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Vol. 8 Issue 6…Dedicated to the Dialogue on Race…February 11, 2004
Magicians
By John M. Swails
Welcome to the land
of the Ooo's and the Ahh's
Where nothing that
you see is what you thought it was
But the cries of
those who notice are not heard
Because everyone is
so distracted
By the Ooo's and the
Ahh's
Microwaves produce
meals in just over a minute
While scientists are
busy creating synthetic epidemics
And just because you
came in first
Doesn't mean you're
gonna win it,
Unless your special
interests groups control the Senate.
We'll start an oil
war in the name of setting people free
'Cause our money
cannot flow
Unless they have
democracy.
With words full of
honey
We'll paint a picture
so sincere,
With all the things
that you
So desperately wanted
to hear.
And, just because the
U.N. was made by us,
Doesn't mean we follow
the rules.
So, if you want to
sway our position,
Give us something we
can use.
'Cause truth be told,
our friendship with you
Is just a pretense of
trust.
'Cause we'll quickly
bomb your country,
If you ever disagree
with us.
So, welcome to the
land of the Ooo's and the Ahh's
Where nothing that
you see is what you thought it was
But the cries of
those who notice are not heard
Because everyone is
so distracted
By the Ooo's and the
Ahh's.
Save Social Security
As the monied interests on Wall Street salivate over the potential profits from charging fees on millions of private accounts, George W. Bush and conservative Republicans have gone on a campaign-style blitz to sell privatizing Social Security to the American public. To counter this privatization push, advocacy groups, including the American Association of Retired Persons (AARP) and Moveon.Org, are urging members of Congress to save Social Security for future generations.
Speaking at the National Press Club in Washington, DC on February 9, 2005, AARP CEO Bill Novelli reiterated his organization's position on privatization. "Social Security does not need a radical overhaul. We don't have to dismantle this successful program in order to save it. There are reasonable, moderate changes we can make to achieve solvency and fiscal soundness, just as has been done before."
Novelli offered several possible options to save the system. (1) Restore the total wages taxed by Social Security to 90 percent of nationwide earnings. This would move the cap from $90,000 in 2005 to $140,000--perhaps phased in over a decade. It would lower the projected shortfall by some 43 percent. (2) Diversify Trust Fund investments in a total market index fund, like most pension funds, to get a higher return, which could fix about 15% of the problem.
Many, including moderate Republicans, see any
number of steps that can be taken to strengthen Social Security short of taking
money out of system for investment in private accounts, which will not improve
its solvency. Moreover, privatization is no magic elixir; it is "risky,
hugely expensive and unnecessary." For more on AARP's efforts to save
Social Security, visit their web site at www.aarp.org.
While online, sign the MoveOn petition at www.moveon.org/socialsecurity/.
Déjà vu Inflation Redistribution
By John Burl Smith
After WWI, debtor nations were unable to repay their war debts. Conditions imposed by The Treaty of Versailles forced Germany to plead for a payment moratorium. As the major Allies' creditor, the United States prospered. Fearing depreciation and collapse of foreign currencies, the US demanded repayment from European debtors in either dollars or gold.
Deeply in debt, Allies borrowed heavily, creating more debt. Without gold or silver reserves, Europe increased its money supply, fighting the war on deficits. Short-term loans at high interest rates and speculative credit extensions to make debt payments to the US overextended Europe. Currencies depreciated causing rampant inflation, which destabilized world trade.
War and inflation redistributed wealth from Europe to the US. US financial institutions benefited greatly from speculation in Europe, driving up the US stock market. US financiers gave Europe huge export loans, which increased domestic production. This kept US employment artificially high and made the dollar seem stronger. Disastrously, US speculation in Europe raised economic expectations from 1925 until 1929, the year it all came crashing down.
Not a result of winning or losing WWI, hyperinflation redistributed wealth from Europe to the US. Germany was the worst-case scenario. The signs of inflation were unmistakable as prices increased six-fold from mid-1921 to mid-1922. Only a prelude to the looming crisis, from mid-1922 to mid-1923, prices rose more than 100 times. Food prices rose 135 times over 1921. Measured by the mark to dollar exchange rate, prices were 222 times higher. Devastating though this was, it proved mild compared to inflation from July to November of 1923; prices rose so fast they multiplied a million to a billion times their previous level.
Germany's hyperinflation is an object lesson on the folly of fighting wars on credit and deficit spending, which redistribute wealth and income. For example, German mortgages were valued at $10 billion in 1913; in late 1923, these same mortgages were worth only one U.S. penny. While Germany's middle class was wiped out, the rich put their wealth in foreign bank accounts, gold, precious metals and land.
Since 9-11, the US has fought wars in Afghanistan and Iraq on credit. Deficit spending has caused a reversal of fortune. Trapped in the wealth redistribution cycle as Europe following WWI, the dollar is at an all time low against the euro, pound, mark, franc and yen. Like Germany's mark in 1922, dollars are losing value sitting in pockets and/or bank accounts. Manipulating numbers, the Bush administration has hidden inflation behind an artificially high stock market and historically low interest rates.
