As promised, here's picture of Wyatt. It's a couple of months old, his ears are now standing up. In this picture, they are still folding over a little. Is there any doubt that he's just the cutest puppy in the whole wide world???
Saturday, February 12, 2005
Thrift Savings Plan Background
The Thrift Savings Plan (TSP) is a voluntary retirement savings plan offered to Federal employees, including members of Congress.
It offers comparable benefits and features to those available to private sector employees in 401(k) retirement plans, including pre-tax contributions through convenient payroll withholding.
Participants voluntarily add $1.3 billion per month in new contributions to their accounts.
Participants have the choice to invest in any or all of five broad-based investment funds:
- A stable value fund invested in U.S. Treasury securities
- An index fund comprising investment grade bonds
- Small and mid-cap stock index fund
- Large cap stock index fund
- International stock index fund
These funds have the following 10-year compound annual rates of return:
- G Fund (government securities fund) 6.04% (3.67% real)
- F Fund (bond index fund) 6.95% (4.58% real)
- C Fund (common stock index fund) 10.99% (8.62% real)
- S Fund (small capitalization stock index fund) 9.70% (7.33% real)
- I Fund (international stock index fund) 4.32% (1.95% real)
Administration and investment costs for the TSP are low (at 6 basis points, or 60 cents per $1,000 of account balance). A Senate hearing in 2004 discovered that many "low-cost" funds have expense ratios between 20 and 65 basis points. Other funds' costs are significantly higher.
The TSP is administered by the Federal Retirement Thrift Investment Board. Governance of the Board is carried out by five independent part-time Presidential appointees and a full-time Executive Director whom they select. TSP funds are held in trust. As fiduciaries, the Board Members and the Executive Director are required to act prudently and solely in the interest of TSP participants and beneficiaries.
The Board provides training and develops educational materials including publications, forms and videos. It maintains an interactive web site (www.tsp.gov) and a toll free telephone center for participants to obtain these materials, check account balances, change contribution levels, adjust investment allocations or request withdrawals.
I've written a little bit about my Chihuahua, Wyatt. Someday, when I figure out how to do pictures, I'll do post some. When I do, look out! Anyway. Wyatt is about 7 months old. He is purebred, but I didn't get papers. He was bred and raised by the grandmother of the wife of a co-worker and he was free, so I can't do too much questioning about his background. At least, I don't feel like I can. There are times when I want to wring his tiny little neck, and other times when I know Wyatt thinks I am the center of his world.
When I walk in the door, he greets me like he has just missed me soooooooo much! The next ten minutes are Mommy's home! Happy! Happy! Joy! Joy! Mommy's home! We do the Mommy's home dance where he stands on his back legs and waves his front legs in the air. He dances all around me on two legs and then we do a twirl or two. He holds onto my fingers and twirls around. Then he jumps all over the chair and couch and coffee table, just waiting for me to kiss Daddy hello and speak to the other kids (Dollie and Oliver, the cats). Then, when I sit down in the chair he jumps up and washes my face for about 10 minutes or until I've had enough. He gets a toy and either wants me to throw it for him, or he sits in my lap and chews on it while I talk to Dale.
I noticed that I haven't been cleaning up puppy puddles lately. hmmmm....potty training wasn't going well because I work and Dale is unsteady enough on his feet that he doesn't want to take Wyatt outside unless I'm there. I was putting down potty pads, but he wasn't real good about using them. One evening last week I found out why I wasn't cleaning as much. Wyatt is using the litter box! I had wanted him to be litter trained, but it was hard going. Apparently, the cats have trained him. He got a treat that time and every time I've noticed him using the litter since.
Now, if only we could get him to use the litter for his, uh....puppy tootsie rolls.
February is home to Groundhog Day (2nd), Washington's and Lincoln's birthdays (12th and 22nd), President's Day (21st), and Valentine's Day (14th). I should mention that my friend Tina's birthday is the 12th and my very own Dale's birthday is the 13th (and yes, he was born on Friday the 13th which explains a lot!). They should both be national holidays, but aren't so we will leave those as just a shout out to them.
February is home to:
February is also home to daily, weekly and monthly observances that I'll be you didn't know about. Or maybe you did, but I sure didn't!
Return Shopping Carts to the Supermarket Month
Greatful thanks to Everyday Stranger for finding this site and providing the link. Check out other months and have fun!.
- PS: I added a link to the Official 2005 Holidays and Observances on the sidebar for your convenience - and mine.
