Utopia Talk / Politics / KidSave

MrPresident07 Member	Thu Feb 13 15:42:40 How Giving $1,000 to Every Baby in America Could Reduce Income Inequality By Norm Ornstein February 12, 2014 Like it or not, the sharp inequality in the country is a fundamental issue. The gap between the richest and the rest of us is greater than it has been since 1929—a notable year. The gap between the pay of CEOs and top executives and the average pay of their companies' workers has grown into a yawning chasm compared with the ratio just a couple of decades ago. One can believe, along with deluded oligarchs such as Tom Perkins, that any criticism of the rich is like Kristallnacht—or, more reasonably, that without the drivers of wealth, the entire society would falter and fail to grow. Or one can believe, as some studies show, that social mobility has not fundamentally changed in several decades—that Americans can still move up the ladder. Or one can believe that the failure to deal with the stagnant incomes of the lower half of the population will lead to a sag in demand that will itself imperil growth. And one can believe that as our population ages and people live longer—making the ratio of Social Security contributors to Social Security beneficiaries much less favorable—stagnant or lower incomes will undermine the viability of the entire system, much less the ability of those relying solely or mostly on Social Security to get by. Whatever combination of those things you believe, one thing should be accepted universally: If Americans lose the sense of the American Dream—that if you work hard and play by the rules, you can rise to the absolute limits of your own abilities—and if Americans gain a sense that the rich get richer while the rest of us get screwed, our national unity will be imperiled, and the opportunities for real demagogues to emerge will grow. Is there any way to deal with this problem that doesn't get caught in our partisan, ideological, and tribal crosshairs? There is, and I am surprised it has not entered our policy discourse at all as the debate over inequality and adequate living standards has raged. It is called KidSave, and it was devised in the 1990s by then-Sen. Bob Kerrey of Nebraska, with then-Sen. Joe Lieberman as cosponsor. The first iteration of KidSave, in simple terms, was this: Each year, for every one of the 4 million newborns in America, the federal government would put $1,000 in a designated savings account. The payment would be financed by using 1 percent of annual payroll-tax revenues. Then, for the first five years of a child's life, the $500 child tax credit would be added to that account, with a subsidy for poor people who pay no income. The accounts would be administered the same way as the federal employees' Thrift Savings Plan, with three options—low-, medium-, and high-risk—using broad-based stock and bond funds. Under the initial KidSave proposal, the funds could not be withdrawn until age 65, when, through the miracle of compound interest, they would represent a hefty nest egg. At 5 percent annual growth, an individual would have almost $700,000. The initial idea of KidSave was to provide a retirement supplement to Social Security, making it easier in some ways to reform Social Security to achieve fiscal solvency. But the concept can serve multiple purposes at a very small cost. Imagine if we adjusted the KidSave rules so that at certain pivot points in life, individuals could withdraw a portion of their nest egg to pay for college expenses or a down payment on a house or a medical or other emergency, or even the creation of a small business, while still making sure that a substantial share of the funds would stay in a retirement account. We could ameliorate many of the problems facing hard-pressed middle-class and working-class families and encourage entrepreneurship, while protecting a major nest egg for retirement years. No doubt, some would squander or misuse the money, but for most, it would provide an opportunity and a lifeline. More than 65 percent of Americans have a net worth of less than $100,000. The average net worth in the U.S. is about $37,000. But averages disguise another reality: the dramatic differences in net worth between the bottom and the top. The wealth owned by the top 1 percent of the population is more than 37 percent of the total; the top 20 percent own 87.7 percent of the wealth. KidSave would significantly change all those numbers and ratios, and provide a cushion of wealth for those at the bottom of the ladder. KidSave drew support from liberals and conservatives, from unions and business interests, from the Heritage Foundation and AARP. For conservatives, it meant a universal investor class. For liberals, it meant giving wealth and security to tens of millions of people who have little or nothing. But for reasons I can't explain, it went nowhere. The same was true of a second iteration of the program, where each child would get an initial $2,000 loan at birth from Social Security, with the money also placed in a retirement account invested through the Thrift Savings Plan; the initial $2,000, as adjusted for inflation, would be paid back in five annual installments starting at age 30, but with the accrued investment growth continuing to build in the individual's account. That plan was cosponsored by Kerrey and fellow Sens. Rick Santorum, Daniel Patrick Moynihan, Charles Grassley, and John Breaux, but it still died on the vine. In his State of the Union message, President Obama proposed a commendable plan for starter retirement accounts, MyRA, providing an incentive for workers to have small amounts automatically withdrawn from their salaries to invest in principal-protected Treasury bonds. Nice, but tiny. KidSave is much more ambitious, with much greater potential. Why not give every American a piece of the pie? If the cost, in the end, were even $20 billion a year, that is chump change in a $17 trillion economy—and, of course, money that would all be invested in America. KidSave is an idea whose time has come. Any takers? http://www...uce-income-inequality-20140212
Camaban The Overseer	Thu Feb 13 15:54:43 700k equivalent in today's dollars? Or just 700k?
hood Member	Thu Feb 13 16:05:11 Sounds a lot like socialism.
