The Truth About Charles Grassley (and Health-Care Reform)

What are the status quo guys going to do when they "win"? Medicare is still going bust. A policy that cost $300 15 years ago now costs $1,000. Those things won't change.

I guess the only way things will change is when the prices get so high we all go broke, then Uncle will really step in and take over. By then, there won't be any input allowed and no discussion. It'll probably be the Republicans that "have to" do it. Take charge guys that they are.

It will be something like the people in '88, that were screaming "Get Government off our backs!!" until the Mississippi flooded and then it was "Well?! Isn't the Government going to do something to help us?!"

Michael -- Great post. I can't keep my eyes from rolling when members of the GOP say that if only they were in charge, they would get this thing done right! ...right after they came off a 6 year period in which they controlled both chambers and the presidency.

More truth-Mikey disjunction. [sigh] Not Thorazine, not Propofol, will work if the Dems compromise...

"they came off a 6 year period in which they controlled both chambers and the presidency"

The GOP tried changing Social Security. The Dems not only opposed it but most importantly, did absolutely nothing whatsoever to reform and rescue this program, when they had the perfect opportunity -- totally mindless obstructionism and failure to exercise due diligence, et cetera. As for Medicare, the only way the Dems touched this was with "We should reform Medicare first" nonsense as one of many bogus arguments they threw up (figuratively!) against Social Security reform. And, it's no surprise that the "Medicare reform" and "entitlement reform" Obama said was essential and that he vowed to achieve, has never been begun. (What idiot would have believed he or any other Dem would ever do such a thing unless these people had a gun held to their head?)

The GOP added a Medicare drug benefit. They've done more than the Democrats have, for decades. All they got (other than to suffer in the polls from aping the Dems -- and "Part D" was part of Clinton's plan to expand Medicare, in the late 1990s, incidentally) was the predictable abuse that what they did wasn't good enough (including the whining and worse about not choosing to do cram-down on Big Pharma).

"The GOP tried changing Social Security."

No they didn't. You keep saying that, but it isn't true.

It was a half-hearted attempt that went nowhere because it was a dumb idea. All "the plan" wanted to do was take the SS money and put it in the stock market. The people that have 401k's lost most of their money in those, so lets throw Social Security money out with it!

DLS

Today's episode of DLS Lost in space.

"The GOP added a Medicare drug benefit. They've done more than the Democrats have, for decades."


Ah yes, passed an unfunded mandate that made sure that the Federal governmebt would pay retail for drugs bought for seniors.

Thanks DLS, your "more" is more than the same self-serving private industry welfare.

My god, can you imagine what would have happened if the SS money had been put on the stock market. I'd actually kinda forgotten about that. The Dems should be touting that as a major victory if they were the ones that stoopped it. .

"My god, can you imagine what would have happened if the SS money had been put on the stock market."

Well, some stockbrokers I knew at the time thought it was a swell idea.

Vey and slamfu------show me where there was a requirement for someone to invest solely in the equities market.

I'll save you the trouble-----there never was such a requirement. Since 2004, my long-term fixed maturity portfolio and insurance company annuities have had aggregate appreciation of about 4.5% per annum. Well above the SS COLA adjustments over the same time period.

Your Dem heroes lost me money.

Thanks, vey, HemmD, Slamfu. Those were the exact things I was thinking while reading DLS's comment. One thing I think needs to be added: the math doesn't really look all that bad to me on SS as it is now; I mean, it could certainly use some adjustments, but changing the entire system doesn't look like the right answer. Drumming up fear about SS nearly meant nearly subjecting that money to the whims of the market -- now who would have benefitted most from that?

"aggregate appreciation of about 4.5% per annum."

How fortunate you are. You are obviously an excellent investor.

What do you tell the ex-Enron employees that had all their money in company stock? Do you lecture them as to how silly they were to be such foolish investors? Do you would also say, "Bon Appetit" for the dog food they will be eating?

Also, I wonder how long the money you get will last? My 80 something father used to bitch the same way you did until I pulled out his SS payment history and pointed out to that him that paying 50 cents a week in 1955 wouldn't go very far these days, even in 1955 money.

We added it all up, compounded the interest and he broke even after nine years.

[Addressing one of the pathetically few real-world responses to what I posted]

"My god, can you imagine what would have happened if the SS money had been put on the stock market."

I was concerned at the time what could have happened. The federal government would have become a gargantual institutional investor, to be followed thereafter by idiotic political activism, demands for "social responsibility" and other nonsense, and pursuing political instead of business objectives.

Bearing that in mind, now you can fully appreciate the real magnitude of how bad it would have been.

http://www.lpi.usra.edu/science/kiefer/Educatio...

http://astro.wsu.edu/worthey/astro/html/im-mete...

"the math doesn't really look all that bad to me on SS as it is now"

Once the program begins running deficits, less than ten years from now, additional revenue will have to be found in order to redeem the trust fund bonds and pay benefits in full. It has been bad math for ages. It is a pay-as-you-go scheme that is unsustainable. And if that's not bad enough math, as it should be, consider the effective "rate of return" on Social Security taxes paid, versus Treasury bonds.

"Once the program begins running deficits,"

Your "program" starts running deficits as soon as the "gee, whiz" investors start "investing" in "sure things."

My dad thought he knew something about the stock market. Many thousands of dollars later he found out that he was a regular Ralph Kramdon, with his get-rich-quick schemes. All I can say is I'm glad he gets that $1,000 a month, cause otherwise he wouldn't be eating.

