform will “cost” approximately $12 trillion no matter what we do because that is the present value of the unfunded liability of our current Social Security system.

The question is how we solve the problem. Two political entrepreneurs Rep. Paul Ryan, R-WI, and Sen. John Sununu, R-NH, have taken the first step. The Ryan-Sununu plan would:

The Kerry campaign has not so subtly adopted the tone of “Anyone but Bush,” which unfortunately translates to a lack of vision and a lack of concrete policies from Democrats.

Kerry’s distinct lack of a plan for Social Security is more than troubling, and his apparent war against profit would be absolutely devastating not just to financial markets, but to the economy as a whole.

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This is unfortunate and may contribute to his politics demise this November and provide ominous foreshadowing for the Democratic Party. I went to the Kerry-Edwards website looking for Kerry's solution.Social Security does not have its own header, it is not in...
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2004-00-14
Thursday, 14 October 2004 12:00 AM
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