Monday, January 10, 2005

Taking My Hard-Earned Money

We have an insurance agent—call him Lenny—we've never met because he bought the accounts of the agent we started with back in about 1973. Couldn't even get him to take a look at our house after a major remodeling changed its value. "Just tell me what you think it's worth," he said.

Over more than a decade, Lenny has collected his annuity from our stream of homeowners and cabin insurance, umbrella policies for the doctor in the house and car insurance for three drivers (including a male teen) without more than lifting a finger to pick up line 2 when the assistant who handles claims takes a sick day.

That's fine. We want this relationship to be no sweat for us, and it is. Even moreso for Lenny.

I think of him every time I write a premium check, and almost every time I hear people complain about their hard-earned money being seized by taxation—and turned over to undeserving parties such as public transit riders, kids without milk in the refrigerator, stem cell researchers and federal prosecutors.

I'm all in favor of earning money through hard work, and I certainly have no objection to getting it the easy way, as long as it's honest. Where I have a problem is the easy-money guys using the interests of hard-working folks as a cover for schemes designed primarily to benefit the Really Big Lennies of the world.

The discussions about Social Security "reform" are the latest chapter in the age-old story of money's inexorable flow upstream. Although President Bush hasn't yet backed a specific plan, we've heard enough to understand a few things about the Cato Institute's Ownership Society campaign and its supporting "take back possession of your own money from the government" mantra.

1. People take better care of things they own, so individuals will do better by investing for themselves. Granted, most people may be careful with their money, but gambling is widespread, consumer debt has never been higher and Americans habitually spend for the short term rather than save. Meanwhile, Social Security is hardly an example of profligate spending or fiscal mismanagement.

Whether the manage-your-own-money argument resonates with you depends on your metaphor for Social Security. Is it an investment or insurance? Even grandma invests. But how many people self-insure?

2. The sky is falling. Privatization can't stand on its own. The math doesn't work, so it's what Monty Python might call confuse-a-cat time, by inventing a distracting Social Security crisis. It simply ain't so, though too many in the media are still taking the Cato Institute's campaign at face value.

3. Stocks have historically outperformed bonds as a long-term investment. So naturally, people should be able to put their hard-earned money in something that will perform better than stodgy old government-backed securities. Of course, the securities industry's standard disclaimer is true: "historical performance is no guarantee of future results."

4. Even if Social Security isn't broken now, it may be someday. It's courageous to take action in the face of the unknown. George Will seems to argue that since we don't know that Social Security won't fail some time in the future, we should go ahead now and try something we don't know will work. (Go ahead and read that one again. I'll wait.)

I find it encouraging that the truth is making even some straight-up Republicans and neocons back away from the Bush push, according to the Washington Post:

William Kristol, editor of the conservative Weekly Standard, is challenging the president's assertions that Social Security is in crisis and that Republicans will be rewarded for fixing it. Republicans are privately "bewildered why this is such a White House priority," he said. "I am a skeptic politically and a little bit substantively."

However, it isn't baffling to readers of Kevin Phillips' American Dynasty: Aristocracy, Fortune, and the Politics of Deceit in the House of Bush. The Bushes have no concept of going to work, performing a job and collecting a paycheck, because they've never actually seen anyone in their family do it. Rather, the Bush family fortune derives from fund raising, speculation, arbitrage, tax advantage and occasionally collecting lease payments on land that produced little oil. Ancestor Prescott Bush was a force on Wall Street before he became a Senator, and in the phrase of Elizabeth Mitchell, oil men are "stockbrokers in cowboy boots."

No wonder we're suspicious about the President's motives. No one in about six generations of the Bush extended family will have ever needed a dime of Social Security. But "fix" Social Security now and the Big Lennies of the world start collecting commissions now. The money managers benefit from new inflows of funds. All that money stagnating in the goverment coffers can start pulsing electronic payments to Wall Street accounts.

Bush believes that what is good for wealthy investors is good for America. That low taxation encourages capital investment—and investment is the true engine of American enterprise. Don't blame him for what he thinks. It's all he's known. It was the way he was bought up. It was the way he became a millionaire without accomplishing anything productive except raising public money to build a stadium for a professional baseball team.

But shame on him for roping in the hard-earned money people to support his worldview. This is about easy money.


Blogger Charlie Quimby said...

I don't mean to imply that being Governor of Texas or eating a hot dog in the stands with baseball fans or making sure the revenue bonds get paid off isn't work. It's just not the kind of work people who talk seriously about their hard-earned money are likely to be doing. And they're not really the people who will benefit from the tax policies appealing to their values and aspirations—although they like to think so.

Kevin Phillips quotes a reported comment by one of GW's old pals: "Midland is probably where he first got the mistaken idea that doing well in business is the solution to America's problems, that is, what's good for business is good for America. 'Opportunity and business fortune for all' isn't really true for everyone. But it was for them [the Bushes]."

4:25 AM  

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