Bloglines | My FeedsChile's Retirees Find Shortfall in Private Plan
Dagoberto Sáez, retiring as a lab technician, is studying podiatry to supplement a pension of $315 a month.
Tomás Munita for The New York Times
Dagoberto Sáez, retiring as a lab technician, is studying podiatry to supplement a pension of $315 a month.
By LARRY ROHTER
Published: January 27, 2005
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SANTIAGO, Chile - Nearly 25 years ago, Chile embarked on a sweeping experiment that has since been emulated, in one way or another, in a score of other countries. Rather than finance pensions through a system to which workers, employers and the government all contributed, millions of people began to pay 10 percent of their salaries to private investment accounts that they controlled.
Under the Chilean program - which President Bush has cited as a model for his plans to overhaul Social Security - the promise was that such investments, by helping to spur economic growth and generating higher returns, would deliver monthly pension benefits larger than what the traditional system could offer.
But now that the first generation of workers to depend on the new system is beginning to retire, Chileans are finding that it is falling far short of what was originally advertised under the authoritarian government of Gen. Augusto Pinochet.
For all the program's success in economic terms, the government continues to direct billions of dollars to a safety net for those whose contributions were not large enough to ensure even a minimum pension approaching $140 a month. Many others - because they earned much of their income in the underground economy, are self-employed, or work only seasonally - remain outside the system altogether. Combined, those groups constitute roughly half the Chilean labor force. Only half of workers are captured by the system.
Even many middle-class workers who contributed regularly are finding that their private accounts - burdened with hidden fees that may have soaked up as much as a third of their original investment - are failing to deliver as much in benefits as they would have received if they had stayed in the old system.
Dagoberto Sáez, for example, is a 66-year-old laboratory technician here who plans, because of a recent heart attack, to retire in March. He earns just under $950 a month; his pension fund has told him that his nearly 24 years of contributions will finance a 20-year annuity paying only $315 a month.
"Colleagues and friends with the same pay grade who stayed in the old system, people who work right alongside me," he said, "are retiring with pensions of almost $700 a month - good until they die. I have a salary that allows me to live with dignity, and all of a sudden I am going to be plunged into poverty, all because I made the mistake of believing the promises they made to us back in 1981."
With many Chileans finding themselves in a situation much like that of Mr. Sáez, people are still looking to the government, not private pension funds, to ensure a secure retirement.
"It is evident the system requires reform," the minister of labor and social security, Ricardo Scolari, said in an interview here. Chile's current approach based on private pension funds has "important strengths," he said, but "it is absolutely impossible to think that a system of this nature is going to resolve the income needs of Chileans when they reach old age."
In formulating proposals in the United States for individual accounts, advocates of partial privatization of Social Security have sought to overcome some of the problems in Chile. They have suggested, for example, setting low limits on the fees that fund managers will be allowed to charge and continuing to provide a major part of retirement income through the traditional system of guaranteed payments.
The program in Chile differs from the voluntary model that President Bush is considering. Participation here has been not voluntary for people entering the labor force since 1981.
On the other hand, Chile was careful before it started its private system to accumulate several years of budget surpluses, in contrast to the recent large deficits in the United States.
The Chilean example also makes clear that introducing private accounts does not solve a lot of the problems faced in the United States, Europe and Japan, where pay-as-you-go systems remain the principal means of government retirement support.
Sunday, January 30, 2005
Can American go bankrupt?
Bloglines | My FeedsOh yes, it can happen here
By Robert Kuttner | January 26, 2005
''How did you go bankrupt?"
''Two Ways. Gradually, and then suddenly."
Ernest Hemingway, The Sun Also Rises
ADVERTISEMENT
COUNTRIES GO broke gradually, by borrowing so much money that creditors lose confidence in their ability to pay the debt back. Then, they go broke suddenly as creditors stop lending.
This has happened to more than a dozen Third World nations, who had the additional misfortune of having to borrow in dollars. As their own currency lost the confidence of world markets, they lost value against the dollar. This only increased their real debt burden. The optimists say, ''It can't happen here."
