McCain's Presidential Ideas

What if McCain and Bush had succeeded in privatizing social security????
NYTimes

September 23, 2008

Retirees Filling the Front Line in Market Fears

By JOHN LELAND and LOUIS UCHITELLE

Older Americans with investments are among the hardest hit by the turmoil in the financial markets and have the least opportunity to recover.

As companies have switched from fixed pensions to 401(k) accounts, retirees risk losing big chunks of their wealth and income in a single day’s trading, as many have in the last month.

“There’s a terrified older population out there,” said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. “If you’re 45 and the market goes down, it bothers you, but it comes back. But if you’re retired or about to retire, you might have to sell your assets before they have a chance to recover. And people don’t have the luxury of being in bonds because they don’t yield enough for how long we live.”

Today’s retirees have less money in savings, longer life expectancies and greater exposure to market risk than any retirees since World War II. Even before the last week of turmoil, 39 percent of retirees said they expected to outlive their savings, up from 29 percent in 2007, according to a survey by the Employee Benefit Research Institute, an industry-sponsored group in Washington .

“This really highlights the new world of retirement,” said Richard Johnson, a principal research associate at the Urban Institute in Washington . “It’s a much riskier world for retirees, because people don’t have defined-benefit plans. They have pots of money and they have to worry about making it last.”

Carol J. Emerson, 65, sees herself as particularly vulnerable. Her annual income of $50,000 comes almost entirely from dividends, and she says she is worried that as her stocks decline, some of those dividends will fall, too.

“If I were guaranteed that the dividend would remain unchanged, I could ignore that the underlying value of my stocks has eroded,” she said. “But that is not the way it works. If the value of the stocks doesn’t go up again, there are not a lot of companies that can keep on paying a 16 percent dividend.”

Nevertheless, Ms. Emerson decided to push ahead last week with the rebuilding of her sun porch in Ventura , Calif. , not wanting to endure any longer the discomfort of life in a mobile home with a leaky and rusting porch.

“I don’t obsess about what is happening, but it is always in the back of my mind,” Ms. Emerson said, adding that she would cancel the $30,000 project if she lost faith that stocks would rebound in her lifetime.

“I can sustain the ups and downs, as long as the downs are followed by ups,” Ms. Emerson said, “but I cannot sustain a constant slow erosion. I am assuming, despite all the terrible news, that somehow things will get better.”

Older people with few assets, including the one-third of retirees who rely on Social Security for 90 percent or more of their income, may not suffer directly from the decline in the stock market, but they feel the pain of higher gas and food prices and reductions in volunteer services like Meals on Wheels, which have been curtailed because of fuel costs.

The collapse of the housing market has hit older homeowners. According to the Center for Retirement Research, Americans over age 63 pulled $300 billion out of their home equity through refinancing from 2001 to 2006, lowering their net worth.

Surveys by AARP, the Transamerica Center for Retirement Studies and the Employee Benefit Research Institute have found that more workers nearing retirement age are putting off their plans to retire, curtailing contributions to their 401(k) accounts and borrowing from the accounts to pay for living expenses, including credit card and mortgage debt.

After three decades of decline, a higher percentage of Americans older than 55 are now working than at any time since 1970, the Bureau of Labor Statistics reports. Some are working because they want to, but many because they need to.

The McKinsey Global Institute reported in June that the typical worker would have to work to age 70 to maintain his or her standard of living in retirement.

Mary O’Connell, 76, and her husband, S. F., 78, of St. Peters , Mo. , retired without pensions and with meager benefits from Social Security, counting on income from four stocks. But the bulk of the stock was in Bank of America, whose stock has dropped by nearly a third since the start of the year, including 10 percent last week. “It’s been horrible,” Ms. O’Connell said.

“I can’t cash anything because the value has deteriorated so much that I would lose money. And even if I did I’d face capital gains tax that would wipe out what little bit I’d get.”

At the same time, she said, her “safe” investments — her certificates of deposit — have rolled over to lower interest rates, reducing a reliable stream of income.

