Unintended consequences are the conundrum of life. Right when the Democrats have been handed an issue or two to chew on and make waves, they wallow in disarray, steadfastly allegiant to shopworn policies and second-rate leaders. John Kerry, Ted Kennedy, Barbara Boxer, Howard Dean et al were so consumed with '60s sloganeering and ad hominem attacks on George Bush and company, they were unable to muster the credibility they needed to make political points as the White House succumbed to the ideological fringe of the Republican Party in the Terry Schiavo case or to the economically vigilant Party partisans in the initiative to "modernize" Social Security.
How the Terry Schiavo incident percolated to the top of the national agenda says a lot about the media, our morbid addiction to death and the underbelly of the Republican Party. What had been accepted through judicial precedent-that unplugging vegetative patients is legal-has been suddenly hurled into the feeding frenzy of TV news. But that's understandable since cable news is desperate for stories as they await a "spike" from a tsunami or a celebrity murder. However, when the United States Congress meets in emergency session at midnight to defy the checks and balances of civic discourse, and the President stops running the world to get involved, something else is going on.
In a great line from the film Gosford Park, an English gentleman demands that his hysterical wife shut up lest the others think she is Italian. In this case, it would have been wiser for the Republican leadership to shut up in the Schiavo case, lest we think they are religious zealots who put aside separation of church and state when it gets right down to serious issues. The outbreak of hysteria by the ruling Party should have been a wide opening for the Democrats to drive a Humvee right through. But the Party is a huge slug weighted down with a carapace composed of empty slogans and dated policies, ridden by bloated quislings working for and in conspiracy with Leftist cant. This is the downside to the complete shellacking by Bush and company: There is no credible opposition, much less noble opposition.
Kill Me
The Schiavo incident echoes the 1970s film Johnny Got His Gun (screenplay by communist writer Dalton Trumbo as anti-war samizdat during the Vietnam War), in which a World War I soldier lies in the hospital with most of his body blown away from a grenade attack. He, Johnny, narrates the film from within his coma, very much aware of the activity and conversations around him, sometimes plaintively yelling to his keepers-who assume he cannot feel or hear anything-not to put him in a closet away from the sunshine.
As the plot would have it, a sensitive new nurse takes pity on Johnny and invents a method for communication involving taps on his almost non-existent body. The nurse gathers the hospital staff around Johnny's bed to behold the miracle. The nurse taps out, what can we do for you? Johnny answers back: "Kill me, kill me."
Is this what Terry Schiavo would have said if her keepers could communicate with her? I think so.
Social Security
The other big issue roiling around the political landscape is George Bush's single-minded dedication to "fix" Social Security as a legacy of his presidency, thinking it will endure and resonate through the history of the future. His plan could make great sense, or it could not. But once again the Democrats exude anarchy and hysterical rhetoric-their signature response to issues-rather than a calm and confident opposition. If they are right that re-engineering Social Security is a disaster in the making, they are unable to make their points cogently, while irritating the electorate at the same time.
Ronald Reagan used reforming Social Security as a major platform plank in his unsuccessful bid for the Republican nomination in 1975-76, making the point most agree with: If the wage and employer matching garnishments swept out of American paychecks were invested in stocks and bonds, rather than in the "Trust" held by the government, the return would be higher and benefits boosted. For this Reagan was attacked unmercifully. by the press and the chattering class Democrats, so he dropped the idea when he was elected in 1980 to invest more time on tax reform.
Fixing the system has been brewing in Capitol Hill cloakrooms since, as the actuaries are forecasting that once the Boomers have died, they will have used up the lion's share of proceeds because there is not a commensurate bulge in the work force to pay for it all. Now George Bush is staking his ascendancy to finish the battle with renewed vigor by taking the case first to the people and then to the Congress where the Republicans enjoy a new majority.
Yet, why does this commonsense initiative cause unease? It seems simple enough, to enrich the corpus that will pay out benefits to seniors to avoid a shortfall of funds in the year 2042, or thereabouts. It is obvious that stock and bond investments over a period of 20 years yield more than investments in cash and cash equivalents that pay a fixed interest, as does, theoretically, the Social Security fund that makes a return by lending worker money to the US Government at a fixed rate. The Security Trust Fund is actually a note owed by the government to itself.
Ronald Reagan simply suggested that a portion of the pool of money be allocated to equity investments. George Bush is suggesting something different. The best I can tell, an employee below a certain age today can elect to have a portion of his wage garnishment go into a separate equity investment that will allegedly enjoy a higher return on that portion of his or her investment in Social Security. However, the employee has little choice where this investment will go. This is not an IRA where you can select from an array of funds. The portion allocated by employees for equity investment will go into a huge pool of funds to be directed by a commission appointed by Congress to make the investments in toto across a wide array of equity, bond and mutual funds.
This is annoying. And it is still not clear whether or not this equity portion will remain available as a pool of money for the government to lend to itself, or be set aside to provide direct proportional benefits to workers. It appears the Bush proposal is a roundabout way to implement the Reagan plan by making it appear it is an individual account when the whole process is simply to move some of the money pool from interest bearing accounts to an equity return on the entire Trust corpus. So why the tarantella of individual accounts, that aren't actually that at all, if the main purpose is to allow citizens to grab a piece of the American pie by investing in stocks and bonds? Under the Bush plan, it's the Social Security system that will do that, not you.