What is Social Security? I just heard Mark Weisbrot (Social Security: The Phony Crisis) on Cavuto on Business say that Social Security is an insurance program. People paid in to be sure they get a return in their old age. Neal Cavuto said that it's a welfare program. I hadn't thought about it before, but I think it's both. It's welfare for those who didn't (couldn't or wouldn't) prepare for their retirement years, and insurance for those who did.
Timothy Penny of the Washington Times explains just what the Bush plan calls for.
One of my (many) pet peeves: I hate when politicians try to scare voters, usually the elderly and poor. And if you just happen to be black, you get extra attention. Why do they do it? Because they want to retain their cushy seat in Washington or their state capital. The Democrats are particularly good at this. The "evil" Republicans are trying to take Social Security away from grandma and trying to keep the poor, especially the poor blacks, from getting any further in life. The Republicans have done it too, but they just don't do it as well as Democrats. I think the Democrats are going to have to find another way to scare their constituents. The elderly don't scare as easily and the poor are figuring out that the Democrats don't have their best interests at heart. Now, don't get me wrong. There are Democrats who honestly want to make the quality of life better for the poor, black or white, but they are few and far between.
It's time to dismantle the UN entirely. Not just rid the US of it's presence, but just get rid of the whole decaying mess. Here's one link. Google for more if you have the stomach.
Observances: Thanks to Everyday Stranger, I found a website that lists all the holidays and observances for the month. this is too good for just a Ramblings post. Look for some observances in another post.
Eason Jordan: He's out at CNN and good riddance. Jordan was a journalist who made a statement and was called on it. He couldn't provide any proof that what he said was true, and couldn't (or wouldn't) provide proof that he was misquoted or his statement was mis-interpreted. As a journalist and high-ranking CNN executive, Jordan should have known not to make statements he couldn't prove. Especially when they had an anti-American flavor. Maybe he thought that making such statements in Europe, where anti-American statements are popular, would go unnoticed in the US. Another poor judgment play. MSM has to understand that the bloggers on the Internet are here to stay and that everyone of "interest" shall we say, is subject to having their statements scrutinized. I believe that for the most part, bloggers will take the side of right. I say for the most part, because there will always be those who will defend the lies simply because they believe them to be true, regardless of proof. If the truth is out there, bloggers will find it. Anyone who make speeches should be aware that their words are subject to scrutiny. I don't celebrate the fact that Jordan resigned his job. I always hate to see someone forced out of a job simply because they made a stupid mistake.
Friday, February 11, 2005
"As we fix Social Security, we also have the responsibility to make the system a better deal for younger workers. And the best way to reach that goal is through voluntary personal retirement accounts."
The President believes personal retirement accounts must be part of a comprehensive solution to strengthen Social Security for the 21st century.
Under the President's plan, personal retirement accounts would start gradually. Yearly contribution limits would be raised over time, eventually permitting all workers to set aside 4 percentage points of their payroll taxes in their accounts. Annual contributions to personal retirement accounts initially would be capped, at $1,000 per year in 2009. The cap would rise gradually over time, growing $100 per year, plus growth in average wages.
Personal retirement accounts offer younger workers the opportunity to build a "nest egg" for retirement that the government cannot take away.
Personal retirement accounts provide ownership and control. Personal retirement accounts give younger workers the opportunity to own an asset and watch it grow over time.
Personal retirement accounts could be passed on to children and grandchildren. The money in these accounts would be available for retirement expenses. Any unused portion could be passed on to loved ones.
Personal retirement accounts would be voluntary. At any time, a worker could "opt in" by making a one-time election to put a portion of his or her payroll taxes into a personal retirement account.
Workers would have the flexibility to choose from several different low-cost, broad-based investment funds and would have the opportunity to adjust investment allocations periodically, but would not be allowed to move back and forth between personal retirement accounts and the traditional system. If, after workers choose the account, they decide they want only the benefits the current system would give them, they can leave their money invested in government bonds like those the Social Security system invests in now.
Those workers who do not elect to create a personal retirement account would continue to draw benefits from the traditional Social Security system, reformed to be permanently sustainable.
Personal retirement account options and management would be similar to that of the Federal employee retirement program, known as the Thrift Savings Plan (TSP). A centralized administrative structure would be created to collect personal retirement account contributions, manage investments, maintain records, and facilitate withdrawals at retirement. The structure would be designed to facilitate low costs, ease of use for new investors, and timely crediting of contributions. This centralized investment structure would help minimize compliance costs for employers.
