Saturday, April 30, 2005

Stupid is as Stupid Does

The people in the Bush administration are now obviously convinced we are utter morons and that they can tell us absolutely anything and not be challenged. Not only that, they think we can’t remember what we had for breakfast this morning and couldn’t possibly remember what stupid lie was parroted by Bush just a week ago.
Bush the Stupid tells us one week that Treasury Bonds are just so many paper IOUs and worthless and the next week is telling us they are the safest of investments. The longer we let this crap go on the worse it will get. At some point it will get so outrageous that we will be too embarrassed to point it out fearing that everyone will think we are pedantic for doing so. I have no doubt that this latest bullshit will be ignored my the main stream as well. Our lack of outrage and silence of the taxpayer funded “Let’s Destroy Social Security Tour”has pushed their belief over the edge. Brad DeLong explains the fuzzy math very well so I don’t have to.

The "build a nest egg" part... The "invest in Treasury bonds" part... Let's mosey on over to the Federal Reserve and look at the safest long-term investment the U.S. Treasury offers: the twenty-year inflation-protected TIP:
FRB: H.15--Selected Interest Rates, Web-Only Daily Update--April 28, 2005: Inflation-indexed: 20-year 1.83 1.86 1.87.
What the Federal Reserve is telling us is that the 20-year TIP is currently providing a real yield of 1.87% per year. What Bush is not telling you is that, under the Bush plan, if you divert $1000 from your Social Security to private accounts, that amount is clawed back--charged to an account associated with your normal Social Security benefit, that amount is then compounded at 3% per year plus the rate of inflation, and then after you retired deducted over time from your normal Social Security benefit.
If you are 45 and if Bush's plan were available today...
Follow George W. Bush's advice, divert $1,000 into your private account, invest it in TIPS, and at the 1.85% per year interest rate you will indeed by able to collect an extra amount worth $10.11 a month in today's dollars when you retire at 65...
But the clawback would reduce your normal Social Security benefit by $14.16 a month. You're $4.05 a month behind.
"Building a nest egg." Feh!

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