To: Zeev Hed who wrote (42894 ) 10/5/2000 11:01:07 AM From: flatsville Respond to Thank you Zeev. Excellent analysis. Thought I had missed something. (Of course I've been thinking this since May of this year.)Bush won't say what portion of payroll taxes he would divert to such accounts, though his aides mention 2% as a likely goal. Social Security has always operated on a pay-as-you-go basis: Benefits for retirees are paid out of current payroll taxes. Diverting 2% of payroll taxes would reduce Social Security revenues by about $1 trillion over 10 years. Bush hasn't said how he would cover that shortfall, especially given his additional commitment to a $1.3-trillion tax cut. The candidate is similarly vague about what investment options he has in mind for the personal accounts, saying only that they would be 'reliable.' He also hasn't said what the age cutoff would be for participating in the personal accounts. Over time, stocks have offered the best returns among investments. But sustained market losses aren't unknown. Does the Bush plan envisage some way of ensuring against significant market losses? Again, there is no answer." [editorial, Los Angeles Times, 5/18/00] Talk about mixed signals. George W. Bush's top economic adviser, Lawrence Lindsey, has been warning for some time that the stock market is dangerously overvalued, that it's a bubble that is bound to burst, and more likely sooner than later. Mr. Lindsey, who strongly favors Mr. Bush's proposed $1.3 trillion tax cut and argues that it would provide a needed economic stimulus, has warned his private clients of a potential stock market tailspin that could lead to a recession. He said he sold his own stocks about two years ago so he would be able 'to sleep at night.' That's one signal. The other signal came Monday when Mr. Bush told the nation that the key to saving Social Security retirement benefits was to allow working Americans to invest a portion of their Social Security taxes in the very same stock market that Mr. Lindsey, at the moment, wants no part of...[Bob Herbert column, New York Times, 5/18/00]...A major sticking point is ensuring the continued stability of Social Security as billions of dollars are diverted from the public system to private accounts. Some proposals in Congress would reduce the Social Security benefit by the amount of an individual's private account. Other ideas include raising the retirement age and adjusting cost-of-living increases. The governor says he supports the idea of appointing a bipartisan commission to work out those details. 'There is a transition period, I agree with that. And that is what the Congress is going to have to solve,' he said. 'My job is going to be to call a commission together.'... But critics worry that poor investments or a market crash could leave a worker worse off than under the present system. Asked whether he envisions a system in which future beneficiaries would receive no less than they would have under the current system, Mr. Bush said, 'Maybe, maybe not.'" [Slater, Dallas Morning News, 5/15/00]