Contributions would be collected and records maintained by a central administrator. Similar to the TSP, private investment managers would be chosen through a competitive bidding process to manage the pooled account contributions.
The central administrator would answer questions from account participants and distribute periodic account statements.
The central administrator would also facilitate withdrawals and the purchase of annuities with account balances.
Like TSP, we expect participants to have easy access to investment information and to their accounts. Participants could easily check account balances and adjust investment allocations.
Guidelines and restrictions would be put in place to provide sound investment choices and prevent individuals from spending the money in these accounts on the lottery or at the race track. Workers would be permitted to allocate their personal retirement account contributions among a small number of very broadly diversified index funds patterned after the current TSP funds.
Like TSP, personal retirement accounts could be invested in a safe government securities fund; an investment-grade corporate bond index fund; a small-cap stock index fund; a large-cap stock index fund; and an international stock index fund.
In addition to these TSP-type funds, workers could choose a government bond fund with a guaranteed rate of return above inflation.
Workers could also choose a "life cycle portfolio" that would automatically adjust the level of risk of the investments as the worker aged. The life cycle fund would automatically and gradually shift the allocation of investment funds as the individual nears retirement age so that it is weighted more heavily toward secure bonds.
Personal retirement accounts would be protected from sudden market swings on the eve of retirement. To protect near-retirees from sudden market swings on the eve of retirement, personal retirement accounts would be automatically invested in the "life cycle portfolio" when a worker reaches age 47, unless the worker and his or her spouse specifically opted out by signing a waiver form stating they are aware of the risks involved. The waiver form would explain in clear, easily understandable terms the benefits of the life cycle portfolio and the risks of opting out. By shifting investment allocations from high growth funds to secure bonds as the individual nears retirement, the life cycle portfolio would provide greater protections from sudden market swings.
Hidden Wall Street fees would not eat up personal retirement accounts. Personal retirement accounts would be low-cost. The Social Security Administration's actuaries project that the ongoing administrative costs for a TSP-style personal account structure would be roughly 30 basis points or 0.3 percentage points, compared to an average of 125 basis points for investments in stock mutual funds and 88 basis points in bond mutual funds in 2003. www.ssa.gov/OACT/solvency/index).
Establishing personal retirement accounts does not add to the total costs that Social Security faces. Personal retirement accounts effectively pre-fund Social Security benefits already promised to today's workers and do not represent a net increase in Federal obligations. The obligation to pay Social Security benefits is already there. While personal retirement accounts affect the timing of these costs, they do not add to the total amount obligated through Social Security.
Coming in Part 4 - Thrift Savings Plan background
Thursday, February 10, 2005
"We must pass reforms that solve the financial problems of Social Security once and for all."
President George W. Bush
In the State of the Union Address, President Bush called for an open, candid review of the options to strengthen Social Security permanently for our children and grandchildren.
The President pledged to work with Members of Congress to find the most effective combination of reforms. Former and current Members of Congress have suggested a variety of solutions to fix Social Security permanently, including limiting benefits for wealthy retirees, indexing benefits to prices rather than wages, increasing the retirement age, discouraging early collection of retirement benefits, and changing the way benefits are calculated. All of these ideas are on the table. The President recognizes that none of these reforms would be easy and has said he will listen to anyone with a good idea to offer.
The President believes that we must move ahead with reform, because our children's retirement security is more important than partisan politics. In the State of the Union, the President laid out some basic principles that he believes are an important guide to reform of the system:
“We must make Social Security permanently sound, not leave it for another day. “We must not jeopardize our economic strength by raising payroll taxes” – higher taxes would slow economic growth.
Increasing payroll taxes is a band-aid, not a permanent solution. Payroll taxes have been increased more than 20 times since 1935, and we still have not fixed the problem. The Social Security payroll tax, which was once 2%, is now 12.4%. To meet the needs of the 21st century, payroll taxes would have to be raised over and over and over again on American workers, stifling economic growth and job creation. Economists calculate that under the current system, the payroll tax would have to rise to more than 18% if our children and grandchildren are to receive their scheduled benefits. (2004 Report of the Social Security Trustees, p. 165).
“ We must ensure that lower income Americans get the help they need to have dignity and peace of mind in their retirement. Any reform should maintain the system's progressivity.
“We must guarantee that there is no change for those now retired or nearing retirement. For those Americans 55 and older (born before 1950), nothing will change, and nobody is going to take away or change their check.
