[Rushtalk] DC's Newest "Free Lunch"...........
John A. Quayle
blueoval57 at verizon.net
Mon Feb 3 22:30:59 MST 2014
MyRAs Washingtons latest 'free lunch'
By Star Parker
The Presidents annual State of the Union address
is another example of how dysfunctional our
government in Washington has become.
Article 2, section 3 of the US Constitution says
that the president shall from time to time give
to the Congress Information of the State of the Union
The president is the chief executive of our
government. As chief executive, it makes sense
that he report periodically about the state of
affairs to the body responsible for passing laws,
the Congress, so they have a sense of what needs to be done.
If handled correctly, the State of the Union
should be like the annual report of a corporate
chief executive to shareholders. It should
convey key information so that stakeholders know whats going on.
But thats not what happens. This isnt about
informing stakeholders. Its about political
calculations and pitching a laundry list of
proposals, invariably with wonderful benefits,
and rarely any perceivable costs, designed to
make the President and his party look good.
President Obama introduced in this years State
of the Union address his proposal to create new
retirement accounts for, in the words of the
White House, the millions of low and
middle-income households earning up to
$191,000. What they are calling MyRAs.
How could enhancing retirement savings not be a
good idea? And, even better, it is a free
lunch. Again in the words of the White House,
the account balance will never go down in value
and will be totally secure because it will be backed by the U.S. government.
President Obama is creating these accounts with
the greatest of ease, without even a new law from
Congress, by doing what he has done better than
any president in American history. Drive the U.S. government into debt.
These wonderful new retirement accounts will
receive bonds from the U.S. Government. And who guarantees them?
Please, dear reader, if you are a U.S. taxpayer,
look in the mirror and say me.
If the State of the Union was really about the
president informing Congress and the nation, he
would have reported the following from the recent
2013 Long-Term Budget Outlook report of the Congressional Budget Office:
Federal debt held by the public is now about 73
percent of the economys annual output
than at any point in U.S. history, except a brief
period around World War II, and it is twice the percentage at the end of 2007.
CBO projects, the report continues, that
federal debt held by the public would reach 100
percent of GDP by 2038
.even without accounting
for the harmful effects that growing debt would have on the economy.
Meanwhile, as President Obama uses U.S.
government bonds to create magical new risk-free
retirement savings accounts, there was not a word
in the State of the Union of the broken state of
affairs of the governments oldest retirement plan Social Security.
According to Social Securitys latest trustees
report, the revenue shortfall, in todays
dollars, of projected requirements of Social
Security to meet its long-term obligations is
$9.6 trillion. Beginning in 2033, when those
now in their late forties start retiring, there
will be only funds sufficient to pay 77 percent of scheduled benefits.
If the president really wants to enhance
retirement savings of low and middle income
Americans, and create real savings and investment
while addressing the fiscal disaster of Social
Security, let these folks opt out of the Social
Security black hole and use those funds to open a real retirement account.
This is what was done in Chile and it
worked. The Chilean economy grew because the new
retirement accounts directed investments into the
real economy (as opposed to creating more
government debt) and Chilean workers have
achieved real returns and newly created wealth.
Wouldnt it be novel if the president really
reported on the State of the Union each year and
if we solved our existing problems before creating new ones?
Star Parker is an author and president of CURE,
Center for Urban Renewal and Education.
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