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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review June 6, 2005 / 28 Iyar, 5765

Future Shock

By Michael Barone


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http://www.JewishWorldReview.com | For much of the 20th century, Americans sought security in the form of guarantees from large organizations. The federal government would provide Social Security benefits for workers and their dependents. Large corporations would provide defined-benefit pension plans promising specific payments to retired employees. The assumption was that experts at the top of these big organizations could use scientifically obtained knowledge to take better care of us than we could take care of ourselves.

Now there's reason to challenge that assumption. The experts, it turns out, are fallible. The Social Security system faces rising gaps between revenues and promised benefits starting in 2017 and an exhaustion of trust fund assets in 2041. Meanwhile, large corporations—the latest is United Airlines—have defaulted on their defined-benefit pension plans and passed them off to the government-sponsored Pension Benefit Guaranty Corp., which does not pay all of the promised amounts.

Boom years. The Social Security system's problems are, in large part, the product of increases pushed through Congress by House Ways and Means Chairman Wilbur Mills way back in 1972 and signed by President Richard Nixon, who was running for re-election. The increases had the good effect of wiping out poverty among the elderly. The experts of the day argued that they would be paid for by the offspring of the baby boomers then reaching adulthood. But the baby boomers didn't produce a second baby boom. In 1983, legislation cutting benefits and raising taxes solved the problem for a time. But now it looms squarely ahead.

Not to worry, say opponents of George W. Bush's proposal for personal retirement accounts. The federal government guarantees the benefits. But it doesn't. In 1960, the Supreme Court, in Flemming v. Nestor, ruled that there was no right to Social Security benefits. Social Security, wrote Justice John Harlan, "was designed to function into the indefinite future, and its specific provisions rest on predictions as to expected economic conditions, which must inevitably prove less than wholly accurate, and on judgments and preferences as to the proper allocation of the nation's resources which evolving economic and social conditions will of necessity in some cases modify."

The Pension Benefit Guaranty Corp. was set up by the ERISA pension law in 1974 and is financed by fees from companies with defined-benefit pension plans.

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Unfortunately, as of September of last year, the PGBC's program funds had a net deficit of $23.5 billion. The PBGC's biggest obligations are for the pension funds of bankrupt steel companies (Bethlehem, LTV, National) and airlines (TWA, US Airways, and, now, United), all of which had strong unions that negotiated big benefits that the weakened companies proved unable to fund. Now there is talk that General Motors and Ford may have trouble financing their huge defined-benefit plans. The practical result is that companies with fully funded pension plans will have to pay higher PBGC fees to bail out those without. The lesson is that experts can err and big organizations can't always be relied on. When they fail, they fail big.

Almost all investment advisers routinely tell their clients to diversify their portfolios to reduce risk. Reliance on large organizations may spread benefits, but it also concentrates risk. As the 20th century progressed, the private sector gravitated toward such diversification. Since 1980, the number of workers with defined-benefit pensions has decreased while the number with defined-contribution pensions— which the employer partially funds and the employee owns and invests—has increased. Personal retirement accounts as part of Social Security would allow lower-income workers, who typically have little in the way of investments, to accumulate wealth over the course of a working lifetime, as most Americans do.

Some Democrats attack this plan as hugely risky, because the stock market goes up and down. But the stock market has always gone up over the course of a typical lifetime. The Democrats' more serious argument is that Social Security should be a bedrock guarantee not subject to market risk. But this is antiprogressive: It leaves lower-income workers with less ability to accumulate wealth. More important, what if the bedrock turns out to be quicksand? The experts, as Justice Harlan noted nearly a half century ago, don't always get it right.

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BARONE'S LATEST
Hard America, Soft America: Competition vs. Coddling and the Battle for the Nation's Future  

America is divided into two camps, according to U.S. News and World Reports writer and Fox commentator Michael Barone. No, not Red and Blue, though one suspects Barone may taint the two groups in the hues of the 2000 presidential election. Barone's divided America is one part Hard, one part Soft. Hard America is steeled by the competition and accountability of the free market, while Soft America is the product of public school and government largesse. Inspired by the notion that America produces incompetent 18 year olds and remarkably competent 30 year olds, Barone embarks on a breezy 162-page commentary that will spark mostly huzzahs from the right and jeers from the left. Sales help fund JWR.

JWR contributor Michael Barone is a columnist at U.S. News & World Report. Comment by clicking here.




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