First, we're the people who print dollars. So if the dollar is losing value, it just means the money that we owe the rest of the world is getting cheaper. Lucky us.
Second, we enjoy a codependency with our creditors. For instance, China, which keeps lending us money to finance our deficits, may be accumulating dollar credits that are losing their real worth. But China needs us to keep absorbing their products, so China will go right on lending.
And third, the United States remains the anchor of the world economy. So even though other nations may not like America's immense trade and budget deficits, nobody is going to risk pushing the world into depression by crashing the dollar.
That, as I say, is the optimistic view. Well, dream on.
Yesterday, the bipartisan Congressional Budget Office, possibly the last intellectually honest government agency in George Bush's Washington, reported that our fiscal situation is even worse than expected.
According to the CBO's latest ''Budget and Economic Outlook," the projected deficit for 2005 will be about $400 billion. The CBO declares, politely but unmistakably, that it doesn't buy the Bush administration's budgetary gimmickry of trying to keep anticipated military outlays out of the official budget.
''The absence of further appropriations for activities in Iraq and Afghanistan," CBO states, ''masks a further deterioration in budget projections over the [next] ten years."
Specifically, the deficit for the next decade is $504 billion worse than anticipated in CBO's previous estimate last September.
The agency goes on to warn that other challenges not currently itemized in official administration projections, such as Medicare, Medicaid, and Social Security, will only increase future deficits. And, of course, if the Bush administration succeeds either in making permanent his major tax reductions (most of which sunset after 10 years), or in adding $2 trillion of borrowing to privatize Social Security, the fiscal situation would go from merely disastrous to catastrophic.
But back to our story, ''It Can't Happen Here." America's deteriorating fiscal situation, unfortunately, is not lost either on world money markets or on the Federal Reserve. Although no world leader would willfully plunge the world into depression, that's not how markets work. Markets are purely self-interested.
Lately, markets, with good reason, have been betting against the dollar. As the US trade deficit approaches a staggering 7 percent, it's not clear how much longer foreign investors will keep investing in dollars and dollar-securities, such as corporate stocks and government bonds.
As for the Chinese, Clyde Prestowitz of the Economic Strategy Institute, formerly a senior trade negotiator in the Reagan administration, offers the following scenario: In a future crisis involving the tense China-Taiwan relationship, the Chinese ambassador suggests to Secretary of State Condoleezza Rice that maybe the United States would like to move its warships 500 miles away from Taiwan. Rice demurs. The next day, the Bank of China sells a few --just a very few to get our attention -- US Treasury securities. Money markets reel.
Would the Chinese play such a risky game? They have their own interests, geopolitical as well as economic. They are certainly not an American pawn, less so with every passing year. Miscalculations have happened in world economic relations before, and with calamitous results.
The Federal Reserve, meanwhile, is increasingly worried about inflation, largely of the imported variety due to the weak dollar. The Fed is steadily raising interest rates. With every quarter-point hike, consumers pay more for mortgage and credit card loans, investors in stocks become more wary, and the air goes out of the economy. Alan Greenspan kept rates very low long enough to get George W. Bush reelected. Now he is reverting to type.
The Bush administration is putting itself, and America's economic future, in grave jeopardy. The only good news is that all this bad news makes Social Security privatization, or permanent tax cuts for the wealthy, less than an even bet.
By Robert Kuttner | January 26, 2005
''How did you go bankrupt?"
''Two Ways. Gradually, and then suddenly."
Ernest Hemingway, The Sun Also Rises
ADVERTISEMENT
COUNTRIES GO broke gradually, by borrowing so much money that creditors lose confidence in their ability to pay the debt back. Then, they go broke suddenly as creditors stop lending.
This has happened to more than a dozen Third World nations, who had the additional misfortune of having to borrow in dollars. As their own currency lost the confidence of world markets, they lost value against the dollar. This only increased their real debt burden. The optimists say, ''It can't happen here."