“We must ensure changes in the system are gradual, so that younger workers have years to prepare and plan for their future.
“And, we should make Social Security a better deal for younger workers through voluntary personal retirement accounts.”
Wednesday, February 09, 2005
Such a compromise could entail, for example, requiring illegal immigrants to return to their native countries to apply for the program, Mr. DeLay said.
Mr. DeLay said he talked recently with the president, who has advocated a guest worker program that would be open to workers who are currently in the country illegally as well as to newcomers.
"He doesn't discount the notion, for instance, that you have to apply for it in your country of origin," Mr. DeLay said of the president. "He thought that was a great idea."
"One of America's most important institutions - a symbol of the trust between generations - is also in need of wise and effective reform. Social Security was a great moral success of the 20th Century, and we must honor its great purposes in this new century. The system, however, on its current path, is headed toward bankruptcy. And so we must join together to strengthen and save Social Security."
President George W. Bush
A Social Security System designed for a 1935 world does not fit the needs of the 21st Century. Social Security was designed in 1935 for a world that is very different from today. In 1935, most women did not work outside the home. Today, about 60% of women work outside the home. In 1935, the average American did not live long enough to collect retirement benefits. Today, life expectancy is 77 years. (2004 Report of the Social Security Trustees, p. 81).
Social Security will not be changed for those 55 or older (born before 1950). Today, more than 45 million Americans receive Social Security benefits and millions more are nearing retirement. For these Americans, Social Security benefits are secure and will not change in any way.
Social Security is making empty promises to our children and grandchildren. For our younger workers, Social Security has serious problems that will grow worse over time. Social Security cannot afford to pay promised benefits to future generations because it was designed for a 1935 world in which benefits were much lower, life-spans were shorter, there were more workers per retiree, and fewer retirees were drawing from the system.
With each passing year, there are fewer workers paying ever-higher benefits to an ever-larger number of retirees. Social Security is a pay-as-you-go system, which means taxes on today's workers pay the benefits for today's retirees. A worker's payroll taxes are not saved in an account with his or her name on it for the worker's retirement.
There are fewer workers to support our retirees. When Social Security was first created, there were 40 workers to support every one retiree, and most workers did not live long enough to collect retirement benefits from the system. Since then, the demographics of our society have changed dramatically. People are living longer and are having fewer children. As a result, we have seen a dramatic change in the number of workers supporting each retiree's benefits. According to the 2004 Report of the Social Security Trustees (page 47):
- In 1950, there were 16 workers to support every one beneficiary of Social Security.
- Today, there are only 3.3 workers supporting every Social Security beneficiary.
- And, by the time our youngest workers turn 65, there will be only 2 workers supporting each beneficiary.
- Benefits are scheduled to rise dramatically over the next few decades. Because benefits are tied to wage growth rather than inflation, benefits are growing faster than the rest of the economy. This benefit formula was established in 1977. As a result, today's 20-year old is promised benefits that are 40% higher, in real terms, than are paid to seniors who retire this year. But the current system does not have the money to pay these promised benefits.
- The retirement of the Baby Boomers will accelerate the problem. In just 3 years, the first of the Baby Boom generation will begin to retire, putting added strain on a system that was not designed to meet the needs of the 21st century. By 2031, there will be almost twice as many older Americans as there are today - from 37 million today to 71 million Americans in 2031. (http://www.ssa.gov/pressoffice/basicfact).
Social Security is heading toward bankruptcy. According to the Social Security Trustees, thirteen years from now, in 2018, Social Security will be paying out more than it takes in and every year afterward will bring a new shortfall, bigger than the year before. And, when today's young workers begin to retire in 2042, the system will be exhausted and bankrupt. (Summary of the 2004 Annual Report of the Social Security Trustees, p. 1). If we do not act now to save it, the only solution will be drastically higher taxes, massive new borrowing, or sudden and severe cuts in Social Security benefits or other government programs.
As of 2004, the cost of doing nothing to fix our Social Security system had hit an estimated $10.4 trillion, according to the Social Security Trustees. (2004 Report of the Social Security Trustees, p. 58). The longer we wait to take action, the more difficult and expensive the changes will be. · Every year we wait costs an additional $600 billion. (2004 Report of the Social Security Trustees, p. 58). · Today's 30-year-old worker can expect a 27% benefit cut from the current system when he or she reaches normal retirement age. (2004 Report of the Social Security Trustees, p. 8). And, without action, these benefit cuts will only get worse.
