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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (101239)	2/20/2005 4:08:40 AM
From: LindyBill	Read Replies (1) \| Respond to of 793762

You Can't Paint the Military as Sympathetic Figures if You Look Down on Them By Cori Dauber The elite press want to write about the military as sympathetic figures, particularly in regards to the way they are forced (figuratively) into fighting wars they cannot fully understand for economic reasons, but that's ultimately hard for them when they write from a position of, well, elitism. As Robert Kaplan recently wrote, there is an element of just plain class difference keeping elite journalists from understanding the military folks they write about, but there are times when that turns into what can only be described as condescension. Lets just take a look at this front page above the fold article from the Times, "Iraq or No, Guard Bonus Lures Some to Re-enlist," in other words, "My God, even with Iraq, some of them are dumb enough to take the money. Can't they see they're being bought?" Yet note the first soldier mentioned in the piece, the one "stoic" about the fact that his re-enlistment meant an almost certain second tour in Iraq: nytimes.com Sergeant Marez, who in civilian life in Albuquerque works as a machine operator at a weapons laboratory, stoically explained that he supported the war in Iraq and was not afraid to return. He also said he would soon receive a re-enlistment bonus of $15,000, part of the National Guard's effort to bolster its ranks after missing its recruiting goals for the first time in a decade last year. (My emph.) Imagine. Whether to pay down debt, splurge on a vacation, buy a car, make a home down payment or cover education costs, the bonuses are being embraced by some members of the National Guard as an unexpected bounty. But doesn't that imply they were planning to re-enlist anyway? And what does this mean? "The Guard is looking for an economic solution to a socio-political problem," said David Segal, a military sociologist at the University of Maryland. "Fifteen thousand dollars is half a muscle car. I'd be surprised to see this policy have more than a marginal effect on the Guard's numbers." On the one hand, he's saying the money won't get them to re-enlist. But on the other hand, he's suggesting, what, that soldiers measure money in increments of muscle cars? Even the reporter was able to figure out there are plenty of other things a soldier can do with fifteen thousand dollars than put it towards a muscle car. Well, which is it? Is it that these poor soldiers are being exploited by the military? Or is it that they're too smart to be exploited by the military for money? Or, is it that the evil military is trying to exploit them for money, but they're too smart for them? Yeah -- that must be the ticket. Except, some of them just don't see the trap. Particularly in relatively poor areas of the country like Springer, a town of 1,200 people surrounded by small ranching communities, the Guard will be recruiting in coming months as its roster of recruiters swells to 4,100, from 2,700. A low-ranking Guard member can make about $35,000 a year in a combat tour in Iraq, or about $5,000 more than a young schoolteacher can earn here in a year. Though $15,000 may stretch further here, the pay and the bonuses failed to sway many of the 515th who returned home with Sergeant Marez. Sgt. Dennis Trujillo explained why a couple weeks ago as he sat down for barbecue after the welcome-home ceremony concluded with a show of digital photographs of the unit in Iraq to a medley of hard-rock and heavy-metal classics. No one in the 515th was killed in Iraq, Sergeant Trujillo said, but the unit had suffered about 40 indirect mortar attacks and its duties, which included supplying Army troops with gasoline and water, were sometimes grueling. The money the Guard was offering was "good but not enough," said Sergeant Trujillo, 29, who grew up in Roy, a ranching community of 400 people not far from Springer, and whose term with the Guard expires this summer.

To: LindyBill who wrote (101239)	2/20/2005 10:32:20 AM
From: Lane3	Read Replies (2) \| Respond to of 793762