Under Bush administration fiscal policies, which
include raiding Social Security and Medicare trust funds to give tax cuts to the
rich, the poor and middle class have taken real hits, as US jobs flowed
overseas. True signs of inflation Bush cannot hide are the food, energy,
medical and educational costs, which have more than doubled since 9-11.
Borrowing heavily in Europe and Asia to cover its debt and deficit spending to
pay for wars in Afghanistan and Iraq, the US economy sings déjà
vu 1922. With the shoe on the same foot, as other nations that fought wars on
credit while printing money like mad without gold to back it up, what does a
bully do when the creditors call in his IOU? (See www.sparknotes.com/history/european/interwaryears/section1.html
for the WWI historical perspective)
On Foxx in Ray!
By Dot
All too often in film, music and other aspects of socioeconomic and political life in the United States, blacks are depicted in such a negative light that many of us are simply so turned off that we tune out. Expecting the worst in the biographical film Ray, I was delightfully surprised and thoroughly entertained by Jamie Foxx's depiction of music great Ray Charles.
As members of the Academy of Motion Pictures, Arts and Sciences prepare to cast ballots for best film and best actor, Foxx and Ray should top the charts. Without belaboring the point, the film did an excellent job of portraying life for blacks in the segregated South. Having grown up in that era and marveled at the sheer genius of Ray Charles and his accomplishments, Foxx and the film's director, Taylor Hackford, deserve special recognition for making it real. For those too young to have experienced the times, music and the man firsthand, Ray provides an education.
This must see film has received nominations by
the 77th Academy Awards in the best picture, actor and director
categories. Ray is a winner!
Private Pension Protection (1875-2005)
In ancient times, a pension or annual payment was a personal gift granted to an individual by sovereign for past service, particularly military service, and later on for scientific discoveries and artistic achievements. The more complex pension plans, which cover thousands of individuals, began and developed with industrialization. By the 1950's, pensions afforded retirement protection for large segments of the United States' population in the public and private sectors.
Public sector pension plans ranged from the Social Security system and military service pensions to retirement plans of state and local governments. On February 13, 1946, the UN General Assembly created a pension plan to attract qualified staff worldwide.
American Express Company established the first private US pension plan in 1875. Other companies followed its example. Entirely employer-funded, these early retirement plans paid a specific monthly benefit.
In 1963, Studebaker terminated its employee pension plan. More than 4,000 workers at its South Bend, Indiana auto plant lost some or all of their pension benefits. To protect workers' pension benefits, Senator Jacob Javits (NY) introduced the Employee Retirement Income Security Act (ERISA) in 1967. President Gerald Ford signed ERISA into law on September 2, 1974. It established the Pension Benefit Guaranty Corporation (PBGC), which issued its first pension check for $140.75 on February 28, 1975. Today, nearly 800,000 people receive their pensions from PBGC.
PBGC guarantees single- and multi-employer pension plans. The single-employer program covers about 34.4 million workers and retirees in about 31,000 plans, while the multi-employer program covers about 9.5 million workers and retirees in about 1,650 plans.
While PBGC has afforded workers some security, the current system does not insure that pension plans are adequately funded. Today, the nation's pension plans are under-funded by an estimated $450 billion. Under-funded plans that must be terminated strain the pension insurance system. PBGC recently reported a record deficit of more than $23 billion. Although it will be able to pay benefits for some years to come, large and rising deficits undermine the long run financial solvency of the pension insurance system. (Sources: www.pbgc.gov and Encyclopedia Americana)
The Dark Knight-Batman/White Ninja/Zorro recently
received a progress report that fell below his potential, especially in
conduct. While the report alleges he has been talking in school, acting up and
generally abusing at least one of his teachers, the Dark One swears he is being
confused with his rowdy and discourteous classmates. When challenged to rectify
the situation, as in stand out from the horde, the Dark One/Ninja/Zorro
declared, "I will never give up on me!"
Disgruntled wants to know: In 2000,
George W. Bush campaigned on a pledge to place the Social Security trust fund
surplus in a "lockbox," i.e., used to pay down the national debt to
insure the solvency of the retirement program. Once in office, Bush made no
effort to distinguish between revenues from Social Security and federal income
taxes. Instead, determined to give his class a series of big tax cuts, Bush
jawboned down the economy in order to justify emptying the "lockbox"
and deficit spending. Adding insult to injury, he informed poor wage earners
that they were not included in his tax cut regimes because they did not earn
enough to pay income taxes. Yet, the only surplus revenues available to
partially offset the tax cuts were in the Social Security trust fund. At the
time, those that dared to call this travesty "class warfare" were
severely chided. If one cannot call it by its rightful name, then can we call
it a reversed Robin Hood scam, since it essentially redistributed income from
the bottom up?