First, we're the people who print dollars. So if the dollar is losing value, it just means the money that we owe the rest of the world is getting cheaper. Lucky us.
Second, we enjoy a codependency with our creditors. For instance, China, which keeps lending us money to finance our deficits, may be accumulating dollar credits that are losing their real worth. But China needs us to keep absorbing their products, so China will go right on lending.
And third, the United States remains the anchor of the world economy. So even though other nations may not like America's immense trade and budget deficits, nobody is going to risk pushing the world into depression by crashing the dollar.
That, as I say, is the optimistic view. Well, dream on.
Yesterday, the bipartisan Congressional Budget Office, possibly the last intellectually honest government agency in George Bush's Washington, reported that our fiscal situation is even worse than expected.
According to the CBO's latest ''Budget and Economic Outlook," the projected deficit for 2005 will be about $400 billion. The CBO declares, politely but unmistakably, that it doesn't buy the Bush administration's budgetary gimmickry of trying to keep anticipated military outlays out of the official budget.
''The absence of further appropriations for activities in Iraq and Afghanistan," CBO states, ''masks a further deterioration in budget projections over the [next] ten years."
Specifically, the deficit for the next decade is $504 billion worse than anticipated in CBO's previous estimate last September.
The agency goes on to warn that other challenges not currently itemized in official administration projections, such as Medicare, Medicaid, and Social Security, will only increase future deficits. And, of course, if the Bush administration succeeds either in making permanent his major tax reductions (most of which sunset after 10 years), or in adding $2 trillion of borrowing to privatize Social Security, the fiscal situation would go from merely disastrous to catastrophic.
But back to our story, ''It Can't Happen Here." America's deteriorating fiscal situation, unfortunately, is not lost either on world money markets or on the Federal Reserve. Although no world leader would willfully plunge the world into depression, that's not how markets work. Markets are purely self-interested.
Lately, markets, with good reason, have been betting against the dollar. As the US trade deficit approaches a staggering 7 percent, it's not clear how much longer foreign investors will keep investing in dollars and dollar-securities, such as corporate stocks and government bonds.
As for the Chinese, Clyde Prestowitz of the Economic Strategy Institute, formerly a senior trade negotiator in the Reagan administration, offers the following scenario: In a future crisis involving the tense China-Taiwan relationship, the Chinese ambassador suggests to Secretary of State Condoleezza Rice that maybe the United States would like to move its warships 500 miles away from Taiwan. Rice demurs. The next day, the Bank of China sells a few --just a very few to get our attention -- US Treasury securities. Money markets reel.
Would the Chinese play such a risky game? They have their own interests, geopolitical as well as economic. They are certainly not an American pawn, less so with every passing year. Miscalculations have happened in world economic relations before, and with calamitous results.
The Federal Reserve, meanwhile, is increasingly worried about inflation, largely of the imported variety due to the weak dollar. The Fed is steadily raising interest rates. With every quarter-point hike, consumers pay more for mortgage and credit card loans, investors in stocks become more wary, and the air goes out of the economy. Alan Greenspan kept rates very low long enough to get George W. Bush reelected. Now he is reverting to type.
The Bush administration is putting itself, and America's economic future, in grave jeopardy. The only good news is that all this bad news makes Social Security privatization, or permanent tax cuts for the wealthy, less than an even bet.
Friday, January 28, 2005
Love for Sale
Welcome to MichaelMoore.com! : Words
January 27th, 2005 8:12 pm
Love for Sale
By Maureen Dowd / New York Times
I'm herewith resigning as a member of the liberal media elite.
I'm joining up with the conservative media elite. They get paid better.
First comes news that Armstrong Williams got $240,000 from the Education Department to plug the No Child Left Behind Act.
The families of soldiers killed in Iraq get a paltry $12,000. But good publicity? Priceless.
