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Feingold Versus Johnson (Thomas Sowell)
Townhall.com ^ | October 12, 2010 | Thomas Sowell

Posted on 10/11/2010 9:17:11 PM PDT by jazusamo

One of a surprising number of old, well-established politicians being challenged in this year's election by some unknown newcomer is Senator Russ Feingold in Wisconsin. In a recent debate between Senator Feingold and his new challenger, businessman Ron Johnson, the difference between the old pol and new guy on the block stood out.

Feingold was clearly smoother and more glib-- and his arguments may have sounded more plausible to those unfamiliar with the facts. But what Ron Johnson said would have resonated better with those who did know the facts. How many people are in which category may determine the outcome of this election.

Senator Feingold wants Social Security kept pretty much the way it is. That would mean that there is not enough money to pay what is owed to the baby boomers who retire. Ron Johnson wants to keep Social Security as is for those who have already retired and for those approaching retirement years, but would not make it mandatory for younger people to join, if they don't want to.

Russ Feingold was on it in an instant, accusing his opponent of denying the benefits of Social Security to young workers and forcing them into the risky stock market for their retirement.

Although Senator Feingold cast himself in the role of a defender of Social Security, Ron Johnson pointed out that members of Congress like Senator Feingold had in fact undermined Social Security financially, by spending its money on other things.

This is in fact the dirty little secret about Social Security. In all the years when the money coming into Social Security exceeded the money being paid out in pensions, Congress simply spent the difference on everything from junkets to earmarks.

The fiction of a Social Security "trust fund" was maintained by giving government bonds in exchange for the money taken. But these bonds changed nothing, since they were just claims on future taxpayers.

If these bonds had never been printed, future taxpayers would have been on the hook for future shortfalls. Neither the government nor anyone else can spend and save the same money.

But the question is: How well did Johnson explain it to people who don't know the facts? That is also something that could determine the outcome of this election.

As for the dangers of the stock market, it would take a very poor index mutual fund to do worse than Social Security, even if the investor retires when the stock market is down.

After Ron Johnson referred to having recently read the Constitution, Russ Feingold pounced and depicted that as showing that his opponent hadn't read the Constitution before. It was the kind of political trick that may impress people who don't pay close attention.

But, to those who do pay attention to what goes on, the mention of the Constitution should remind them of the McCain-Feingold bill, which restricted free speech by some in the closing days of an election campaign. Just what part of "Congress shall make no law" abridging the freedom of speech did Senators Feingold and McCain not understand?

Apparently quite a lot. The Supreme Court has already declared part of that law unconstitutional.

The rationale for the McCain-Feingold law was to reduce the influence of money in political campaigns. But did you notice any reduction in the role of money after that law was passed and before it was declared unconstitutional? Feingold and McCain sold our birthright and didn't even get the mess of pottage.

Finally, there was that old favorite from the liberal playbook, "tax cuts for the rich." According to Senator Feingold, we cannot allow high-income people to continue to get the Bush administration tax cuts because the federal budget needs the money.

It has been shown so many times, in many administrations, as well as in other countries, that reductions in tax rates do not imply lower tax revenues. Often it has meant more tax revenues, when people change their behavior in response to tax cuts, and the resulting increase in economic activity generates higher incomes.

It is "tax cuts for the economy," but that does not have the same political pizzazz as "tax cuts for the rich."

The question in Wisconsin, as elsewhere, is whether the voters want more political cleverness of the kind that has gotten this economy into its present predicament.


TOPICS: Editorial; Politics/Elections; US: Wisconsin
KEYWORDS: feingold; johnson; sowell; thomassowell
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1 posted on 10/11/2010 9:17:16 PM PDT by jazusamo
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To: abigail2; Amalie; American Quilter; arthurus; awelliott; Bahbah; bamahead; Battle Axe; ...
*PING*
Thomas Sowell

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Please FReepmail me if you would like to be added to or removed from the Thomas Sowell ping list…

2 posted on 10/11/2010 9:20:03 PM PDT by jazusamo (His [Obama's] political base---the young, the left and the thoughtless: Thomas Sowell)
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To: jazusamo
Please bump the Freepathon and donate or become a monthly donor!

3 posted on 10/11/2010 9:21:28 PM PDT by jazusamo (His [Obama's] political base---the young, the left and the thoughtless: Thomas Sowell)
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To: jazusamo

Not only is his message good, but Johnson communicated much more clearly in the 2nd debate and knocked the ball out of the park.


