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Don't let anyone near your three legged stool!

Bush's proposed accounts differ substantially from the 19-year-old TSP. Moreover, they would be much more difficult to run than the TSP and have far higher administrative costs than the president and his supporters let on, some experts say.

"It's a non-starter," said Francis X. Cavanaugh, a designer of the TSP who from 1986 to 1994 was the first executive director of the Federal Retirement Thrift Investment Board, which administers the plan. "There's no way they can do this without an enormous federal subsidy. . . . This has to do with workability, no matter how one feels about it philosophically, and it's not workable."

For most federal employees, the TSP serves as one leg of a "three-legged stool" of retirement income; the other two are the traditional Social Security benefit and a government pension. But because many businesses no longer offer defined-benefit pensions, many employees in the private sector have only a two-legged stool -- their 401(k) plan plus Social Security.

The money that workers divert to Bush's personal accounts, plus 3 percent interest, would come out of their guaranteed Social Security benefit. So, in effect, the president would be shaving down one of the legs and hoping that a new one -- the individual account -- would grow at least enough to compensate for the loss.

"It's not really like TSP at all," said James Sauber, chairman of the Employee Thrift Advisory Council, a 15-member panel of representatives from federal labor and managerial organizations. "He's proposing to weaken one leg of the stool to fund another leg of the stool."

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When the conservative Bradley Foundation awarded a $250,000 prize to George Will last week, it raised some eyebrows at a time when Armstrong Williams, Maggie Gallagher, and Michael McManus have been criticized for accepting government money.

The foundation is a private entity, but it is reported to have ties to the Bush administration, and its president/CEO is a former Republican National Committee member.

The prize "sure has a strong stench of a payoff to yet another White House sycophant," said "Non Sequitur" cartoonist Wiley Miller, whose Universal Press Syndicate comic appears in 700-plus newspapers and includes political commentary. "Is this how they're going to get around direct payoffs, by pretending it's some sort of journalism award?"

[Neither] Will [nor] Bradley Foundation President/CEO Michael Grebe [returned] E&P phone calls asking for comment.

...


A number of journalism awards come with cash, but usually far less than $250,000. Pulitzer Prize winners, for instance, receive $10,000. Speaking of the Pulitzers, Will was quoted by The New York Sun as saying at the Feb. 16 Bradley ceremony in Washington, D.C.: "It's very fine to win the Pulitzer Prize. It's even better to receive the Bradley Prize."

The full name of the Milwaukee entity that gives the prize is the Lynde and Harry Bradley Foundation -- named after the brothers who founded, in 1903, what became the Allen-Bradley Company. When A-B was acquired by Rockwell International in 1985, a significant portion of the proceeds went to the foundation -- which had about $535 million in assets as of September 2003, according to a Newhouse News Service article that month.

The article said of the foundation: "Headed by a former Republican Party official [Grebe] and enjoying strong ties to the Bush administration, the foundation is credited with producing more than a decade of intellectual fuel for conservative lawmakers."

Another 2003 article, in the Milwaukee Journal Sentinel, said many of the neoconservatives who would later urge President Bush to invade Iraq had received funding from the Bradley Foundation.

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Leaving work to raise children even for just a few years sometime early in her career will put a woman at a disadvantage as compared to a male high school dropout who starts working early and is able to continue to work (even if the woman receives some usable college education.

Under the current system there are safeguards built in for women who takes some time off to care for the family or for minorities who may not be able to work full time from an early beginning. Curiously the program actually seems to favor white males who drop out of high school and start working early.

Minorities will find similar discrimination in the privatization program.

Cato Institute (conservative think tank) and backer of privatization points out the differences and EPI Senior Fellow William Spriggs analyzes their findings.

[The] privatization solution is not fair to today's working women who still take on the majority of child rearing and who have much lower employment rates than men, particularly in their twenties. Private accounts exacerbate earnings differences for workers who, for whatever reason, have spells of unemployment when they are young. This group includes women with children who are often either completely out of the labor force or working part time when their children are young. Workers with lower earnings at the outset of their career have significantly lower savings accumulated in their private account because of the power of compound interest.

For example, compare a male high school drop-out to a woman of the same age who stays in school and receives a diploma. The male high school drop-out starts working full time at age 16.3 When the woman finishes high school two year later, she gets married and stays at home with her two young children for their first six years. Between the ages of 24 and 28, she works part time, goes to school part time, and takes care of her children part time. At age 29, when both her children are in school for a full day and she has completed her associate's degree, she starts her first full-time job. Her earnings are slightly higher than the male high school drop-out's initial and current earnings, because, despite persistent labor force discrimination that maintains a pay gap between men and women, her additional education allows her to get a slightly higher status job.5 While the high school drop-out has stayed consistently employed throughout his life, at age 61, this female worker temporarily leaves the labor market to care for her ailing mother for one year, and then works part time thereafter.6 Both workers retire at age 65.