Disgruntled says:
Facetiously, George W. Bush's proposed 2006 federal budget is being hailed as a
tribute to fiscal restraint. Promising to cut the federal deficit in half in
ten years, long after his second and final term in office expires, Bush's $2.6
trillion budget has a projected deficit in excess of $300 billion. It is
unclear how high the deficit will climb this year, since all of the cost of the
wars in Afghanistan and Iraq is not included. Also missing from the budget is
the projected $2 to $4.5 trillion needed to privatize Social Security, a
supposed cornerstone of the Bush second term agenda. One thing is crystal. Of
the proposed program cuts in Bush's budget, the only real reductions will occur
in areas that impact the poor and powerless. Large campaign contributors to
both political parties need not fear fiscal restraint, whether fact or fiction.
Disgruntled feels: Piracy! In the lead up to the war in Iraq, US citizens were frightened into believing Saddam Hussein possessed tons of chemical, biological and nuclear weapons of mass destruction. These WMDs in the possession of a rogue posed an imminent threat to Iraq's neighbors and US security. To end this crisis and avert the potential mushroom cloud from Saddam's nonexistent nuclear arsenal, the US declared war on Iraq. Now, US citizens are being warned, ad nauseam, that the Social Security system faces a financial crisis and must be fixed through privatization or face insolvency. Given the lies, black and white, about the dangers posed by Iraq, one cannot help but feel this is more manipulation to raid the treasury and/or dishonor the obligation. Air Force One should fly the Jolly Roger! Its skull and cross bones should adorn the backdrop and every podium where Bush and company declare, "Social Security is in a crisis!" This is piracy!
CBC on Privatizing Social Security
In response to the
"crisis" and discussions about privatizing the Old Age, Survivors and
Disability Insurance (OASDI) program, known as Social Security, the
Congressional Black Caucus (CBC) produced a white paper published at www.cbcfinc.org. This document enumerates the
benefits of the current system, counters the rhetoric being used to sell
privatization and highlights its impact on black Americans.
Citing statistics from various sources, the CBC report concludes, "Social
Security is the only protection against poverty resulting from the loss of
income due to retirement, death of a breadwinner or disability." Because
it is an insurance program, Social Security provides a guaranteed,
inflation-adjusted retirement income for a lifetime. As one of the most
successful programs in the nation's history for keeping people out of poverty,
its advocates believe that, rather than entertain measures that assure its
dissolution, Congress should insure its solvency for future generations.
The CBC report offers cogent arguments to counter privatization rhetoric,
including the notion that racial and ethnic minorities can make up for
centuries of discrimination and disadvantage by investing their Social Security
contributions in private accounts that will "magically" earn
inheritable wealth. Even with the attraction of ownership and potential wealth
creation, the rhetoric does not address the historic patterns of racial
discrimination in the U.S. that adversely impact the lifetime earnings of black
Americans.
Historically, in good and bad economic times, blacks experience periods of
unemployment and underemployment far greater than their white counterparts. Nothing
in the rhetoric alters racial disparities in the US labor market. Consequently,
should the past patterns shape the future, blacks will continue to earn
significantly less than whites and have less to invest in private accounts.
And, while blacks may enjoy the same rate of return as whites on their
investments, their lower contributions guarantee lower retirement income.
Moreover, because of stock market volatility, there is no guarantee of a
positive return on investments for either blacks or whites.
Ironically, the rhetoric used to divide blacks on this issue includes the fact
that black men have lower life expectancies than whites. Privatization does
nothing to address the fact that black men do not get as much out of this
retirement system as their white counterparts. Moreover, under privatization,
there is no disability and survivors' benefits, which at present
disproportionately benefit black children. To understand this and other aspects
of the Social Security privatization debate, log on to www.cbcfino.org
and read this report.
Mailbox:
E-Mails, Faxes and Telephone Calls
Email atlguy@hotmail.com
In an investment climate characterized by fraud, abuse, mergers and acquisitions,
who knows what constitutes the real value of a company's stock? Firms buy back
stock to the tune of billions of dollars to keep the prices artificially high.
Email www.news.ft.com (02-05-05) Russia said
yesterday it had abandoned efforts to tie the rouble's movement closely to the
dollar and switched to shadowing both the euro and US currency. The move
heightened expectations that other countries operating defacto dollar pegs,
such as China, could follow suit.
Email www.thecarpetbaggerreport.com Privatizing Social Security is politically charged. Even among Republicans, there is reluctance. A private memo to conservative allies, contained in a Monday (January 3, 2005) e-mail from Peter Wehner, Bush's director of strategic initiatives, strongly argues that Social Security benefits paid to future retirees must be significantly reduced. The memo disputes those on the right who insist that creating private investment accounts is all that's needed to fix the retirement system.
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