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Pick me! Mr. Bush. I have something to say about your blue ribbon panel gathered for the topic of privatization of Social Security.
Sure, I' m no Patrick Moynihan, a very influential person who has pushed for reform in the program through investment in the markets. He will be joined on the committee by Sam Beard, Tim Penny, Estelle James , Robert Johnson, Olivia Mitchell, and Fidel Vargas round out the democrats on the team. For the Republicans, the list is just as impressive and just as biased: John F Cogan, Gerald Parsky, Carolyn L. Weaver, Robert G. Deposada, Gwendolyn S. King, and Thomas R. Saving. These folks have until October or so to present the President with the answer he expects. All are pro-privatization. That's why they should pick me. I'm against it.
This was not even a great suggestion as we looked at the longest bull market in history. It is even less now. Wall Street would love the infusion of cash. Social Security could ill afford top divert any potential monies away from it's shaky foundation. Insolvency looms sometime in the next thirty to forty seven years, depending on whose report you want to read.
The cost of such a privatization would exceed $1 trillion over a ten year period, making the budget in Congress nothing more than scratch on a napkin.
Once again, scrap the current budget proposal, the tax plan, and the overhaul of Social Security, and just start over. The surplus will still be there. It would be great if it was done right the first time.
I know that I can't be the only one who doesn't see the good in layoffs. I have a good understanding of why they are happening. I have a slew of numbers to tell me that they are taking place; 223,000 lost jobs increasing the jobless rate to 4.5%, over 6.3 million Americans out of work, and an economy that is right at zero growth.
I can't be the only one who sees loss of jobs equating to loss of consumerism. If you aren't working, you can't participate in purchasing with the same gusto as the economy expected. So your confidence has got to be down. Right? The last time this nation was in a recession (in 1991), the jobless rate was 4.5%. That means that despite the lowering of short term rates, business is still unable to turn a profit through production. Instead, they are scrambling to put the numbers on the balance sheet the old fashion way, with labor costs reductions.
The stock market reacted to the bad news for all these workers as a sign of good news that businesses are beginning to realize that labor is controllable.
What it means to you is simple. If you haven't begun to reign in your spending, now is the time. If you are feeling as though it will not have any effect on you, you are wrong. Although you may be working, a recession can have a broad range of negative effects on everyone. Because sooner or later, labor will be trimmed to its minimums and consumer prices will start to rise.
Yesterday, President Bush was busy in front of the cameras talking up his new missile defense, throwing out old treaties and never really telling us what he would do that was different. But his tax bill was what I focused on and after we seem to beat the notion to death here at the BlueCollarDollar, he got most of what he wanted.
How we get is another matter altogether.
Instead of $1.6 trillion, he got lawmakers to approve of $1.35 trillion in tax cuts, the largest in 20 years.The committee arrived at that number with the approved $1.25T and the additional $100 billion that is to be returned this year. This immediate tax cut would amount to about $500 per tax payer.
This plan will be enacted over the next 11 years as was originally proposed. But nothing has been quite settled yet. There is still the subject of spending. This little stickler of a point can go either way.
A budget resolution is essentially a work in progress and not anything resembling a law. The legislators will try and decide how to keep the spending at a minimum and still give the president his tax cut, his agenda on military spending, and his plans for education and agriculture. In an evenly divided Senate, percentage will mean everything.
The Senate wants an 8% spending increase, the House and Mr. Bush want 4%. The compromise number is said to be around 5%.
It is still fiscally irresponsible and the agreement will probably be tossed because of ideological defections from both the House and the Senate. As we watch for talks on 401(k) and IRA reform in the House today, we can't help but think that it ain't over yet.
We love numbers. A baker's dozen, countless dalmations, the Dow at 10,000, and of course, what we count as the President's first hundred days. First given consideration during Roosevelt's administration at a time when Congress met six times a week, it has little meaning nowadays other than a benchmark.
Mr. Bush has made fewer waves than his predecessors but that was no less indicative of what we are to expect. The days of getting all kinds of laws passed in that time period have given way to getting people where you need them. This cabinet building has been rather slow (many lack any assistance at all) , but hey, let's talk about money and his first hundred days with your finances.
Mr. Bush has not wavered in his commitment to big business and tax policies that will benefit those who are about to inherit. He seems to care little about those who cast the most votes instead pandering to the rich. As he pledged to do.
It should come as no surprise that his agenda will continue in such a manner from reform of bankruptcy laws at the urging of MBNA and other major creditors who gave mightily to his campaign to the bullying tactics he is using in the Senate to get his tax plan passed in full.
We can only hope that he eases his hard line conservative approach to these subjects and open his arms compassionately, adjust his tax proposals, get spending in line, and remember the little guy.
When I hear the prefix turned word "micro", I can't help but think of something frosty in a tall pint glass, a foamy head, and a deep rich color and taste. Of course I am talking beer, but the prefix turned word means something entirely different when we talk about economics.
We can understand microeconomics much easier than its elusive cousin, macroeconomics because it is something that we have had actual contact with. If a product becomes too expensive because of its price and the reason is supply, we can grasp the reason. If there are substitutes for this product, we will simply switch without much of a care. If the supply is limited, and the choices are few, we can understand the way price works. If your car runs on gas, as most do, and the price goes up, there are few alternatives to turn to to power your auto. Adding milk to your tank will not work.
Macroeconomics on the other hand is the shadowy sibling with little resemblance other than last names. It deals with a certain guess work on the effects of one move and its relation to another.
Consider this: If you cut taxes, will it boost the economy because there is more money flowing back to the consumer? Will you work harder because you will take home more? And if that happens without some sort of restraint on government spending, deficits will arise. And that means that government, now short of tax cash, will start to borrow. And that borrowing will take place in the same marketplace as businesses, making money scarce, interest rates higher, and in the end, defeating the very purpose of the tax cut. Is this better?
Tax cuts are good... and bad, depending on your economic outlook, your ability to guess the unknown, and your skill at choosing the right microbrew.
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