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To: Paxb2u who wrote (109112)	2/28/2010 12:56:28 PM
From: THE ANT	1 Recommendation Respond to of 116555

cato.org Since the above study all asset classes have had a terrible run.How else can you explain the rate of return on social security being so much higher than all asset classes other than stocks and this before stocks having a 10 year run of with no appreciation.SS return would be the clear winner if same study repeated.Paul Mculley of Pimco argues that the zero risk investment should have 0% return after inflation.All the excess SS return is clearly govt subsidy.While getting my economics degree it was a given that SS was as much a welfare program as a retirement system.My expected returns for SS benifits are much larger given my expected life span than my inflation adjusted payments into the system (even before accounting for my wife getting 50% of my future benifits without ever having contributed)and then we will get the no tax SS benefit.This is calculated using both my and my employers payments.Now add in medicare jhppl.dukejournals.org where the subsidy is nothing but astronomical. I repeat it is mathematically impossible to pay for the current deficits via tax on the wealthy even assuming no change in their behavior (I gave the prior example of most being in a 60% marginal bracket as is---if you could get 20% more and go to 80% how much of the deficit would that cover?)We need a consumption ,VAT like tax,to maintain our current level of benefits.The Europeans get it!Obama must be honest with the American people.All will pay more to keep current benefits and even more for any other promises.The promise to not increase taxes on those above 250K and increase the % of those paying no federal tax from 40% to 60% is ludicrous.There is great pain and hard choices ahead.I for one want an immediate 10% VAT like tax and $1 a gallon gas tax.If this blows a hole in consumption we are heading in the right direction.I do not make the choice as it will be done by Americans at the ballot box.If we choose low taxes we will get less benefits than we have been.If we choose inflation it will not help.As calculated by myself in the past on these boards, and PIMCO 11/09, assets in the US were 100% overvalued in 2007.In terms of day to day living the average American was likely living at least 50% over sustainable levels.It will take at least 20 years to return to that lifestyle and that is if we get it right