BILL FRIST: THE PERFECT PITCHMAN!
Bill Frist's pickle on Social Security
Champion of personal accounts lost big in the market
By Mark Murray
NBC News
Jan. 25, 2005
WASHINGTON - With his party controlling the White House and both chambers of Congress, Senate Majority Leader Bill Frist, R-Tenn., was simply doing his job as he tried to sell President Bush’s plan to revamp Social Security.
At a news conference unveiling the GOP’s agenda for the 109th Congress, Frist on Monday touted the linchpin of Bush’s proposal, which would allow younger workers to divert a portion of their payroll taxes to create personal retirement accounts and enable them to invest this money in the stock market.
Such voluntary personal accounts, Frist noted, "will not only enhance their future retirement income but also provide them with an opportunity to create a nest egg of wealth that can be passed on to their loved ones."
But Frist, some of his political opponents say, might not be the ideal person to sell this part of Bush’s plan. As it turns out, according to documents filed with the Federal Election Commission, a Frist political campaign fund established in 2000 has actually lost nearly $500,000 in stock market investments since that time. (An FEC spokesman says there are no restrictions against investing campaign money into the stock market, although the practice isn’t that common.)
In early December, a handful of media outlets, such as the Washington Post, reported on this stock-market loss. But in media appearances and interviews since then, including at Monday’s Capitol Hill news conference, Frist has not had to answer any questions linking his support for private accounts with his loss. Of course, the senator isn’t the only person who has lost money after the burst of the tech-stock bubble and the Sept. 11 terrorist attacks. Still, some of his political opponents and other independent observers wonder: If this can happen to Frist — a U.S. senator and a graduate of Princeton and Harvard Medical School — then could it also happen to an ordinary American’s retirement fund?
Such a question attracts even more scrutiny since Frist, as majority leader, will be quarterbacking this legislation in the Senate — where Republicans have a majority, but not a filibuster-proof one. He is also considered a possible presidential candidate in 2008. "It will complicate his life enormously to have people tell this story over and over again" in the debate over Social Security, said Roger Hickey, co-chair of the liberal Campaign for America’s Future, which is campaigning against the president’s Social Security reform plan.
"What this experience has demonstrated is even bigwigs and smart people who have stock brokers can lose their shirt," Hickey added. "Imagine when an average investor faces in terms of navigating the stock market."
Personal accounts have become one of the most contentious battlegrounds in the present debate over Social Security. Bush and many Republicans support such accounts because they promote "an ownership society" that empowers Americans to manage their own retirement plans. Opponents contend, however, that creating personal accounts could cost the federal government up to $2 trillion in transition costs, and would subject retirement funds to the whims of the stock market, instead of the guaranteed benefit that Social Security currently provides.
Yet Nick Smith, a spokesman for Frist, dismisses the idea that the senator’s stock-market loss prevents him from championing the president’s Social Security plan. Smith argues that this short-term loss belies the historically high rate of return the stock market provides to investors, and he calls the loss "a snapshot in the life of a short-term return from the market."
"Sen. Frist has full confidence in the market and believes that personal accounts can offer younger generations a chance to increase their savings," he said.
Republican strategist, who spoke only on the condition of anonymity because he didn’t feel comfortable speaking on Frist’s behalf, adds that the market’s long-term performance is precisely why unions and companies invest their pension programs in it. "The reason they do it is because it winds up being successful in the long run," the strategist said.
President Bush made nearly the same point during a forum on Social Security earlier this month, arguing that any attempt to partially privatize the system would have guidelines to minimize risk. "I’ve heard some say, well, this is risky to allow people to invest their own money…. But it’s not risky," he said. "Federal employees — the Thrift Savings plans — invest under certain guidelines, and I don’t hear them screaming it’s risky. It makes sense to try and get a better rate of return on your money, if you expect there to be a Social Security system which is going broke."
Norman J. Ornstein, a congressional expert at the American Enterprise Institute, doesn’t dispute that, over the long term, investing in the stock market provides a higher rate of return than Social Security does. But he notes that Frist’s $500,000 loss still makes it harder to assure less sophisticated and affluent Americans that they won’t get fleeced or receive bad advice when they invest their retirement funds in the market. In addition, he says, Frist’s case drives home the point that timing matters in investing: Under Bush’s plan, for instance, someone who retired during the market downturn in 2001 would have far less retirement income than someone who retired a year before, when the market was at its peak.
Ornstein adds that Frist and the Republicans can certainly counter arguments against personal accounts. "But when [their opponents] have a concrete example — who happens to be the majority leader — it’s a burden they would probably not want to carry."
Champion of personal accounts lost big in the market
By Mark Murray
NBC News
Jan. 25, 2005
WASHINGTON - With his party controlling the White House and both chambers of Congress, Senate Majority Leader Bill Frist, R-Tenn., was simply doing his job as he tried to sell President Bush’s plan to revamp Social Security.