Who Do You Trust?
Here are my problems with the Bush proposal, beyond what looks like a trick to diversify Social Security by making people think they are investing individually in equities and bonds. It appears we are being asked to choose between the incompetence of government and the greed and immorality of Wall Street money managers. While Social Security does not provide home-run returns on investment, it is consistent and reliable and backed by the good faith and credit of the United States. If a portion of this pool of money is made available to the poltroons and cads in the equity investment business, hold onto you hat, ass and overcoat.
Have we forgotten already that most of the major investment firms in the US were recently caught screwing investors? Merrill Lynch, Goldman Sachs, CitiBank and insurance firms who handle huge investment accounts for customers have paid enormous fines for their chicanery, and worse, contempt for their clients. Is this "commission" to be established to invest employee-garnished funds going to be free from temptation and corruption? Not if the recent past is any indicator.
All this excitement about bigger returns from equity investments over simple interest on cash has merit, to a certain degree. In 1979, interest rates shot up to over 22 percent, resulting in a mass movement of investments from stocks to cash and cash equivalents, resulting in an alarming free-fall in the stock market. Interest rates are creeping up slowly, but what if they shoot up due to some unforeseen incident? Add to this an important point. If you buy a Certificate of Deposit for a term at 5 percent interest, you keep the corpus and the interest. If you buy a stock, or a fund, and it loses value, it can cut right into your equity. In other words, if a cash investment loses its interest contribution to the corpus, that is the extent of your exposure. A bank can't charge negative interest as financial conditions change and eat away at the original investment. But a falling stock certainly can. All you need to do is look at the decline in value of retirement accounts and equity funds from 2001 to 2004 in the wake of the Dot.com bust to see what can happen.
The Bush plan has merits, but in the long run, is it not prudent to keep the small return on Social Security rather than risk a portion of it on the vagaries of the stock market and the thievery of Wall Street investment firms? Do you think a committee of these types selected to invest in stocks and bonds will be free from corruption? And what happens if just plain old market risk does not deliver a return on the accounts allocated from Social Security?
Well, ask Alan Greenspan. While the White House has been on the road to sell the new plan, he has recommended that employers be forced to increase their matching payments to employee Social Security payments and a national sales tax. He sees right off the plan is not a sure thing and wants to raise revenues now to pay the piper in 2042. Hitting employers is certainly not the correct course and a national sales tax seems burdensome. How about we leave Social Security where it stands-backed by the good faith and credit of the United States-and await events.
Notes from La-La Land
Jim Goodnight, founder of global software giant SAS, with headquarters in Cary, delivered a cogent address to the North Carolina Citizens for Business and Industry, pointing out that the problems in education in the state continue to cause harm to our future as a high tech center that attracts new businesses and ensures our famous quality of life. Relating to the statistic that the United States ranks 16th among the 16 top industrialized nations in scholastic achievement, and fearful that keeping out foreign students since 9-11, all the while allowing the massive migration of uneducated workers from Mexico and Central and Latin America, we have created a shrinking pool of qualified workers in medicine, biotechnology and computer engineering.
He recommends an experiment. Take one class-9th grade-and one subject-he suggests English-and divide the class into two sections, so there are fewer students per teacher, and provide them all with computers. Goodnight senses that opening up the web for research will make English their favorite subject. He sees that schools operating on 19th-century model cannot compete for the interest of a student with books and lectures when they go home and plug into sophisticated computer games and unlock the world on their screens.
This is obviously worth a shot, and now, as businesses are announcing that the content learned in public schools is not applicable in the workplace. But worse to them is the self-esteem training and group dynamics that have sucked the air out of education and created unsuitable employees.
...
Even with improvements in education in the state, the scandal that a large number of our kids can't read and don't know their own culture is still with us. One main reason that public schools are impervious to reform is the deeply embedded administrative strata of educators who cannot be budged and who insist that everything is fine when actually everything is awful.
Now the whistle has been blown. A report by the Teachers College of Columbia University (the Jerusalem of educators) states categorically that most graduate programs in education across the nation are "inadequate and appalling." This is after a study of 1200 colleges and schools of education and 28 case studies. I was tarred and feathered by the teacher union types for saying this 15 years ago, so it's a nice vindication for Columbia to tell it like it is. The report points to irrelevant curriculum, low standards, weak faculty, inadequate clinical research and inappropriate degrees. Told you so.
...
As our roads make us look like Eritrea and Mike Easley and the Legislature - which is withholding funds for cities over rural areas- will not return street and highway funds to our cities that we gave over to help balance our bloated state budget in 2003, our leaders continue to allow the cadre of rail transit zealots to soldier on, seeking Federal monies for a project doomed to fail and in the process scar our Triangle communities. A small item in the local daily demonstrates what rail activists have accomplished in Washington.
The federal road budget to be voted on this session in Congress breaks down like this: $225 billion for the Federal Highway Administration and $52.3 billion for the Federal Transit Administration, with other smaller allocations to the Safety Administrations and $12.4 billion allocated for Members to use in their districts. Add it all up and the Feds, who take your tax money at the pump to pay for roads, after intense lobbying by environmentalists and social engineers, have upped the percentage siphoned for mass transit to 20 percent of the total allocation. This is why our existing roads are falling apart and why new, much needed road projects are delayed: to impose mass transit on our society. Off with their heads!