Mr. Williams helped out the first President Bush and Clarence Thomas during the Anita Hill scandal. Mr. Williams, who served as Mr. Thomas's personal assistant at the Equal Employment Opportunity Commission when the future Supreme Court justice was gutting policies that would help blacks, gleefully attacked Professor Hill, saying, "Sister has emotional problems," and telling The Wall Street Journal "there is a thin line between her sanity and insanity."
Now we learn from the media reporter Howard Kurtz that the syndicated columnist Maggie Gallagher had a $21,500 contract from the Health and Human Services Department to work on material promoting the agency's $300 million initiative to encourage marriage. Ms. Gallagher earned her money, even praising Mr. Bush in print as a "genius" at playing "daddy" to the nation. "Mommies feel your pain," she wrote in 2002. "Daddies give you confidence that you can ignore the pain and get on with life."
Genius? Not so much. Spendthrift? Definitely. W.'s administration was running up his astounding deficit paying "journalists" to do what they would be happy to do for free - just to be friends with benefits, getting access that tougher scribes are denied. Consider Charles Krauthammer, who went to the White House on Jan. 10 for what The Washington Post termed a "consultation" on the inaugural speech and then praised the Jan. 20th address on Fox News as "revolutionary," says Media Matters, a liberal watchdog group.
I still have many Christmas bills to pay. So I'd like to send a message to the administration: THIS SPACE AVAILABLE.
I could write about the strong dollar and the shrinking deficit. Or defend Torture Boy, I mean, the esteemed and sage Alberto Gonzales. Or remind readers of the terrific job Condi Rice did coordinating national security before 9/11 - who could have interpreted a memo titled "Bin Laden Determined to Attack Inside the United States" as a credible threat? - not to mention her indefatigable energy obscuring information that undercut the vice president's dementia on Iraq.
My preference is to get a contract with Rummy. It would be cost effective, compared with the $80 billion he needs to train more Iraqi security forces to be blown up. For half a mil, I could write a doozy of a column promoting Rummy's phantasmagoric policies.
What is all this hand-wringing about the 31 marines who died in a helicopter crash in Iraq yesterday? It's only slightly more than the number of people who died in traffic accidents in California last Memorial Day. The president set the right tone, avoiding pathos when asked about the crash. "Obviously," he said, "any time we lose life it is a sad moment."
Who can blame Rummy for carrying out torture policies? We're in an information age. Information is power. If people are not giving you the intelligence you want, you must customize to get the intelligence you want to hear.
That's why Rummy also had to twist U.S. laws to secretly form his own C.I.A. A Pentagon memo said Rummy's recruited agents could include "notorious figures," whose ties to the U.S. would be embarrassing if revealed, according to The Washington Post. Why shouldn't a notorious figure like Rummy recruit notorious figures?
I could write a column denouncing John McCain for trying to call hearings into Rummy's new spy unit, suggesting the senator is just jealous because Rummy's sexy enough to play James Bond.
The president might need my help as well. He looked out of it yesterday when asked why his foreign policy is so drastically different from the one laid out in Foreign Affairs magazine in 2000 by Ms. Rice - a preview that did not emphasize promoting democracy and liberty around the world. "I didn't read the article," Mr. Bush said.
And why should he? Robert McNamara never read the Pentagon Papers. Why should W. have to bone up on his own foreign policy?
Freedom means the freedom to be free from reading what you promise voters and other stuff. I could make that case, if the price were right.
January 27th, 2005 8:12 pm
Love for Sale
By Maureen Dowd / New York Times
I'm herewith resigning as a member of the liberal media elite.
I'm joining up with the conservative media elite. They get paid better.
First comes news that Armstrong Williams got $240,000 from the Education Department to plug the No Child Left Behind Act.
The families of soldiers killed in Iraq get a paltry $12,000. But good publicity? Priceless.
Mr. Williams helped out the first President Bush and Clarence Thomas during the Anita Hill scandal. Mr. Williams, who served as Mr. Thomas's personal assistant at the Equal Employment Opportunity Commission when the future Supreme Court justice was gutting policies that would help blacks, gleefully attacked Professor Hill, saying, "Sister has emotional problems," and telling The Wall Street Journal "there is a thin line between her sanity and insanity."