The figure below shows the Social Security benefits for both of these workers under three scenarios: (1) those benefits promised under current law; (2) those that can actually be paid if no changes are made to the current system (based on the Congressional Budget Office's 80% assumption); and (3) those implied by the Bush Administration's Plan 2, which includes both Social Security benefits and income earned from private accounts.<br />

Even though the female high school graduate started out with zero earnings and had very low earnings for the first 11 years when she juggled part-time work, school, and child rearing, under Social Security today, she would receive a higher benefit than the male high school drop-out ($1,361 versus $1,343). That's because she had higher average earnings over the bulk of her career. Current law only considers the highest paid 35 years of earnings and ignores the rest, so Social Security would not penalize her for the early years when she was staying at home raising her children.7



If privatization were adopted, this male high school drop-out's private account would be larger than the woman's in this scenario because of his higher earnings in the earliest years of their workforce participation: his combined monthly benefit would be $909, compared to her benefit of $897.8 So, relative to current law, as well as relative to simply doing nothing to "fix the Social Security crisis," this female worker is worse off. As for the individual retirement accounts, the high school drop-out's individual account would give him a boost to his monthly benefit of $75 compared to her monthly individual account benefit of $53.

Ultimately, the individual accounts accumulated over a lifetime really do not add much "security" to either of these workers—his annuity is only 5.6% of currently scheduled benefit, and hers is only 3.9%.

The earlier a person puts money into a private account, the bigger the effect on their retirement annuity. For example, $1,000 earned at age 18 adds almost twice as much to a worker's total private account than $1,000 earned at age 40. So, women face a tough choice if they reduce their earlier years in the labor force. This privatization solution prefers and subsidizes men, who are better able to enter the labor market early, and punishes women who take time-out early for child care or more education.

Notes:
1. Leanne Abdnor, "Social Security Choices for the 21st Century Woman," SSP No. 33 (Cato Institute, February 24, 2004).

2. This is also a problem for young African Americans, who have lower employment rates than whites.

3. In this hypothetical, the male earns $26,216—between the 2003 median and mean of male high school drop outs. All earnings are expressed in 2005 dollars. The earnings of both the male and female grow with average wages in this example.

4. The woman in this hypothetical earns $2,662 annually when initially working part time and $33,877 annually when she starts working full time. Her average annual earnings are higher than the man's annual earnings ($35,163 versus $33,691). She has a wage premium similar to that of a woman with some college when compared to a male high school drop out.

5. Because of gender discrimination in the workplace, women must have a higher education to earn the same amount as men. For example, in 2003 women who had some college coursework earned $24,018, compared to the median male high school graduate who earned $31,411. There is a similar gap between the earnings of African Americans and whites. Median earning of an African American who finished high school was lower than that for whites ($22,902 versus $31,101).

6. When she returns to the labor market part time in her sixties, she earns $4,823 a year.

7. It similarly would also make up for the challenge faced by young African Americans who, in their twenties struggle to get a foothold in the labor market. The average woman has a little over six years of zero earnings, and the average African American male has four years of zero earnings, compared to two years of zero earnings for white males.

8. We use CBO's analysis of Plan 2 of the president's commission (which estimates the effect of the benefit cuts and the "clawback"). We have also gender differentiated the two annuities. Because individuals would have to go to the private market to purchase their annuities, following the remarks of Cong. Bill Thomas, Chair of the House Ways and Means Committee, we have allowed the private market to consider gender in the annuities. We also use CBO's assumption of a 3.0% rate of return in calculating the annuity. A higher rate of return would make the advantage for the man larger.

This Snapshot was written by EPI Senior Fellow William Spriggs with research assistance by David Ratner.

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An irritated Mr. Putin compared the Russian system to the American Electoral College...

Certainly the autocratic former K.G.B. agent needs to be upbraided by someone - Tony Blair, maybe? - for eviscerating the meager steps toward democracy that Russia had made before Mr. Putin came to power. But...

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I fear that something President Bush said last week might be taken out of context by the liberal media and used to influence the most naďve and susceptible among us, including schoolchildren and Arizona politicians. Though not necessarily in that order.

Standing next to Russian President Vladimir Putin at a news conference, Bush said, "Democracies have certain things in common. They have a rule of law, and protection of minorities, a free press, and a viable political opposition."

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Yeah, Girl, Crack that whip!

Visiting Wiesbaden Army Airfield in Germany this week, Rice wore a pair of knee-high boots with a high, slender heel, a black skirt that hit just above the knee and a black coat that fell mid-calf.
Pictures of the outfit spread across the Internet after a review in the Washington Post claimed it brought to mind ``shadowy daydreams'' of a ``Dominatrix!''
``Rice's coat and boots speak of sex and power - such a volatile combination, and one that in political circles rarely leads to anything but scandal,'' the piece said.

...

Other political observers dismissed the flap.

``I think most people could care less what a public official wears,'' said political analyst Larry Sabato of the University of Virginia. ``From A to Z it's totally trivial.''

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(Click on image to see readable cartoon at original site.)

Unverified information is being passed on by biased governments unquestioningly by the corporate press to damn one party of each pair.

Maybe most importantly, as the Bush administration ramps up the rhetoric against Syria an assasination in Beirut has been laid to the charge of the Bush Administration's new whipping "boy".

What you need to know is that there was no tunnel under the street where the bomb exploded, thereby putting to rest the bomb in a tunnel explanation that points to state sponsorship.

But the corporate news media will not even look for evidence or non-evidence of a tunnel before passing on Bush administration accusations.

For the rest of the great analysis see: A Pattern of Deception by Justin Raimondo

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