I often refer to Vice President Joseph Robinette “Joe” Biden, Jr. as the accidental comedian because of the strange things he says. He says them with such force and vigor that people often are swayed by the emotion conveyed and perhaps don’t notice the absurdity of what was said. During his convention speech he said (with great vigor) that “Governor Romney believes in this global economy it doesn’t matter where American companies invest and put their money or where they create jobs. He then went on to say that Romney was proposing “…a territorial tax, which the experts have looked at, and they acknowledge that it will create 800,000 new jobs—all of them overseas, all of them.” Joe, or his speech writers, apparently did not know that the business leaders on President Obama’s Export Council and his Council on Jobs and Competitiveness have said that the tax system Joe accused as originating with Mr. Romney would be a good idea for the U.S economy.
Those comments by Joe during his speech created a flurry of astonished articles, but it isn’t even my favorite recent “Joeism.” During the Vice Presidential debate he accused Paul Ryan and Mitt Romney of wanting to privatize Social Security and inquired where people’s retirement programs be if that idea had been accepted when George W. Bush proposed it. I did a posting in February in which I analyzed what would have happened to a worker who voluntarily put the suggested one third of their Social Security “contributions” into a S & P 500 index (which was called “privatization by Joe and others) on a dollar averaging basis. It would have been really worrisome to watch the value of the account plummet with the stock market in 2008, but the money being invested during that time would have bought more shares.
The calculations I made were based on a person earning $50,000 a year with $3100 being withheld for Social Security and matched by the employer. One third of the monthly total would have resulted in about $170 dollars a month going into the private account. There would have been about $8300 invested since the beginning of 2005, and the value would have dropped to $5700 at the worst of the market collapse. However, the investors that took advantage of the lower market value and continued to invest would be pleased with the results. They would have invested about $15,700 by now, and, with the improved stock market, the account would be worth about $17,600.
No one knows what the stock market is going to do in the future, but history has shown it to be a good place to create value for investments. The individual with the private account would have the advantage of being able to use the money however they wished upon retirement instead of having the government calculate how much money they would receive each month. They also could designate the person or persons of their own choice to be beneficiaries who would receive the full remaining value. Social Security payments stop immediately after the death of the person.
All of that may or may not be of interest, but let’s get back to Joe. When he asked where we would be if Social Security had been “privatized,” he apparently didn’t know that the individuals who had voluntarily began the investment process would have more money. What is even more astonishing is that he apparently hasn’t noticed that the stock market has improved since Mr. Obama and he took office. Wouldn’t that be something to brag about?