Coming in Part 2: Strenthening Social Security Permanently
Monday, February 07, 2005
Kenneth J. Van Dellen (with help from friends) 1/22/05
FairTax and Rights and Freedoms
- It restores the 5th Amendment, which guarantees the right to due process. Under current systems the IRS has their own courts with their own set of rules not included in the 5th Amendment.
- It restores individual privacy. You no longer have to report where you work, what you are earning, and what you are doing with it. (Employers will report your earnings to the Social Security Administration for determination of your social security benefits.)
- It relieves citizens of the risk of facing the shift in burden of proof that is so common with the current system, i.e., the taxpayer is guilty unless proven innocent, but even the IRS staff sometimes gives conflicting interpretations.
- It eliminates the need to have a "marriage" clarification declaring who you live with, as that no longer has any bearing at all on a state or federal sales tax.
- It eliminates the need for courts to decide which divorced parent gets to take the tax deduction for children.
FairTax and Government and Educational Entities
- Without FICA to pay, most states, counties, municipalities, and school districts will see a large increase in their available state budget revenues, additionally lowering the overall tax burden (State & Federal) for most Americans.
- It eliminates the administrative costs incurred by states in collection of state sales taxes because states will piggyback the state tax collection onto the national tax collection, for which they are compensated by the FairTax ¼% administrative cost give-back. (Retailers receive an equal amount for collecting the FairTax.)
FairTax and Politics
- It cleans up a major flaw in campaign financing, eliminating campaign donations for "tax favors".
- It eliminates wrangling in Congress over tax cuts, the tax code, and who is or is not paying a fair share of the tax bill, providing more time for debate on more productive issues.
FairTax and the Environment
- It’s good for the environment. Reportedly, the IRS sends out 8 billion pages of forms and instructions each year. Laid end to end, they would stretch 28 times around the earth. Nearly 300,000 trees are cut down yearly to produce the paper for all the IRS forms and instructions. Also, since it taxes only new items, it would encourage buying tax-free pre-owned cars, clothes, furniture, houses, etc. Reuse is good for the environment, too.
For more information go to www.fairtax.org
Sunday, February 06, 2005
Kenneth J. Van Dellen (with help from friends) 1/22/05
- By removing the embedded tax from American products, it makes them more competitive with imports here, compensating for the low cost of imported products from which taxes have been removed before exportation to the U.S.
- It encourages investment in companies located in the U.S., thus providing a home for money already in the U.S. and attracting more. The U.S. will be the most attractive tax-free haven in the world for doing business.
- It encourages repatriation to the U.S. of money held by U.S. individuals and companies now in foreign countries, with no tax consequence. American companies will return from offshore and overseas.
- It results in a windfall profit, likely to be invested in job-creating businesses, for many of those holding taxable corporate high interest bonds at the time of passage of FairTax, since the bonds will not be taxed under the FairTax. (Currently, a higher interest rate is usually paid to entice investors to buy the corporate bonds rather than go with the lower interest, but tax free, municipal bonds.)
- It results in Federal Reserve rates being based on current consumption, which is rather stable, instead of future earnings, which are less predictable, resulting in surer inflation prevention.
- It reduces production costs for farmers and other subsidized businesses, leading to a reduction in subsidies, thus reducing the federal budget.
- It moves many individuals now providing tax advice (return preparation, advice, accounting, planning, and records maintenance) into an expansive economy where they will be producing goods and services. There they can add to the standard of living of all Americans and likely earn more than they do currently, instead of shuffling paper for the government (and not contributing anything economically to society).
FairTax and Churches and Non-profit Organizations
- All contributions to Churches and other non-profit organizations are made tax-free. These organizations no longer will bear the expense of filing tax returns with the IRS and paying their half of Social Security and Medicare payments for employees. In order to purchase goods and services tax free they will just have to apply to the state sales tax authority for a qualification certificate as a bona fide not-for-profit organization operated exclusively for religious, charitable, scientific or educational purposes.
- It restores to churches and non-profit organizations the 1st Amendment right to engage in free speech, without fear of losing their tax-free status.
FairTax and Rights and Freedoms
- It restores the 4th Amendment, protecting against unreasonable searches and seizures, from which the IRS presently is exempt.
Coming in Part 5: more Rights and Freedoms; Government and Educational Entities; Politics; and the Environment.
For more information go to www.fairtax.org