CzyA's Big Head

America is like a healthy body and its resistance is threefold: its patriotism, its morality and its spiritual life. If we can undermine these three areas, America will collapse from within. -Stalin

Friday, January 21, 2005

W's in for the start of his next 2 years

In reality, George W. Bush has 2 years left in his presidency. His last two years he will be a lame duck. Why? After the mid-term congressional elections, the mandate of 2004's election will be over and people will begin making strides towards the 2008 election. This is why Bush is pushing his domestic agenda so early in his second term.

Social Security is the main focus of his domestic policy. Old people do like it because the feel as though they may lose current benefits. Its an understandable fear, but unfounded and here is why: if social security is not delt with now, my generation WILL cut those benefits in 20 years. Something has to be done with social security and there isn't an answer that will please anyone.

Here are a couple facts to consider. Back in 1968 my father had just started working for McDonnell Aircraft Company. He was in the finance area and read a report that stated that back at that time, someone that retired at age 62 drew pention for an average of 18 months. 65 as a retirement age was reached because the percentage of people that would draw social security, at that time, was a small pool and most would not draw for a long period of time. Forty years later, people are living well into their 70's and beyond at a much higher quality of life. Advances in health care has increased life span dramatically. This could not have been forcasted when the program was orginally designed. Using the same logic when Social Security was set up, people starting to work today should not be able to collect until 75 or 80. However, changing the age might actually cause 20-somethings to vote next time...not bloody likely...but.

What social security has done is the problem with most social welfare and many other projections: Ceteris Paribus. Ceteris Paribus is a term from latin often used in economics meaning "all things being equal" and also commonly known as: "If things continue...". We all know how well things remain equal. If they did remain equal, I'd be on my own private island after making a bucket load of gold by creating a Dot Com. I can remember it being stressed in my business statistics class that the longer a projection or forecast is made: the greater the margin of error. Any one else remember that USD 10 Billion surplus by 2010 the governement was supposed to have? The point is, anytime the government makes a project for more than about 12 months...chances are its not going to happen like they say it will.

Back to Social Security and what needs to be done. Personally, I'd prefer to see the money in my pocket that I could invest in a Roth IRA or 401K plan instead of the government's. Or a tax credit that you can use if you invest in your own retirement plan rather than the government's. The problem with most people is that if you just give them the money, they'll just spend it now instead of thinking about the future. Just look at consumer debt in this country (another topic for another day). However, I am all about personal freedoms and that people should take responsiblity for their own actions and mistakes instead of looking at the government. The government is not your father. Remeber that!


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