4 posted on 10/11/2010 9:27:17 PM PDT by Crichton
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To: Crichton

Not knowing a thing of WI politics but from what I’ve read it does look like Johnson can send Feingold out the door, sure hope it happens.


5 posted on 10/11/2010 9:31:57 PM PDT by jazusamo (His [Obama's] political base---the young, the left and the thoughtless: Thomas Sowell)
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To: jazusamo
As for the dangers of the stock market, it would take a very poor index mutual fund to do worse than Social Security, even if the investor retires when the stock market is down.

When Bush talked about privatizing SS, some people said: "Oh, I don't want the responsibility of managing my retirement." Man, if I were given the choice, I'd have done it in a heartbeat.

I did some calculations based on an average interest rate of only 4% (remember the 21% prime rate when Jimma was President?). Compounding a "half-balance" of my SS fund at 4% for 46 years would have given me almost $1.7 million. At the rate that I am being paid right now, I need to live to 142 to break even...probably not going to happen. Also, If I had the $1.7 million and got 4% on it now, I'd be collecting $68,000/year and never touch the $1.7 million. That's almost triple what I get from SS. And if you think you can't find a 4% yield, I've got several stocks paying dividends over 10% (e.g., WHX).

6 posted on 10/11/2010 9:41:14 PM PDT by econjack (Some people are as dumb as soup.)
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To: econjack

Well said and I’ll never forget when Jimma was President, we had to sell our home and it wasn’t pretty.


7 posted on 10/11/2010 9:51:22 PM PDT by jazusamo (His [Obama's] political base---the young, the left and the thoughtless: Thomas Sowell)
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To: econjack
I did some calculations based on an average interest rate of only 4%...

Several years ago I made an Excel spreadsheet that would calculate the amount of money I would have if I had placed my SS payments into some type of investment, and I also used 4% interest.

I was lazy and used that stupid letter from SS that shows how much I have paid every year since I started working.

I would have had just under $2.5 million as of today! SS brags if I wait until I am 65 or 70 they will send me monthly checks for $2000, about one fifth of what I could be drawing today and I could retire now and enjoy the rest of my truncated (Obamacare early death sentence) life.

8 posted on 10/11/2010 9:52:17 PM PDT by OldMissileer (Atlas, Titan, Minuteman, PK. Winners of the Cold War)
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To: econjack
Wish some Republican candidate would ask a Dem incumbent--be they in the Senate or the House--this question:

"Tell us--if investing in the stock market is 'too risky'--why Federal employess--you included--can enroll in the Thrift Savings Plan, which allows its members to invest in the stock market?"

Not one Pubbie candidate has EVER--to my knowledge--mentioned TSP, but it would make any Dem Congress critter squirm trying to explain why they rant and rave about "privatizing Social Security" when they have their own private TSP accounts, many of them invested heavily in the stock market. And those accounts--over a relatively short period of time--can earn a nice little nest egg!

9 posted on 10/11/2010 10:05:57 PM PDT by milagro
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To: Diana in Wisconsin
Thomas Sowell on the Johnson-Feingold debate Wisconsin ping.
Feingold was clearly smoother and more glib-- and his arguments may have sounded more plausible to those unfamiliar with the facts. But what Ron Johnson said would have resonated better with those who did know the facts. How many people are in which category may determine the outcome of this election.
(And please add me to the WI ping list, if you would)
10 posted on 10/11/2010 10:10:37 PM PDT by Hunton Peck ( King: I have a DREAM today! 0bama: I'll have ICE CREAM today!)
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To: OldMissileer

It’s sickening, isn’t it.


11 posted on 10/11/2010 10:14:20 PM PDT by unkus
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To: unkus
It’s sickening, isn’t it.

It really is considering so many of those years investments were accruing 10 to 15 percent (and more) and I/we could have been extremely well off, even with the crashes.