Now we learn from the media reporter Howard Kurtz that the syndicated columnist Maggie Gallagher had a $21,500 contract from the Health and Human Services Department to work on material promoting the agency's $300 million initiative to encourage marriage. Ms. Gallagher earned her money, even praising Mr. Bush in print as a "genius" at playing "daddy" to the nation. "Mommies feel your pain," she wrote in 2002. "Daddies give you confidence that you can ignore the pain and get on with life."
Genius? Not so much. Spendthrift? Definitely. W.'s administration was running up his astounding deficit paying "journalists" to do what they would be happy to do for free - just to be friends with benefits, getting access that tougher scribes are denied. Consider Charles Krauthammer, who went to the White House on Jan. 10 for what The Washington Post termed a "consultation" on the inaugural speech and then praised the Jan. 20th address on Fox News as "revolutionary," says Media Matters, a liberal watchdog group.
I still have many Christmas bills to pay. So I'd like to send a message to the administration: THIS SPACE AVAILABLE.
I could write about the strong dollar and the shrinking deficit. Or defend Torture Boy, I mean, the esteemed and sage Alberto Gonzales. Or remind readers of the terrific job Condi Rice did coordinating national security before 9/11 - who could have interpreted a memo titled "Bin Laden Determined to Attack Inside the United States" as a credible threat? - not to mention her indefatigable energy obscuring information that undercut the vice president's dementia on Iraq.
My preference is to get a contract with Rummy. It would be cost effective, compared with the $80 billion he needs to train more Iraqi security forces to be blown up. For half a mil, I could write a doozy of a column promoting Rummy's phantasmagoric policies.
What is all this hand-wringing about the 31 marines who died in a helicopter crash in Iraq yesterday? It's only slightly more than the number of people who died in traffic accidents in California last Memorial Day. The president set the right tone, avoiding pathos when asked about the crash. "Obviously," he said, "any time we lose life it is a sad moment."
Who can blame Rummy for carrying out torture policies? We're in an information age. Information is power. If people are not giving you the intelligence you want, you must customize to get the intelligence you want to hear.
That's why Rummy also had to twist U.S. laws to secretly form his own C.I.A. A Pentagon memo said Rummy's recruited agents could include "notorious figures," whose ties to the U.S. would be embarrassing if revealed, according to The Washington Post. Why shouldn't a notorious figure like Rummy recruit notorious figures?
I could write a column denouncing John McCain for trying to call hearings into Rummy's new spy unit, suggesting the senator is just jealous because Rummy's sexy enough to play James Bond.
The president might need my help as well. He looked out of it yesterday when asked why his foreign policy is so drastically different from the one laid out in Foreign Affairs magazine in 2000 by Ms. Rice - a preview that did not emphasize promoting democracy and liberty around the world. "I didn't read the article," Mr. Bush said.
And why should he? Robert McNamara never read the Pentagon Papers. Why should W. have to bone up on his own foreign policy?
Freedom means the freedom to be free from reading what you promise voters and other stuff. I could make that case, if the price were right.
Thursday, January 13, 2005
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Bloglines | My Feeds
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Wednesday, January 05, 2005
Dem Lays Out Case Against Bush's Ohio Win
Bloglines | My Feeds
January 5th, 2005 7:43 pm
Dem Lays Out Case Against Bush's Ohio Win
New York Times
WASHINGTON (AP) -- The senior Democrat on the House Judiciary Committee protested President Bush's re-election Wednesday with a new report claiming serious election irregularities and ``significant disenfranchisement'' of voters in Ohio.
The report by Rep. John Conyers of Michigan says Congress should challenge the Electoral College vote when it is tallied Thursday in the House of Representatives and investigate all claims of voter problems in Ohio.
``We have found numerous, serious election irregularities in the Ohio presidential election,'' the report said. ``There are ample grounds for challenging the electors from the state of Ohio.''
