Scott Burns on Social Security

Scott Burns on Social Security--skip the first question and go to the second one:

http://assetbuilder.com/blogs/scott_burns/archive/2008/12/10/what-others-are-doing-with-their-401-k-money.aspx

I didn't know how the Social Security system really worked until I read Mr. Burn's response to the second question.

Scott Burns on Financial Nitwits

Scott Burns raises an interesting and terrifying issue--what happens when all those ARMs adjust upwards? I see an "uh oh" in the future...

http://assetbuilder.com/blogs/scott_burns/archive/2007/08/10/the-nitwit-sector.aspx

Also, if financial services is 20% of all market value, what is going to replace it as its percentage shrinks? I don't see any killer apps on the horizon--do you?

Scott Burns and the Medicare Problem

Scott Burns, formerly with the Dallas Morning News, has an insightful take on an "old" problem. He shows how Medicare will negatively impact not just young children, but 30 year old adults:

http://assetbuilder.com/blogs/scott_burns/archive/2008/09/12/medicare-the-biggest-threat-to-our-retirement-standard-of-living.aspx

Scott Burns, Peter Peterson, David Walker, and Richard Fisher have warned us about the Medicare ticking time-bomb. With apologies to Aldai Stevenson, we need more than just the thinking men to agree that change is necessary. Seniors tend to vote in higher numbers, and it will take a strong, bipartisan effort to fix the broken entitlement system. Someone needs to figure out how to counteract advertisements of grandma not being able to afford her medication, or stories about seniors skipping lunch so they can afford medicine. Such tactics are bound to be used to support the status quo, which is hurting America's younger generations. What can we do when so many Americans spend their working life not saving enough and then end up relying on the government to survive?

This isn't an old-vs.-young issue. The negative savings rate destroys the feasibility of universal healthcare for all Americans, young, middle-aged, and old. Universal healthcare requires more taxation, a surplus, or a weakening of the American dollar, and since we don't have a surplus, I'll give you two guesses as to what the other options are in the absence of a higher savings rate. Meanwhile, here's what the Federal Reserve of San Francisco says about China's savings rate (http://www.frbsf.org/publications/economics/letter/2008/el2008-03.html#5):

China's overall saving rate is now nearly 50%, by far the highest in the world. China's domestic investment rate has also been high, but not as high as saving, resulting in net current account surpluses which rose from 4% of GDP in 2004 to 7% in 2007.

Sadly, America's economy is based on other countries lending us money to spend while America prints more money to sell to the creditor countries, whose citizens save their money. But without Americans spending money, fewer people get to move up the economic ladder, because a nation of savers is terrible for growth and jobs. So the key is for central banks to work together to create timely incentives to spend and to save. Forget about presidents working together--I'd rather see central banks getting chummy first.

Scott Burns and Taxes

Financial journalist Scott Burns used to work for the Dallas Morning News, and now he has his own website. His most recent column explored taxes and had some interesting facts:

http://assetbuilder.com/blogs/scott_burns/archive/2008/05/02/the-truth-about-income-taxes.aspx

Here is an excerpt (published under fair use guidelines in good faith under 17 USC 504(c)(2)--these excerpts also incorporate facts publicly available)

Only 953,000 taxpayers--- about 1 percent of the total who paid taxes--- paid at the top 35 percent tax rate in 2005. They paid $315.4 billion in taxes on their $1,094 billion in income.

The most common marginal tax rate is 15 percent. That’s the rate paid by 54.4 million taxpayers...The second most common marginal tax rate is 10 percent. About 25.5 million taxpayers pay taxes at that rate...So of the two-thirds of all households that pay anything in income taxes, about three-quarters pay at 15 percent or less.

Another 22 million, 3.7 million and 1.5 million households pay income taxes at marginal rates of 25, 28 and 33 percent, respectively. In the year 2000 this top 25 percent of all taxpaying filers paid a whopping 83.6 percent of all income taxes. By 2005 they paid 85.6 percent of all taxes...

You were in the top 25 percent of taxpayers in 2005 if your taxable income exceeded $61,055.

Millions of Americans have no idea what fat cats they are.

Copyright: Scott Burns, "The Truth about Income Taxes" (2008), www.assetbuilder.com blog