12 posted on 10/11/2010 11:59:03 PM PDT by OldMissileer (Atlas, Titan, Minuteman, PK. Winners of the Cold War)
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To: jazusamo

Bump


13 posted on 10/12/2010 4:09:40 AM PDT by TheOldLady (Pablo is very wily.)
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To: milagro
One has to question why Congress exempts itself from most of the legislation it passes, including SS and the new health care plan. An email circulated a few weeks ago seeking an amendment that stated that Congress could pass no bill that they, themselves, were not subject to. Yeah...fat chance of that ever seeing the light of day.
14 posted on 10/12/2010 4:35:02 AM PDT by econjack (Some people are as dumb as soup.)
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To: OldMissileer
Clearly, you made more than I did as a university prof. Still, there is no doubt that everyone would be better off with a private plan. Friedman once suggested that people be given that choice (i.e., SS or private), provided they signed a document stating they would never be entitled to any gov't support if they opted for a private plan. Sounds good to me. That way, the lazy idiots that pervade this Republic can have what they want and those of us with a few neurons still firing can have ours. Having a choice would be nice, but gov't wants to take choices away from you, not give them to you.
15 posted on 10/12/2010 4:40:08 AM PDT by econjack (Some people are as dumb as soup.)
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To: econjack
Still, there is no doubt that everyone would be better off with a private plan.

I can't help but wonder what our society and economy would be like with all that SS money invested and put to work, instead of being given to congress to spread around.

16 posted on 10/12/2010 6:40:49 AM PDT by GBA (Not on our watch!)
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To: OldMissileer; econjack
I did some calculations based on an average interest rate of only 4% (remember the 21% prime rate when Jimma was President?). Compounding a "half-balance" of my SS fund at 4% for 46 years would have given me almost $1.7 million.

At the rate that I am being paid right now, I need to live to 142 to break even...probably not going to happen. Also, If I had the $1.7 million and got 4% on it now, I'd be collecting $68,000/year and never touch the $1.7 million. That's almost triple what I get from SS. And if you think you can't find a 4% yield, I've got several stocks paying dividends over 10% (e.g., WHX).

6 posted on October 12, 2010 12:41:14 AM EDT by econjack

Several years ago I made an Excel spreadsheet that would calculate the amount of money I would have if I had placed my SS payments into some type of investment, and I also used 4% interest.

I was lazy and used that stupid letter from SS that shows how much I have paid every year since I started working.

I would have had just under $2.5 million as of today! SS brags if I wait until I am 65 or 70 they will send me monthly checks for $2000, about one fifth of what I could be drawing today and I could retire now and enjoy the rest of my truncated (Obamacare early death sentence) life.

Social Security not only imposes a tax on the employee, it imposes an equal tax "on the employer." I put that in scare quotes for the simple reason that all the money, not just the "employer contribution," comes from the employer - and the burden on the employee is to earn the whole expense of his employer's cost of employing him.

if you don't earn enough to cover the cost your employer has to pay to keep you on, you are on your way out the gate. So it doesn't matter whether the tax is imposed on the employer, the employee, or - as in Social Security - both. Any way you slice it, the employee has to earn it before the employer will pay it.

So if you just look at the money Social Security says you paid in, you are underestimating how much you actually bore in order to get the Social Security payments you ultimately receive.

Wouldn't it be a great idea for Republican candidates to have a link on their web sites to a calculator which would do the sort of calculation that you did with your spreadsheet!


17 posted on 10/12/2010 7:05:37 AM PDT by conservatism_IS_compassion (DRAFT PALIN)
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To: conservatism_IS_compassion

My calculations included the employer’s contribution.


18 posted on 10/12/2010 7:09:06 AM PDT by econjack (Some people are as dumb as soup.)
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To: milagro
"this question"

That's actually a very good point. I know quite a few Dems who have invested bigtime in the stock market and other non-governmental funds. I think the anti-stock market rantings play to some of the Dem faithful, like my sister and her husband, who distrust the stocks. They have no money in the stock market. And my sister admits she'll be working far into her sixties. I think the two are connected.

19 posted on 10/12/2010 8:06:51 AM PDT by driftless2 (For long-term happiness, learn how to play the accordion.)
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To: conservatism_IS_compassion

I did not use the employers portion for my 20 years military service but I used it for after I retired. I had my own company and paid those taxes myself.

On top of that, the employee’s portion is capped at certain income levels but the employer side is not capped. The employer pays SS on every penny their employee earns and I made sure my calculation included it because I was making quite a bit more than the cap amount and had to pay both sides of the SS payment to our wonderful government.


20 posted on 10/12/2010 9:21:27 AM PDT by OldMissileer (Atlas, Titan, Minuteman, PK. Winners of the Cold War)
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