Ohio's 20 electoral votes were critical for Bush's defeat of Democratic Sen. John Kerry, D-Mass. A recount last week showed Bush winning Ohio by 118,457 votes over Kerry, according to an unofficial tally by The Associated Press.
The 102-page report titled ``Preserving Democracy: What Went Wrong in Ohio?'' lists such problems as unusually long lines, a shortage of voting machines in Democratic-leaning areas, confusion over provisional ballot rules and computer problems.
The report also contends there were widespread instances of intimidation and misinformation, improper purging of voter registration lists, a lack of inspection for about 93,000 ballots where no vote was cast for president, and vote totals not matching registration numbers or exit poll data.
``In many cases these irregularities were caused by intentional misconduct and illegal behavior, much of it involving Secretary of State J. Kenneth Blackwell, the co-chair of the Bush-Cheney campaign in Ohio,'' the report said.
Carlo LoParo, a spokesman for Blackwell, called the report ``ludicrous'' and a waste of time and taxpayer dollars.
``There are absolutely no grounds for challenging Ohio's electors,'' LoParo said.
Meanwhile, a small group of House Democrats were looking for a Democratic senator to co-sponsor their challenge of Ohio's 20 electoral votes. A single senator supporting the effort would require the two chambers to meet separately and consider the objection. That scenario, however, would still ensure Bush's re-election because both bodies are controlled by Republicans.
Conyers and a few other Democrats have likened the Ohio results to the contested but much closer vote in Florida four years ago when Bush defeated Vice President Al Gore for the White House.
A small number of House Democrats challenged Florida's electoral votes in January 2001 but could not persuade a senator to join them.
January 5th, 2005 7:43 pm
Dem Lays Out Case Against Bush's Ohio Win
New York Times
WASHINGTON (AP) -- The senior Democrat on the House Judiciary Committee protested President Bush's re-election Wednesday with a new report claiming serious election irregularities and ``significant disenfranchisement'' of voters in Ohio.
The report by Rep. John Conyers of Michigan says Congress should challenge the Electoral College vote when it is tallied Thursday in the House of Representatives and investigate all claims of voter problems in Ohio.
``We have found numerous, serious election irregularities in the Ohio presidential election,'' the report said. ``There are ample grounds for challenging the electors from the state of Ohio.''
Ohio's 20 electoral votes were critical for Bush's defeat of Democratic Sen. John Kerry, D-Mass. A recount last week showed Bush winning Ohio by 118,457 votes over Kerry, according to an unofficial tally by The Associated Press.
The 102-page report titled ``Preserving Democracy: What Went Wrong in Ohio?'' lists such problems as unusually long lines, a shortage of voting machines in Democratic-leaning areas, confusion over provisional ballot rules and computer problems.
The report also contends there were widespread instances of intimidation and misinformation, improper purging of voter registration lists, a lack of inspection for about 93,000 ballots where no vote was cast for president, and vote totals not matching registration numbers or exit poll data.
``In many cases these irregularities were caused by intentional misconduct and illegal behavior, much of it involving Secretary of State J. Kenneth Blackwell, the co-chair of the Bush-Cheney campaign in Ohio,'' the report said.
Carlo LoParo, a spokesman for Blackwell, called the report ``ludicrous'' and a waste of time and taxpayer dollars.
``There are absolutely no grounds for challenging Ohio's electors,'' LoParo said.
Meanwhile, a small group of House Democrats were looking for a Democratic senator to co-sponsor their challenge of Ohio's 20 electoral votes. A single senator supporting the effort would require the two chambers to meet separately and consider the objection. That scenario, however, would still ensure Bush's re-election because both bodies are controlled by Republicans.
Conyers and a few other Democrats have likened the Ohio results to the contested but much closer vote in Florida four years ago when Bush defeated Vice President Al Gore for the White House.
A small number of House Democrats challenged Florida's electoral votes in January 2001 but could not persuade a senator to join them.
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