Category Archives: Previous SNITCH Columns

Young Americans should take stock in Social Security

The following is a column I wrote that was originally published in the SNITCH weekly newspaper on December 17, 2004. I post it here in honor of 2010 being the first year that Social Security will pay out more than it will take in.  Unfortunately, I’m now closer to “50-ish” and more worried about social security than ever!

Young Americans should take stock in Social Security

Who do you trust more with your money, yourself or the government?

“Myself, of course!” Right? Be careful. Are you really saving as much for your retirement as you should? If you had a big retirement account already, could you resist dipping into it for that new sports car or that cruise you’ve always dreamed about?

Where would you rather see your Social Security money invested? In the stock market, which has averaged double-digit returns over the long haul, or in low, single-digit-returning government bonds?

Before you go for the Dow Jones gusto, remember one name: “Enron.” One day, its employees are sitting on pots of the company’s golden stock. The next day, greedy executives’ accounting games are revealed and, to quote Willy Wonka, “You get nothing! You lose! Good day, sir!” Who in their right mind would bet their future Social Security checks on the stock market?

These two questions represent the biggest arguments by those opposed to the “privatization” of Social Security. They argue that, if left to their own self-discipline and to an unreliable stock market, too many people would end up with no money in their “senior” years. We wouldn’t save enough or be careful enough with what we saved.

And then there’s one other little problem. If you let current taxpayers keep their Social Security taxes by putting them into private accounts, who’s going to fund all of the checks now going to current retirees? Some estimates of this “transition cost” are upwards of $1 trillion. That’s almost $3,400 for each man, woman and child in the country.

Unfortunately, not changing Social Security isn’t an option. The program’s trustee’s predict, less than 15 years from now, more money will start flowing out of Social Security to retirees than what’s coming in from taxpayers. Michael Tanner, author of “Social Security and Its Discontents”, puts it this way: By 2030, this deficit will exceed the budgets for Head Start, Veterans Affairs and the Departments of Education, Commerce, Interior, Energy and Housing and Urban Development combined.

For people my age (40 “ish,” thank you very much) and younger, this fear gets personal. We’re afraid the feds will “Enron” what we’ve put in: “You get nothing! Social Security is out of money! Good day, sir!” Even if there’s money left, the common expectation is we’ll get a lot less back than we put in.

That’s a big reason why the idea of private Social Security accounts is gaining steam. Even if you can’t get your hands on it, seeing your own money go into your own account and then watching it grow in your own name is much more comforting than being at the mercy of the government.

Perhaps there’s a compromise. The Cato Institute’s Project on Social Security Choice, of which Michael Tanner is the director, has proposed a 50/50 solution. Of the 12.4 percent in payroll taxes we all pay, just treat half of it (6.2 percent) as what it really is anyway: a tax to keep funding the current program. For the other half, give people a choice: stay in the current system or put that 6.2 percent into a private account.

If you choose the latter, you get a “recognition bond” you can redeem when you reach retirement age to reward you for what you’ve paid into Social Security thus far. But, that’s it. You would stop building up future benefits when you opted for the private account option.

From then on, your other 6.2 percent could be invested in carefully selected and well-diversified securities. You wouldn’t be able to sink all your money into the next Microsoft — or the next Enron. You also wouldn’t be able to get your hands on it before retirement, nor would you be able to get all of it upon your retirement so you could blow it all. Instead, you would be required to leave at least enough in the account to provide a certain minimum income.

Lastly, there’s also the admittedly emotional benefit of making more people feel as though they have some control of their own fate. They could then see themselves as “investors,” just like “rich people.” Instead of, “Boy, if Social Security isn’t around, I’m screwed,” it could be, “I may be struggling now, but at least some of what I used to pay in straight taxes is now growing in my name, for my future.

Even Bill Clinton was honest enough to point out that there are only three options for Social Security reform: raising taxes, cutting benefits or investing privately. I’ll take my chances with what’s behind door number three, Bill.

RUSS MANEY is a former columnist for Louisville Business First and Louisville SNITCH. Please use the ‘Comment’ feature on this blog to comment on this article. Or, if you prefer, send your comments to me at russ@russmaney.com, but know that I may then post them on this blog.

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Radar love, like license spray, is detectable as clear hypocrisy

The following is a column I wrote that was originally published in the SNITCH weekly newspaper on December 8, 2004. Who would have thought that a spam email about a bogus-sounding spray that allegedly makes your license plate invisible to automatic traffic policing cameras would lead me to ponder my own ethical dilemma? Well, it did. Also, raising a teen and a pre-teen keeps you focused on the example you’re setting. To see how all of this fits together in a column, read on. If you have an opinion, send me an email: (russ@russmaney.com).