Hot Rod Revved Up	Thu Feb 13 17:16:54 The people that are poor now would go through that in six months and then they would sit around and whine about the minimum wage.
MrPresident07 Member	Thu Feb 13 17:23:36 "Sounds a lot like socialism." Could be. If it works though it could be a good investment. Not sure if that's inflation-adjusted but that's a good question.
Hood Member	Thu Feb 13 17:44:15 "If it works though it could be a good investment." I agree. It just seems odd that people who often bemoan socialism would support such a bill.
McKobb Member	Thu Feb 13 17:49:30 As long as guvment can't put their sticky fingers on it...and promised to 'pay it back later'.
Dakyron Member	Thu Feb 13 17:52:50 Idiotic, why not just fix social security instead of creating a second SS like agency that does the same thing, duplicating all costs. Only a government loving dumbass would come up with something this stupid. Just tax dividends an extra 1% and use that money to shore up SS. Also, this idiotic plan does nothing to fix wealth inequality.
MrPresident07 Member	Thu Feb 13 18:11:06 "I agree. It just seems odd that people who often bemoan socialism would support such a bill." The main argument against 'socialism' is that it doesn't work and hurts the economy. This could actually have positive results as it's more of an investment plan instead of a simple government-owned endless lifeline. It could also be used to phase SS out as Bush wanted to do his first term. Did you read the article Dak? This isn't just a retirement plan...
MrPresident07 Member	Thu Feb 13 18:19:15 And of course it would go a long way toward combating inequality. 'Wealth inequality' will always exist, but there really are some kids out there that have no shot due to the financial side of things. I don't believe money is the answer to every problem, but coupled with education reform I think this could go a long way to helping a lot of problems.
Aeros Member	Thu Feb 13 18:34:04 "The people that are poor now would go through that in six months and then they would sit around and whine about the minimum wage." Almost as bad as a person born in the new deal era complaining about similar programs today, while still accepting the government money to pay for things like knee replacements and scooters.
Hot Rod Revved Up	Thu Feb 13 19:29:35 Aeros, may I suggest you get someone to explain the concept of insurance to you. Or to put it another way, are you willing to give up the benefits you *earned* for being in the service?
Hot Rod Revved Up	Thu Feb 13 19:30:59 BTW, I have been around poor people much of my life and I know their mindset.
Nimatzo iChihuaha	Thu Feb 13 19:41:21 >>The main argument against 'socialism' is that it doesn't work and hurts the economy.<< It's just that this argument is stupid and not valid. Economy is but one part of society.
MrPresident07 Member	Thu Feb 13 19:42:50 "It's just that this argument is stupid and not valid. Economy is but one part of society." "But one part"...meaning the most important and driving part that affects all other parts. We'd really have to define socialism to get to the good stuff, but let's not hijack the thread.
Nimatzo iChihuaha	Thu Feb 13 19:49:19 Well it isn't and either or. My point is however that even if it is, "hurting" the economy is not bad by default provided you have gains in other places.
MrPresident07 Member	Thu Feb 13 19:51:10 I understand give and take. Socialism (mixed economy) has been alive and well in the US for a long time and hasn't killed us. But that's why I said you'd have to define socialism. Anyways, I think this could be a good investment. What are the cons?
Hot Rod Revved Up	Thu Feb 13 20:06:02 "Thu Feb 13 17:16:54 The people that are poor now would go through that in six months and then they would sit around and whine about the minimum wage."
Dakyron Member	Thu Feb 13 22:39:46 "And of course it would go a long way toward combating inequality. 'Wealth inequality' will always exist, but there really are some kids out there that have no shot due to the financial side of things." Yep, just tell the kids... "Dont worry, you will get shit upon by corporate america for 65 years, but then... well, you will be living the mediocre life on the government dole".
Dakyron Member	Thu Feb 13 22:40:21 For fuck's sake, did anyone other than me actually understand the article? I feel like I read one thing and everyone else read something different.
MrPresident07 Member	Thu Feb 13 23:29:25 "I feel like I read one thing and everyone else read something different." Normally I would respond by saying 'then that tells you who's wrong'...but it is UP. Get shit upon by corporate America? People are already shit upon by corporate America. This will pay dividends throughout life though. Why not explain why this is a bad idea?
