17 November 2008

Gimme yer Dough

“Gimme yer dough.” That’s a line I recall from a comedy routine Bill Cosby used to do. Congress, not to be outdone by a respected comic, is thinking along the same lines – at least some of them are.

According to a Wall Street Journal editorial (November 6, 2008, subscription required), Representatives George Miller (D) CA and Jim McDermott (D) WA, think that 401(k)s “are a big failure” and want to replace these private retirement fund options with something akin to what the Social Security Administration now pays to those of us who have made it to age 65 alive. With the Social Security facing a looming funding crisis it comes as no surprise that Miller, McDermott, et al, are interested in finding a new source of funding other than raising taxes. There’s a plausible reason why they want to help out 401(k) owners.

Social Security is a pay-as-you-go system. What comes in almost immediately goes out as payments to Social Security beneficiaries. Never mind what you may have heard about the “Social Security Trust Fund;” it’s all accounting hocus-pocus. There is no cash account; the money is spent almost as soon as it is received. If Miller and McDermott get their way the assets from all of those 401(k) accounts would become available to Congress to spend but payments of some kind to the account owners wouldn’t be made for years or decades into the future. It’s a neat way of putting off the looming Social Security funding crisis for a decade or two. How much cash is in all of those 401(k) accounts? Well, Wharton school puts the 2006 value at something like $2.5 trillion. Of course, in the past few months stock values have dropped around 40%, but just roughing it out there is currently around $1.5 trillion in 401(k) accounts.

Of course, there are some problems with Congress getting its grubby hands on 401(k) accounts. First, there probably isn’t a constitutional way of simply taking them over so it becomes a matter of convincing 401(k) owners that the federal government can do a better job of managing their assets. That’s a tall order, given the long-term rate of return on payments made to the Social Security system. Second, all those 401(k) assets aren’t cash; most holdings are stocks, bonds and money market accounts. Liquidating all those holdings would make current financial market disruptions look like a tiny bit of bother.

No. It appears to me that the real motivation is that Congress would be able to take in a large chunk of cash without having to raise taxes or force the US Treasury into borrowing more. All of this would be done under the promise of making retirement funds more secure. Yeah, right. Remember Ronald Reagan’s most feared words: “I’m from the government and I’m here to help.”

UPDATE: In a letter to the editor of the Wall Street Journal on 18 November 2008, Rep. George Miller denies he has plans to end 401(k)s and replace them with some government-run pension system. Instead, he writes, he is interested in more complete disclosure of the details and costs of 401(k) accounts and removing the unfair tax burden on seniors who may be forced into begin taking withdrawals from their retirement accounts because they have attained a statutory age.

11 November 2008

Veterans Day 2008

It was a glorious fall Monday in late October 1997. Twenty-five years after my last combat tour in Southeast Asia I was finally going to visit “The Wall,” the Vietnam Memorial. Up until that time I really had no desire to see it; I knew at least a dozen names that are there and it would do no good to go and actually look at them. Besides, I live 1200 miles away and there was never a good time to go that far to see things I already knew existed. We finally got an excuse with the wedding of an old Air Force acquaintance’s daughter in Fairfax, Virginia.

So, the Monday after the wedding four of us, my wife and I and the parents of the bride, took the Metro up to the Mall for a look at the Vietnam Memorial. We had other sites on the itinerary: The Holocaust Museum, for one, but I wanted to make sure I went over to the Vietnam Memorial just to see it. After visiting the Holocaust Museum we made our way down the Mall, past the Washington Monument and in the general direction of my objective. First we came upon the Korean War Memorial: the figures of those 19 poncho-clad GIs, forever on patrol, were eerie – even ghostly. Not far away stands the Vietnam Nurses Memorial. The mother of the bride had been an Air Force nurse in the mid-1960s and she wanted to see that small monument to big sacrifices. A row of trees separates it from the black granite slabs that make up the Vietnam Memorial itself. From where we stood you can see the Vietnam Memorial through the line of trees. Scanning the tree line I saw a Yaqui Indian man. He was standing in the tree line and was performing some kind of ceremony with an eagle feather. By the look of him he might have been a Vietnam veteran himself. I don’t know if his ceremony was for the benefit of his tribesmen or for the more than 58,000 names on those black granite slabs. In any case we watched him and in a few minutes he completed his ceremony, packed up his regalia, and went on his way.

We made our way around the tree line and started at the registry that matches all those names with the slabs they are listed on. I went back and forth several times looking up names and then find the slabs and locating the names I was looking for. Most of the names were in small clusters since the men had died in the same actions. I was scanning one particular slab for an elusive name when I noticed a young woman standing thirty or forty feet to my left. She was blonde; she wore a black overcoat over business attire and looked like she might be some office worker on her lunch break. She just stood there facing one of the panels; she held a single red long-stemmed rose and a white envelope. I looked at her for a few seconds and then went back to my task at hand. I finally located the name I was looking for and looked back to where the young woman had been standing. She was gone and now the rose and envelope she had held were lying at the base of the memorial. I walked over to see what she had left. There was the long-stemmed rose and a white greeting card-sized envelope. It was addressed to “Daddy.”

I wonder now, as I wondered then, whether “Daddy” ever had the chance to see his little girl. Clearly, the young woman missed her father and honored his memory with her presence.

I wonder now whether the history of 1973 will repeat itself and we will preemptively leave the Middle East before the job is done. If that happens Karl Marx will once again be proved wrong: history repeating is tragedy the second time around also.