Tuesday, November 30, 2004


Bush Economic Policies vs. Reality (Pt. 2)

In Part 1, we saw Reality starts with a body slam to the dollar.

Bush countered with a "belief in a strong dollar" followed by proposed Social Security changes requiring massive additional borrowing. The New York Times reports:
The White House and Republicans in Congress are all but certain to embrace large-scale government borrowing to help finance President Bush's plan to create personal investment accounts in Social Security, according to administration officials, members of Congress and independent analysts.
The White House says it has made no decisions about how to pay for establishing the accounts, and among Republicans on Capitol Hill there are divergent opinions about how much borrowing would be prudent at a time when the government is running large budget deficits. Many Democrats say that the costs associated with setting up personal accounts just make Social Security's financial problems worse, and that the United States can scarcely afford to add to its rapidly growing national debt.
"Anybody who thinks borrowing money for the transition to personal accounts is going to solve the problem of the long-term solvency of Social Security doesn't understand the size of the problem," said Senator Charles E. Grassley, Republican of Iowa, the chairman of the Senate Finance Committee, which has jurisdiction over the retirement system.

Mr. Grassley said Congress would also have to put benefit reductions and tax increases on the table, in part to hold down the need for borrowing and in part to assure that any changes restore Social Security's long-term financial stability.

What happens when the Government is bankrupt, the stock market crashes, and the Bay Boomers find themselves on the street?

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