Retirement Security Program

With military victory in Iraq secured, it is time to recognise another battle being waged on America's home front -- a generational war. When two countries go to war, one side usually wins. But generational warfare is a losing proposition for all because of the long-term social, fiscal and political strife it creates.

The final bill to US taxpayers for regime change in Iraq will probably total in the hundreds of billions of dollars. By contrast, the liabilities now… more

The U.S. government has yet again hit the debt ceiling -- a limit that was increased by $450 billion to a whopping $6.4 trillion just last year. The lack of fanfare surrounding the event reflects that the debt ceiling is now little more than a whisper of a reminder that there is a downside to excessive government borrowing, not the closing of the credit line it was intended to be. Given the return of structural budget deficits and the looming… more

President Bush's proposed budget blurs the important distinctions between stimulus and growth. Given the differing objectives of the two -- on the one hand increasing spending to stimulate the economy in the short term and on the other increasing saving to boost longer-term growth -- it is nearly impossible to accomplish both.

With the stimulus and growth components of the president's economic proposals canceling each other out, the budget plan is likely to accomplish neither.

When stimulus is the objective,… more

Leading the charge against the president's new economic proposal, Senator Daschle is describing the plan as "the wrong idea at the wrong time to help the wrong people."

It is true that the plan provides little short-term stimulus and benefits primarily the wealthy, while also adding significantly to the budget deficit. But its centerpiece, the elimination of individual taxes on stock dividends, isn't a bad idea, and need not favor the "wrong people" -- provided the country is willing to… more

The U.S. economy is afloat today thanks only to the undaunted American consumer. Breaking the pattern seen in other downturns of the past half century, consumption grew at a brisk pace through the three quarters of recession in 2001. Despite plunging stock prices, the spending binge continued last year, financed by record borrowing, a huge wave of mortgage refinancing and home-equity loans, a large federal tax cut, and anemic household saving. Were it not for the persistence of American shoppers,… more

The midterm elections ended the misconception that proposing changes to Social Security leads to a swift political death. President Bush has repeated his support for voluntary personal retirement accounts, and the moderate Democratic Leadership Council also leans toward the idea.

But how to pay for it? Reformers had targeted budget surpluses to fund the transition of Social Security from government collections and disbursements to personally directed investment accounts. But the war on terrorism and the recession-induced decline in tax revenue… more

"...we never really defined our position on the economy, we never said what we would do differently." Dick Harpootlian, chairman of the South Carolina Democratic Party as reported in The New York Times, 7 November 2002

Even among the advanced welfare states of Europe, efforts to contain pension costs are now common. The United Kingdom, Sweden, Germany and Italy have all enacted partial privatizations of their pension systems in recent years. Countries such as Spain and Greece will soon have to do so with Greece making reforms in order to comply with European Union regulations that limit government borrowing. Hungary and Poland have both adopted hybrid systems, in which traditional plans are being phased out and… more

While Democrats disliked President Bush's trillion-dollar-plus tax cut from the beginning, the dramatic deterioration in the federal budget outlook has given them new ammunition for assaulting the final, most expensive phase of the cut. With deficits forecast for the next three years, holding off the rest of the tax cut, as Democrats are suggesting, seems eminently sensible. But there's a catch. Democrats aren't invoking fiscal restraint as their cause. Rather, they want to spend the money generated by curtailing the… more