Liberty's Blog

State of the Union 2006

I thought president Bush's speach last night was pretty good Although the Democratic half of the floor didn't seem to be to impressed at least until he got to Social Security. They cheered at Bush's mention of the failure to pass real reform.

BUSH: The retirement of the baby boom generation will put unprecedented strains on the federal government. By 2030, spending for Social Security, Medicare and Medicaid alone will be almost 60 percent of the entire federal budget. And that will present future Congresses with impossible choices: staggering tax increases, immense deficits or deep cuts in every category of spending.

Congress did not act last year on my proposal to save Social Security...

President Bush paused to let them have their moment then he, pulled the ole rope a dope and put the ball in their court.

... yet the rising cost of entitlements is a problem that is not going away.

BUSH: And with every year we fail to act, the situation gets worse.

So tonight I ask you to join me in creating a commission to examine the full impact of baby boom retirements on Social Security, Medicare and Medicaid.

This commission should include members of Congress of both parties and offer bipartisan solutions. We need to put aside partisan politics and work together and get this problem solved.

It was a most embarrassing moment for the Democrats, they know Social Security is broken, and he put the ball in their court. Tom Elia states it well.

Think about that for a moment: Social Security not only has long term liquidity problems, but it is a program that pays the average recipient about $1,000 per month, where 20-25% of recipients receive its benefits as their sole source of income, and where another 40-45% of recipients have their benefits count for at least half of their retirement income.

Of course, the program's benefits come from a tax rate of about 12.5%, itself the result of about 15 increases since the program's inception.

However, we know how to run the program more efficiently. Just ask retired state, federal, and local government workers, whose retirement plans account for almost 10% of the total capitalization of both the stock and bond markets.

And the Democrats, who themselves offered no alternative to Bush's plan, cheered the inaction on reform?

Absolutely remarkable. 'Party of the People' indeed. As they say in Chicago, "Datz rite. Punch 10*."

If the Republicans were smart, they should save the tape of that moment, and use it in commercials for the next 50 years.

Time will tell if Congress has the heart and guts to deal with this, but every year they waste brings us closer to the big crisis.

posted by Liberty @ 8:29 PM