At a news conference unveiling the GOP’s agenda for the 109th Congress, Frist on Monday touted the linchpin of Bush’s proposal, which would allow younger workers to divert a portion of their payroll taxes to create personal retirement accounts and enable them to invest this money in the stock market.
Such voluntary personal accounts, Frist noted, "will not only enhance their future retirement income but also provide them with an opportunity to create a nest egg of wealth that can be passed on to their loved ones."
But Frist, some of his political opponents say, might not be the ideal person to sell this part of Bush’s plan. As it turns out, according to documents filed with the Federal Election Commission, a Frist political campaign fund established in 2000 has actually lost nearly $500,000 in stock market investments since that time. (An FEC spokesman says there are no restrictions against investing campaign money into the stock market, although the practice isn’t that common.)
In early December, a handful of media outlets, such as the Washington Post, reported on this stock-market loss. But in media appearances and interviews since then, including at Monday’s Capitol Hill news conference, Frist has not had to answer any questions linking his support for private accounts with his loss. Of course, the senator isn’t the only person who has lost money after the burst of the tech-stock bubble and the Sept. 11 terrorist attacks. Still, some of his political opponents and other independent observers wonder: If this can happen to Frist — a U.S. senator and a graduate of Princeton and Harvard Medical School — then could it also happen to an ordinary American’s retirement fund?
Such a question attracts even more scrutiny since Frist, as majority leader, will be quarterbacking this legislation in the Senate — where Republicans have a majority, but not a filibuster-proof one. He is also considered a possible presidential candidate in 2008. "It will complicate his life enormously to have people tell this story over and over again" in the debate over Social Security, said Roger Hickey, co-chair of the liberal Campaign for America’s Future, which is campaigning against the president’s Social Security reform plan.
"What this experience has demonstrated is even bigwigs and smart people who have stock brokers can lose their shirt," Hickey added. "Imagine when an average investor faces in terms of navigating the stock market."
Personal accounts have become one of the most contentious battlegrounds in the present debate over Social Security. Bush and many Republicans support such accounts because they promote "an ownership society" that empowers Americans to manage their own retirement plans. Opponents contend, however, that creating personal accounts could cost the federal government up to $2 trillion in transition costs, and would subject retirement funds to the whims of the stock market, instead of the guaranteed benefit that Social Security currently provides.
Yet Nick Smith, a spokesman for Frist, dismisses the idea that the senator’s stock-market loss prevents him from championing the president’s Social Security plan. Smith argues that this short-term loss belies the historically high rate of return the stock market provides to investors, and he calls the loss "a snapshot in the life of a short-term return from the market."
"Sen. Frist has full confidence in the market and believes that personal accounts can offer younger generations a chance to increase their savings," he said.
Republican strategist, who spoke only on the condition of anonymity because he didn’t feel comfortable speaking on Frist’s behalf, adds that the market’s long-term performance is precisely why unions and companies invest their pension programs in it. "The reason they do it is because it winds up being successful in the long run," the strategist said.
President Bush made nearly the same point during a forum on Social Security earlier this month, arguing that any attempt to partially privatize the system would have guidelines to minimize risk. "I’ve heard some say, well, this is risky to allow people to invest their own money…. But it’s not risky," he said. "Federal employees — the Thrift Savings plans — invest under certain guidelines, and I don’t hear them screaming it’s risky. It makes sense to try and get a better rate of return on your money, if you expect there to be a Social Security system which is going broke."
Norman J. Ornstein, a congressional expert at the American Enterprise Institute, doesn’t dispute that, over the long term, investing in the stock market provides a higher rate of return than Social Security does. But he notes that Frist’s $500,000 loss still makes it harder to assure less sophisticated and affluent Americans that they won’t get fleeced or receive bad advice when they invest their retirement funds in the market. In addition, he says, Frist’s case drives home the point that timing matters in investing: Under Bush’s plan, for instance, someone who retired during the market downturn in 2001 would have far less retirement income than someone who retired a year before, when the market was at its peak.
Ornstein adds that Frist and the Republicans can certainly counter arguments against personal accounts. "But when [their opponents] have a concrete example — who happens to be the majority leader — it’s a burden they would probably not want to carry."
1 Comments:
Hi Lefty,
Thanks much! I also enjoy your page quite a bit! I will be out of town for a few days, but when I get back I will re-do my links. I had you, Cheeky, Jericho/Fuzzy, Ms. L., JFM, J.Marquis, Moose, Carter, Sheryl, OCD-GenX and some other goodies, including ALa and True American (who is back, BTW!) linked... before my template kind of disintegrated or became non-functioning or something.
You will be linked once again on my site during the next week. Save Me, Lefty Jones! Think Like The Man!
If you haven't checked out some of Damien's artwork at www.couchwarfare.blogspot.com, you are in for a treat when you do. His observations are excellent as well. Check him out!
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