Dakyron Member	Fri Feb 14 09:10:49 "Why not explain why this is a bad idea? " I believe I already did, but here goes try number two. First, it doesnt solve the income inequality problem. Its a forced retirement savings program without any kind of guaranteed return, and its something you cannot touch until age 65. So as a way to solve the problem of stagnant wages for all but the top 1%, you decide to take more money from the middle class and put it into a government run 401(k) program. The child still goes throughout life making significantly less than the rich fucks who hoard money. Income inequality doesnt change. The program is not financed by the 1%, its financed by the workers. So what the fuck is the point? Second, again, why are duplicating a service that already exists in social security? Why pay double the overhead? Its inefficient. Third, if we want to help solve income inequality without resorting to extreme measures, then just tax dividends an extra 5% for people with a networth over a certain threshold(say $5M). Use that money to shore up social security, and possible even increase the benefits.
MrPresident07 Member	Fri Feb 14 09:17:48 "and its something you cannot touch until age 65." I'll ask again, did you even READ the article? You are wrong. "The program is not financed by the 1%, its financed by the workers. So what the fuck is the point?" It gives people more flexibility and security throughout life as well as after retirement. And I'm not sold on how it's pitched to be financed. "Second, again, why are duplicating a service that already exists in social security? Why pay double the overhead? Its inefficient." It's not just a retirement plan...Jesus Christ read the article. I guess we really have to define 'inequality'. I guess you are correct in saying it won't reduce 'inequality'...meaning the gap between the rich and poor. But who cares how rich the rich are as long as the poor have an opportunity to get wealthier and are able to lead better lives?
Nimatzo iChihuaha	Fri Feb 14 09:35:48 >>But who cares how rich the rich are as long as the poor have an opportunity to get wealthier and are able to lead better lives?<< Because it slows the economy. Money sitting on a pile is not serving anyone, not even the owner of the pile. How many cars can you buy? How many times can you eat out, buy furnitures or groceries? You should care how rich the rich are, because it slows down economic growth.
Dakyron Member	Fri Feb 14 09:36:29 "I'll ask again, did you even READ the article? You are wrong. " I did read it. They make "exceptions" to the rule, but that is the general rule. You can already borrow from a 401(k) for certain things. How is this any different than a forced 401(k)? Other than you dont have to immediately pay the money back and its not tied to an employer? "It gives people more flexibility and security throughout life as well as after retirement. And I'm not sold on how it's pitched to be financed. " So you forceably take money from a person, put into a retirement account, and only let them use that money if they are in an emergency or are too old to enjoy life, and we call this income redistribution? Its almost like companies created a way to keep people who missing payments via bankruptcy. "It's not just a retirement plan...Jesus Christ read the article." You need to read it. It IS a retirement plan. Otherwise there would be no age limit on when you could use the money. "I guess we really have to define 'inequality'. I guess you are correct in saying it won't reduce 'inequality'...meaning the gap between the rich and poor. But who cares how rich the rich are as long as the poor have an opportunity to get wealthier and are able to lead better lives? " How does this offer an opportunity to get wealthier? By letting pay for college upfront rather than over time? By allowing them to pay for emergency medical care that should be free? This is an insanely stupid idea.
Dakyron Member	Fri Feb 14 09:40:40 You want to reduce inequality? Make healthcare single-payer, and a guaranteed right. Make dividends, capital gains, and interest taxed as regular income. Subsidize the cost of college education. Encourage entrepneurship by taxing the top 1% and extra 5% or so and using that money to guarantee business loans for start-up businesses, rather just the 60% or so guarantee now that basically means that it is virtually impossible to start a business via loan.
MrPresident07 Member	Fri Feb 14 10:32:42 "They make "exceptions" to the rule, but that is the general rule." My support of this would hinge on making that 'exception' the rule. Jesus stop hammering away at B+C while ignoring A. "Other than you dont have to immediately pay the money back and its not tied to an employer?" You never have to pay the money back. And you don't have to be employed for this. "So you forceably take money from a person, put into a retirement account, and only let them use that money if they are in an emergency or are too old to enjoy life, and we call this income redistribution?" The taking money from a person falls under the "not sold on how to finance it". Yes, it would come from Americans' tax dollars. It's still (on paper) a better investment than a lot of the social welfare we have going on right now. At least it would give people options before retirement and would supplement retirement. "You need to read it. It IS a retirement plan. Otherwise there would be no age limit on when you could use the money." Once again you ignore one of the main benefits of this. "How does this offer an opportunity to get wealthier? By letting pay for college upfront rather than over time? By allowing them to pay for emergency medical care" Yes, yes, and other things. It wouldn't have to be emergency medical care. It could go toward supplementing insurance premiums or deductibles. Potentially allow the starting of new businesses. Possibilities are endless. Your solutions are stupid. Free college and healthcare? Dumb dumb dumb.