Ms. O’Connell said she did not follow her stocks too closely because it would only make her depressed. “We figure we worked all our lives,” she said. “This is something we wanted to enjoy. Now that’s taken away from us.”

For many older people, last week’s turmoil on Wall Street was just the latest in a series of shocks that have eroded their stability.

When Robert Waskover, 79, was asked how the economy was affecting him, the first thing he mentioned was gas prices.

Mr. Waskover, who sells insurance part time in Palm Beach Gardens , Fla. , said he and his wife, Barbara, 75, were being squeezed from all sides: rising expenses for gas, food and health care; lower income from his business; and the collapse in value of their home and stock portfolio.

Mr. Waskover described a one-two punch from the economy. First, his expenses started to exceed his income, so he began occasionally selling some of his stock. Then the stock prices fell, so any sale meant taking a loss. “Now I’m looking to see if I can take a bridge loan on the house so I can draw on that,” he said. “We’ve been watching every penny. And everything keeps going up and up.”

Corlette McShea, 61, of Libertyville , Ill. , is one of those worried about how she will live in retirement. Ms. McShea, who works nearly full time for a market research company, has scrimped to build a nest egg — buying her house for cash after a divorce settlement, building a 401(k) account and buying a seven-year, $30,000 annuity from the American International Group.

Then she discovered the annuity was not protected by the Federal Deposit Insurance Corporation. As A.I.G. teetered this month, Ms. McShea tried to call the number given to her for A.I.G. “Their office is in Texas , so after the hurricane, the office is not even open so I couldn’t talk to anybody,” she said. She was willing to pay a penalty for early withdrawal, she said, but at 61, “how do you recoup any of this?”

At the same time, other parts of the economy are closing in around her. Though her home is paid off, her property taxes have risen to nearly $14,000 a year, up from $5,000 when she bought the house 10 years ago. She was counting on the annuity to pay the taxes.

“What a terrible situation that you have a house that is paid for and you can’t even afford to stay in it because the real estate taxes keep going up,” she said. “In my neighborhood, there’s houses up and down the street that are for sale and not even an offer. I’m stuck. I’m stuck with the house; I don’t know what my investments are doing; and here’s this annuity with A.I.G. that is in jeopardy. Every way I look, I’m feeling kind of scared and panicked.”

Younger people, of course, have been feeling the market’s pain as well. But for some — including those who have felt priced out of the housing market — the dips mean a chance to get in. For older people, there is no upside to the distress. “They’ve got to adjust their expectations of retirement,” said Martin Baily, a senior fellow at the Brookings Institution. “The market will recover, but you won’t.”

Malcolm Gay and Ana Facio Contreras contributed reporting.

McCain's Integrity

10 Sep 2008 01:40 pm

For me, this surreal moment - like the entire surrealism of the past ten days - is not really about Sarah Palin or Barack Obama or pigs or fish or lipstick. It's about John McCain. The one thing I always thought I knew about him is that he is a decent and honest person. When he knows, as every sane person must, that Obama did not in any conceivable sense mean that Sarah Palin is a pig, what did he do? Did he come out and say so and end this charade? Or did he acquiesce in and thereby enable the mindless Rovianism that is now the core feature of his campaign?

So far, he has let us all down. My guess is he will continue to do so.

  And that decision, for my part, ends whatever respect I once had for him. On core moral issues, where this man knew what the right thing was, and had to pick between good and evil, he chose evil. When he knew that George W. Bush's war in Iraq was a fiasco and catastrophe, and before Donald Rumsfeld quit, McCain endorsed George W. Bush against his fellow Vietnam vet, John Kerry in 2004. By that decision, McCain lost any credibility that he can ever put country first. He put party first and his own career first ahead of what he knew was best for the country.

And when the Senate and House voted overwhelmingly to condemn and end the torture regime of Bush and Cheney in 2006, McCain again had a clear choice between good and evil, and chose evil.