washingtonpost.com > Opinion > Editorials Editorial The Risks in Personal Accounts Sunday, February 20, 2005; Page B06 NEWLY ELECTED to a second term and possessed of a mandate to cut the "nanny state," Margaret Thatcher set out in 1984 to privatize Britain's state pension system. The result stands as a warning to the Bush administration. The Thatcher reforms empowered unscrupulous salesmen to press inappropriate savings accounts on unsophisticated workers; regulators ultimately required payment of some $24 billion in compensation to the victims. Last year 500,000 Britons who had opted out of the government pension system in favor of private accounts returned ruefully to nanny. Social Security reform, in short, is risky. Individual retirement accounts can suffer not only from aggressive salesmen but also from high management fees (Chile), disappointing investment returns (Sweden), irresponsible subsidization at the expense of taxpayers (Britain, again) and the danger that workers might seek early access to their money to meet medical emergencies or other expenses, leaving them impoverished in retirement (Singapore). So, despite the significant likely gains from investing in equities via personal accounts, reform doesn't cross the threshold of plausibility unless it is designed to avoid these pitfalls. The Bush administration appears to understand this. It says that workers would not be allowed to tap into their accounts before retirement; nor would they be permitted to borrow against them. Moreover, it has proposed a government-run personal account system, modeled on the Thrift Savings Plan for federal employees. The government, not private salesmen, would offer workers the option of a personal account, along with a short list of mutual funds to invest in. By cutting out private-sector marketing and advertising costs, the Bush plan would keep fees low -- to less than 0.3 percent of the savings in the system. The administration also seems to want to avoid subsidizing private accounts, even though a subsidy might sweeten them politically. Under Mr. Bush's proposal, workers who opt to divert some of their payroll taxes into a private account must give up future government benefits worth the same amount, suggesting no taxpayer subsidy. However, it would still be true that account holders who die before retirement would be able to bequeath their savings; this would represent a "leak" of money from the system, which taxpayers would be required to plug. What of the risk that the stock market investments in personal accounts could go bad? The nonpartisan Social Security actuaries have examined all the 22-year periods since 1925: Returns from the broad S&P 500 stock market index beat 20-year Treasury bonds in every one of them. Administration critics say these long-run numbers aren't everything: What if you retire the day after a crash and are forced to convert your savings into an annuity just when your account has tanked? But workers could avoid that danger by shifting their savings gradually out of stocks and into bonds in their last working years, thus insulating themselves from a collapse in equities. Equally, critics say that future investment returns may not be as great as the historical ones that guide the actuaries; the baby bust could hurt growth and hence also the stock market. But economists who've calculated this effect don't expect it to reduce equity returns by enough to undermine the promise of personal accounts. So some oft-cited dangers in personal accounts may be overstated. But there are three that remain more worrisome. The first is that, even though the average worker may gain, a minority will invest recklessly and end up impoverished. The admin- istration says it will reduce this peril by creat- ing a default "life cycle account": Workers who don't actively withdraw from this option would have their money shifted automatically from equities into bonds as they approached retirement. But this excellent provision won't prevent some workers from betting on the stock market up until the day that they retire and so risking real hardship. Unless the administration compels all workers to invest in life cycle accounts -- an illiberal but nonetheless sensible idea -- this particular danger cannot be eliminated. The second risk in personal accounts is that their transition costs might scare financial markets. As we have argued before, investors shouldn't take fright. The transition borrowing merely swaps government debt to future retirees for government debt to bondholders. Indeed, if personal accounts are coupled with a benefit cut, as they should be, the government's total debts would fall; if anything, investors should be heartened. But financial markets are not perfectly rational. Coming on top of the president's irresponsible budget policies, a flood of new bond issues might possibly frighten investors, perhaps triggering a fall in the dollar and higher interest rates. The last risk is that the traditional Social Security system, which has performed well for the past 65 years, might be weakened. The current system is attractively progressive; diverting some of its money into personal accounts would blunt that effect unless a compensating reform boosted the progressivity of the residual government benefit. The current system is also popular. But if better-off Americans come to like their personal accounts and to view the vestige of the old Social Security program as a welfare transfer to the elderly poor, the political foundations of a program that has greatly reduced old-age poverty could crumble. To capture the high returns from equity investment without running these risks, the government could invest payroll tax revenue directly in the stock market, without personal accounts. This sensible idea was floated in the Clinton years and ought to receive serious consideration now. Another Clinton-era idea is to have personal accounts financed not by a diversion of taxes from the traditional Social Security program but rather by add-on contributions: This would reduce transition costs, protect the size and progressivity of the traditional system, and boost national savings. Short of these approaches, the Bush administration might consider limiting the size of private accounts, particularly for high-income workers. Under the president's current proposal, people earning more than the payroll tax cap, currently set at $90,000, would eventually have such big personal accounts that the compensating reduction in their traditional benefits would reduce them to zero. It's not clear that better-off Americans would continue to support a system from which they received nothing. This is one in a series of editorials examining Social Security and its future. Others can be found at www.washingtonpost.com/opinion.