Posted by Stacy Ozol
on September 16, 2011
, President Obama
, Social Security
These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:
When established in 1935, Social Security made its first payments to Americans age 65. These first recipients never contributed and were paid from contributions made by younger Americans. Those Americans and successive generations believed their contributions were investments, and that they would be paid at retirement by the earnings on those investments.
In fact, those younger Americans were paid by the contributions of successive generations of “investors,” as the federal government spent their money to help finance operating deficits. With the ratio of retirees to contributors rising, the Trust Fund will run out of money by 2036, if not sooner.
Such a scheme could only continue if the working age population grew more rapidly than the number of retirees, but it hasn’t because Americans live longer and the birth rate has declined.
President Barack Obama’s claims notwithstanding, Social Security is now a growing burden on federal finances, as the difference between the Trust Fund’s income and what it pays out grows each year. As we approach 2036, either payments will have to be dramatically curtailed, or the government will have to shut down, on a massive basis, other activities.
Either Social Security fails, or the U.S. fails. Continue reading…
by Jessica Holzer
Dow Jones Newswires
WASHINGTON (Dow Jones)–Securities and Exchange Commission Chairman Mary Schapiro said Friday budget constraints were hampering the regulator’s ability to enforce U.S. securities laws, in her bluntest remarks yet on the resource strain facing the agency.
Schapiro, speaking at a legal seminar in Washington, D.C., said the budget strain was forcing market analysts to use decades-old technology to “monitor trading that occurs at the speed of light.”
She also suggested that data-management systems and a digital forensics lab were on the chopping block unless Congress acted to increase the regulator’s budget.
Also, she indicated the agency didn’t have the funds to hire the market experts it needs to keep ahead of fraudsters and manipulators.
The SEC was tasked with wider responsibilities by the Dodd-Frank financial law, but Congress hasn’t increased the agency’s budget.
With Republicans back in control of the House of Representatives, the prospects for a boost in the agency’s funding have dimmed significantly.
House Republicans on Friday unveiled a plan that would slash nondefense, discretionary spending for the rest of the year by 9%, a cut of $43 billion compared with 2010 levels. The plan didn’t contain details about cuts at specific federal agencies.
When Charles Satterfield joined Stanford Financial Group in 2005 as managing director of fixed income, he had no idea this meant peddling Certificates of Deposit.
“They wanted to tie my compensation directly to sales of the bank CD,” said Satterfield, a fixed-income investment strategist.
“When grandma came in and wanted stability and a little bit of income, my answer was supposed to be, “Oh, the bank CD.” “When a young guy came in and wanted to grow his principal, my answer was supposed to be, “Oh, the bank CD.” “No matter what the question was, I was supposed to answer, “the bank CD.’” Continue reading…