[Rushtalk] DC's Newest "Free Lunch"...........

John A. Quayle blueoval57 at verizon.net
Mon Feb 3 22:30:59 MST 2014



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MyRAs – Washington’s latest 'free lunch'

By Star Parker

The President’s 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 what’s going on.

But that’s not what happens.  This isn’t about 
informing stakeholders.  It’s 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 year’s 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 economy’s annual output
higher 
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 government’s oldest retirement plan – Social Security.

According to Social Security’s latest trustees 
report, the revenue shortfall, in today’s 
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.

Wouldn’t 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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