By the way, my daughters are now 17 and 19, the ethical dilemma is now even more pronounced! And, as prophesized by this column over 5 years ago, the 19 year old just got her first traffic ticket. Does she now need a radar detector, too?

Radar love, like license spray, is detectable as clear hypocrisy

 Stuck to my windshield is one of my best investments ever – and a glaring ethical dilemma:  my radar detector.

 As I revealed in a column earlier this year about attending traffic school, I occasionally go faster than the posted speed limit. Not recklessly — while I’ve been rear-ended once and broadsided once — I’ve never been “at fault” in an accident. I obey speed limits on secondary roads. It’s interstate highways where my foot gets a little heavier. I don’t like long car rides and don’t mind going a little faster to make them shorter. You can already smell the rot of my not-so-defensible rationalization of this “warn me when the cops are around so I can stop breaking the law” device, can’t you? As a father of a now 14-year-old daughter, as well as one who will soon be 12, it’s getting harder for me to put up with the stench, too. Especially when my girls wonder why their normally “law & order” dad has a gadget that helps him not get caught when he breaks the law.

“Daddy, what’s that little thing with the lights on it that keeps making those irritating beeping sounds?”

“Er, uh … that’s my, uh … ‘keep daddy honest’ machine. Yeah! That’s what it is. When it goes off, I know there could be a nice police officer near by. It reminds me to make sure I’m not going over the speed limit.”

“What do you do when there aren’t any police around?”

“Uh … well, uh … I always drive very carefully.”

“You know, dad, in two years, I’ll be driving.”

Gulp. “Well, yeah, but you have to have been driving for … uh … 10 whole years before you can get your own radar detector. You first need to learn how to drive very carefully without one, like dad did.”

We all know kids start questioning their parents when they become teen-agers, even when mom and dad have an iron-clad case. And here I am shoveling this #2 at them, just because Van Halen and I both “can’t drive 55,” as the song says. Ugh.

Then, this morning, I get a spam email touting the next greatest, “legal in all 50 states” law enforcement-evading “technology” for your car: Photo-Blocker Spray. Around the country, local police are installing sensor-triggered cameras at intersections where people often run red lights. When you do, the camera photographs your license plate and, voil·, a few weeks later you get a ticket in the mail. This spray supposedly makes your license plate un-photographable, by making it so shiny the camera records a bright, unreadable reflection instead. The coating is supposedly “invisible to the naked eye,” so your plates are still perfectly readable and no one can tell you’ve used the spray.

This seemed like so many other emails I get, promising a better mortgage rate, a Rolex for a song, or a bigger male member. But, just out of columnist curiosity, I went to the Photo-Blocker manufacturer’s website anyway. There I viewed apparently independent and legitimate video clips of newscasts (one from the Bakersfield, Calif., CBS affiliate and one from the FOX affiliate in Washington, D.C.) that showed the spray actually does produce a number-hiding, reflective glare in traffic intersection police photos. One TV reporter cited tests conducted by the Denver Police Department, calling the product “surprisingly effective.”

So, did I immediately place an order? No I didn’t, I’m proud to say.

Yes, ethically, the spray isn’t far from a radar detector. One keeps the cop cameras from identifying you, the other keeps radar guns from catching you. I won’t even try to denigrate one while rationalizing the other.

The most defensible reason why I won’t ever buy anything that would enable me to run red lights is safety. In my own twisted mind, if I go 70 or 75 on an interstate highway, I’m doing so when it is “safe” — light traffic, good weather, roads built for those kinds of speeds, etc.

If I choose to run a red light, I’m risking that a law-abiding citizen will choose to go through his green light at the same time and ruin both our days — or more. That puts my fate in someone else’s hands as well as mine — a risk I won’t take.

Yeah, I know, I know. Will I accept this distinction the first time one of my daughters brings home a speeding ticket, versus a ticket for running a right light? Not a chance! They both better obey all traffic laws, or be forced to hang up their keys.

As for dad, yes, he’ll have to practice what he preaches, too. Looks like my radar detector’s days are numbered. Sigh.

RUSS MANEY is a former columnist for Louisville Business First and Louisville SNITCH. Please use the ‘Comment’ feature on this blog to comment on this article. Or, if you prefer, send your comments to me at russ@russmaney.com, but know that I may then post them on this blog.

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