He capitulated and enshrined torture as the policy of the United States , by allowing the CIA to use techniques as bad as and worse than the torture inflicted on him in Vietnam . He gave the war criminals in the White House retroactive immunity against the prosecution they so richly deserve. The enormity of this moral betrayal, this betrayal of his country's honor, has yet to sink in. But for my part, it now makes much more sense. He is not the man I thought he was.

And when he had the chance to engage in a real and substantive debate against the most talented politician of the next generation in a fall campaign where vital issues are at stake, what did McCain do? He began his general campaign with a series of grotesque, trivial and absurd MTV-style attacks on Obama's virtues and implied disgusting things about his opponent's patriotism.

And then, because he could see he was going to lose, ten days ago, he threw caution to the wind and with no vetting whatsoever, picked a woman who, by her decision to endure her own eight-month pregnancy of a Down Syndrome child in public, that he was going to reignite the culture war as a last stand against Obama. That's all that is happening right now: a massive bump in the enthusiasm of the Christianist base. This is pure Rove.

Yes, McCain made a decision that revealed many appalling things about him. In the end, his final concern is not national security. No one who cares about national security would pick as vice-president someone who knows nothing about it as his replacement. No one who cares about this country's safety would gamble the security of the world on a total unknown because she polled well with the Christianist base. No person who truly believed that the surge was integral to this country's national security would pick as his veep candidate a woman who, so far as we can tell anything, opposed it at the time.

McCain has demonstrated in the last two months that he does not have the character to be president of the United States . And that is why it is more important than ever to ensure that Barack Obama is the next president

McCain's Health Plan

THIS ALONE SHOULD CREATE A GROUND SWELL OF UNSHAKEABLE SUPPORT AND ACTIVISM FOR OBAMA AND AGAINST McCAIN IN THIS ELECTION!!!!!!!!

IF McCAIN IS ELECTED YOU ARE SCREWED!

EVERY MEMBER SHOULD BE ABLE TO RELATE TO A REAL LOSS IN INCOME OF BETWEEN $2,400 AND $3,300 OR MORE!

READ THIS CAREFULLY AND MAKE SURE THAT THIS GETS IN THE HANDS OF EVERY MEMBER IN OUR UNION AND ANYONE YOU KNOW WITH AN EMPLOYER SPONSORED HEALTH CARE PLAN!!!!!!

McCain's Health Care Plan

McCain gave a speech on his health care plan yesterday which said very little. In this NY Times article, McCain's economic advisor Holtz-Eakin makes it clear that their political strategy is to avoid getting tied down on any details, so that the glaring flaws in the plan won't be quite so obvious.

Let's start with the one hard proposal McCain has made: he would tax employer-sponsored health insurance and create new tax credits--$5000 for a family and $2500 for an individual--for people who buy their own insurance. As Holtz-Eakin made clear in the talk I attended last month, this means that workers would have to pay taxes on the value of health benefits they received from employers. This is explicitly an attempt to kill the existing system of employer-provided care by dramatically increasing taxes on workers.

How would this work out for the typical worker? Consider this information from the most recent Kaiser Family Foundation study of health care costs:

In 2007, for a family the average total premium for a health care plan was $12,106, with $8824 paid by the employer. Let's say the McCain plan is enacted. What would happen to that average family if the employer continued to provide coverage (Scenario 1)? For a married couple filing jointly with income $63K-128K, the marginal tax rate is 25%, so they would face a tax increase of $2406 (25% of $8824).

But of course the intent of the McCain plan is to kill the employer-provided system. So let's say the McCain program is adopted and your employer drops your family's coverage (Scenario 2). What would happen? You would now have to foot the complete $12,106 bill for coverage, a $8825 increase over the employee-portion you're currently paying. This would be offset by a $5000 tax credit. So net, you would end up paying $3325 ($8825-$5000) more for your health care.

So, remarkably, McCain has managed to design a heads-you-lose, tails-you-lose program. Either your employer keeps your coverage, in which case you face a huge tax increase. Or your employer drops your coverage, and you face an even more massive increase in your out-of-pocket health-care costs.