As I recall the private option on Social Security would have been put into an extremely conservative bond portfolio, not the stock market.

Anyway posts like Stickings are amusing since they mirror the posts from right-wing wingnuts a few years ago right before the GOP went over the cliff. Liberals seem to have a shallower learning curve in self-destruction.

I'm not sure what to think about social security investment strategy, because the economics get nonlinear at that scale. An individual investor can invest in aggressive growth stocks and get a great return, but when 50 million retirees are all trying to cash out, prices tumble, and the returns can prove more theoretical.

Social security returns and GDP growth are to some extent synonymous. If American productivity and competitiveness does well, social security will do well, regardless of the face value of the securities it holds.

So it should be invested in whatever will boost GDP the most. I'm just not sure what that is. DLS is right that investing in corporate equities will tend to socialize the economy, encouraging more corporate decisions to be made based on politics than economic efficiency. That's probably the wrong answer. But wouldn't bonds have the same problem?

Dr. J I haven't completely thought this through, but the dynamics would be different between stocks and bonds. With stocks the taxpayers would become owners and would share in growth and losses, with bonds they essentially become a bank that loans money to companies. With bonds there would be some fluctuation of principal depending on interest rates but this is moderated by a fairly steady yield. It seems to me that the SS funds would have also gone into Fannie Mae and Freddie Mac bonds which is amusing in retrospect since they would have been less safe than most corporate bonds.

As far as what would have stimulated GDP more I don't know the answer but the bonds would have had considerably greater safety than stocks and therefore would have been preferable. The exception might be investing in very stable high-dividend stocks like utility companies, etc. The upshot would have been taxpayers providing an additional pool of money for businesses to borrow, more than likely lowering interest rates which would have been stimulative.

DaGoat, the only real difference between stocks and bonds is the payback terms. And as we saw in Detroit, the government feels free to rewrite those when politically convenient.

I disagree bonds would be any safer. The current crisis was, after all, precipitated by problems with debt instruments. And in any case, the government is the ultimate long-term investor. If stocks dive for a year or two, they can easily ride it out.

Re: Grassley's statement:

"There’s a feeling that the only way to get a bipartisan agreement is to defeat a Democratic proposal on the first hand and then the Democrats will come to Republican leadership and then, at that point, they’ll know the only way they’re going to get health care reform is bipartisan."

How you view this statement depends on your political lens. If you think the Democrat's proposal is way too far to the left, then this statement makes sense. If you think the proposal is just right, then his statement could be translated as "Bipartisanism is Republicanism. On health-care reform, it’s either the Republican way or no way at all."

So, the debate isn't furthered at all, but instead you've just illustrated the ideological divide.

I would also like to point out that people have had to use their 401k and other savings to pay medical bills. If SS had been changed the way DLS thinks it would have been changed, even if it started out that the citizens couldn't touch their own money, an exceptions would be not far behind.

An argument could be made that holding back savings for old-age isn't much use to people if they die before they get there.

"Your 'program' starts running deficits ..."

I specified no program of "mine." I stated correctly that the current Social Security is unsustainable and will begin to fail in the next decade, affecting federal finances, and I was against the equities-based (actually more like securities-based; it could have involved bonds as well as stocks, typically in mutual funds) program of Bush's; I stated correctly that this would have made Washington ("private" accounts in a government program is simply bogus, if not immediately, then as soon as the next election) into an enormous institutional investor, prepared to inject politics (Democratic, lib-PC politics) into the business world (even more than exist now). That I opposed this should have been plainly evident to all.

Now, that the Dems merely, stupidly opposed everything and proposed nothing during the earlier raising of Social Security's changes and rescue, a program the Dems "own" and could have easily rescued and had their own way at it, stupidity that made them worse than the GOP, is the most important fact here.

"If SS had been changed the way DLS thinks it would have been changed, even if it started out that the citizens couldn't touch their own money, an exceptions would be not far behind."

Would have, yes. (Should have, no.) In addition to the feds' insisting on "social responsibility" and all other kinds of political "gargantuan shareholder activism" nonsense, putting federal officials into boards of directors or into management positions, etc., there would probably be increasingly loose regulations or restrictions on withdrawals by individuals. The typical progression would be downward in price or cost and "size," as we've anticipated with housing activities and Cash for Clunkers (automobiles): First home expenses, then automobile expenses, then large appliance (durable goods) expenses, eventually to the stereos, televisions, etc. It would buy votes and would be irresistable to the Dems (especially if losses were repaid by progressive taxation).

"But wouldn't bonds have the same problem?"

Bonds of enterprises with a large federal presence, I would say yes.

There's one thing to consider though. Governments can "cheat" and reduce their interest levels and their interest costs by making their bonds tax-free. There's no reason why politically favored enterprises could not also enjoy this benefit. ("Social responsibility tax incentives and rewarding responsible firms")

"I specified no program of "mine." '

Of course you didn't. It's so easy just to say "No!" to anything productive. According to you, SS is unsustainable, but your "answer" is to make it less sustainable, by sucking funds off to the "private sector" even though you want to control those funds and not allow them to be private after all.

But that wasn't your plan, it was the Republicans, wasn't it?

Do us a favor, will you? Either make up your own plan, support someone else's plan or shut up. According to you, your position is too confusing for us simple-minded people to understand.