MrPresident07 Member	Fri Feb 14 10:33:07 "Because it slows the economy. Money sitting on a pile is not serving anyone, not even the owner of the pile. How many cars can you buy? How many times can you eat out, buy furnitures or groceries? You should care how rich the rich are, because it slows down economic growth." So what is your solution?
Sam Adams Member	Fri Feb 14 12:38:02 Theres no solution for the stupid class. You need IQ in the modern world.
Camaban The Overseer	Fri Feb 14 12:39:55 >>"Because it slows the economy. Money sitting on a pile is not serving anyone, not even the owner of the pile. How many cars can you buy? How many times can you eat out, buy furnitures or groceries? You should care how rich the rich are, because it slows down economic growth." << One thing that kind of gets me with this... The assumption is that the cash is sitting under their bed or locked in a vault. Rather than either being made up of investments, or being kept in a bank which loans the money out and attempts to keep it working.
Dakyron Member	Fri Feb 14 12:55:56 "My support of this would hinge on making that 'exception' the rule. Jesus stop hammering away at B+C while ignoring A. " So you want a forced government run savings account? What is the point? "Free college and healthcare? Dumb dumb dumb. " LOL... You want to create a govt run savings account that lets you use the money in it to pay for college and healthcare, but when I suggest we just cut out the middleman and pay for college and healthcare, you call me dumb. True small government conservatives are rolling over in their graves...
MrPresident07 Member	Fri Feb 14 15:21:38 "So you want a forced government run savings account? What is the point?" It was in the article...It gives people options/flexibility down the road. "LOL... You want to create a govt run savings account that lets you use the money in it to pay for college and healthcare, but when I suggest we just cut out the middleman and pay for college and healthcare, you call me dumb." Yes, because there would be more freedom involved for everyone. Government bureaucracy wouldn't get in the way, and you wouldn't need to regulate every aspect/decision concerning life. This empowers people instead of the government.
MrPresident07 Member	Fri Feb 14 15:21:52 We call these 'market-based' solutions Dak.
Dakyron Member	Fri Feb 14 15:51:54 "Yes, because there would be more freedom involved for everyone." How? Your money is still being forcibly confiscated and then given back to you only for specific reasons. If there is no list of reasons and you can just pull money out whenever, then again, I ask... WHAT THE FUCK IS THE POINT? Why create a system to force people to have a savings account that they raid every month? How does this equate to more freedom? "Government bureaucracy wouldn't get in the way" LOL
MrPresident07 Member	Fri Feb 14 15:55:08 My freedom reference was in regards to subsidizing school and single payer. If the government takes over you can kiss freedom goodbye. I understand that you're for less freedom, but most Americans just have a different philosophy.
Dakyron Member	Fri Feb 14 15:57:40 Kiss what freedom goodbye? The freedom to not pay your medical bills by filing bankruptcy? The freedom to be overcharged by horrific student loan companies? How does providing SPHC equal less freedom? How does subsidizing college tuition(public schools only) equal less freedom?
MrPresident07 Member	Fri Feb 14 16:52:49 Price fixing, wait lines, and life regulation. Duh. Such programs cannot exist without government regulation.
Nimatzo iChihuaha	Fri Feb 14 22:53:29 >>One thing that kind of gets me with this... The assumption is that the cash is sitting under their bed or locked in a vault. Rather than either being made up of investments, or being kept in a bank which loans the money out and attempts to keep it working.<< http://bgr...-reserves-147-billion-dollars/
Nimatzo iChihuaha	Fri Feb 14 22:56:19 "I calculate that the combined cash and liquid investments of Apple, Microsoft, Google, Cisco, Oracle, Qualcomm and Facebook now top $340 billion, a near-fivefold increase since the start of the millennium." http://www.cnbc.com/id/101302701
Nimatzo iChihuaha	Fri Feb 14 22:58:22 • American Express found in 2012 that affluent Americans (at least $100,000 in disposable income) had at least $6 trillion in cash savings; they estimate this number “could balloon to $12 trillion by 2014.” http://www...ng-on-huge-piles-of-cash-.html
Nimatzo iChihuaha	Fri Feb 14 23:06:44 And finally. "Small and medium-sized UK businesses are still struggling to access enough funding despite efforts by the government to boost lending, the Public Accounts Committee has said." http://www.bbc.co.uk/news/business-25823215
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