The best-case scenario would be that employers who dropped coverage would then increase wages, compensating workers for the jump in what they have to pay for health care. In the long-run, there's a fair case to be made that this would happen, but as Keynes famously remarked, "In the long run, we're all dead," and the transition period would be extremely painful.

Strangely, although the plan is plainly an attempt to deep-six the employer-provided system, according to the NY Time article, "Mr. Holtz-Eakin said he believed that many employers would still offer health insurance to try to attract the best workers ..." If that's right, these workers would face a huge jump in their tax bill (see Scenario 1 above).

None of this gets to the key problem in McCain's plan: on the individual market, people with pre-existing conditions would be denied coverage. Here's the relevant part of the Times article:

Mr. McCain had previously described aspects of his health care plan but on Tuesday offered new details on how to cover people with existing health problems, in a nod to the growing concerns about the difficulties that many sick, older and low-income people have getting insurance.

Elizabeth Edwards ... recently pointed out that both she and Mr. McCain could be left uncovered by Mr. McCain’s plan because she has cancer and he has had melanoma. Stung by such criticism, Mr. McCain is trying to develop a way to cover people with health problems while still taking a generally market-based approach to solving the health care crisis.

“I’ll work tirelessly to address the problem,” Mr. McCain said in a speech here at the H. Lee Moffitt Cancer Center & Research Institute. “But I won’t create another entitlement program that Washington will let get out of control. I won’t do it. Nor will I saddle states with another unfunded mandate.”

For people who currently get health insurance through their jobs, Mr. McCain’s plan would give them a tax credit that they could put toward buying a different, and potentially less expensive, health insurance plan tailored to their needs — and allow them to keep that health plan, and their doctors, even if they switch or lose their jobs.

But Democrats and some experts said the proposal might lead some employers to stop offering health insurance, and questioned whether the tax credit would cover the cost of private insurance ....

Mr. McCain’s speech here implicitly acknowledged some of the shortcomings of his free-market approach. But rather than force insurers to stop cherry-picking the healthiest — and least expensive — patients, Mr. McCain proposed that the federal government work with states to cover those who cannot find insurance on the open market. With federal financial assistance, his plan would encourage states to create high-risk pools that would contract with insurers to cover consumers who have been rejected on the open market.

Mr. McCain was vague Tuesday about just how his safety net would be structured, and did not specify how much it might cost, leaving the details to negotiations with Congress and the states. But his top domestic policy adviser, Douglas Holtz-Eakin, said in an interview that the federal share could cost between $7 billion and $10 billion — money he said could be redirected from existing federal programs that pay for uncompensated medical care, mainly in hospitals.

Mr. Holtz-Eakin said that sum, when combined with contributions expected from the states and insurers, could provide coverage for the five million to seven million uninsured people that he estimates cannot obtain it because of their health or age.

These figures are nonsense on their face. If the federal government is going to subsidize a high-risk pool of 5-7 million people with $7-10 billion a year, the proposed subsidy is $1400 year. There is no way to this is going to be anywhere close to covering the extra insurance costs for a group that consists of old and sick people. Although McCain intentionally leaves out the details, the only place these extra funds could come from is from the states. In other words, although McCain says, "Nor will I saddle states with another unfunded mandate,” this is exactly what his plan would do.

Additionally, the 5-7 million is surely a vast underestimate of the number of people who would not be able to obtain health insurance in McCain-land. Anyone old, sick, or with a prior condition--a number that would easily be in the several tens of millions--would not be able to obtain insurance at anything other than obscene rates. Faced with no restrictions, insurers would cherry pick only the low-risk customers.

Overall, the McCain plan would raise taxes on workers in an effort to eviscerate the current health care system in the name of free market idolatry. To the extent it fails to completely destroy the existing system--as McCain's advisor anticipates--it would saddle the average family with $2400 in extra taxes to penalize them for having employer-sponsored care. And if the McCain plan succeeded in killing the current system, it would leave tens of millions unable to buy any care, until he comes up with some new safety net, details to be provided later, i.e. never.