Demagoguery and Seizing on Current Fears

Obama put out a bald faced lie today in Florida:

“If my opponent had his way, the millions of Floridians who rely on it would’ve had their Social Security tied up in the stock market this week,”

This is demagoguery of the worst sort, for two reasons. First, neither John McCain nor George Bush ever proposed putting all Social Security contributions into the stock market, only a portion. Second, even if someone had done been allowed to invest their Social Security taxes in the stock market over the past 30 years, they would still be receiving superior returns to those the government provides. Some facts:

At the beginning of 1975 the S&P 500 Index was at 68.56. Since that time the S&P 500 Index has experienced an impressive growth rate to its current level around 1500. During that time the S&P 500 Index has had 25 years of positive gains and 7 years of negative returns.

The S&P 500 closed at 1255 on Friday, despite a week of panic, so the historic rate of return from 1975 is 8.8%. (That article must have been written early this year.) This is what a diversified portfolio of stocks can be expected to earn over many years. It is scandalous that Obama is peddling the myth that this is somehow risky, the greater risk for most workers not near retirement would to not be in the market. Meanwhile Social Security is offering a rate of return of less than 2%.

Further, Social Security obligations can not be sustained without change. Obama has joined Pelosi and Reid in opposing any change to a system that we can state to a certainty is on a path to bankruptcy. From David Ignatius in the WaPo

Pelosi describes with relish her strategy for trouncing Bush's plan to privatize Social Security -- which was to blast it mercilessly, without offering an alternative. The implicit message is that negotiation and compromise are for losers. The reality that Social Security is facing bankruptcy seems not to interest either Pelosi or Reid.

Nor Obama for that matter. So much for hope and change. This is relevant to the current crisis; do we really need four or eight years of failing to deal with impending crises? Because the current financial mess, bad as it may seem, pales in comparison to the $44 trillion in unfunded liabilities in the Social Security system over the next 75 years. And for some reason, young people are the ones supporting The One. I guess there is some irony there, as they will be the ones to pay the bill.


P.S. If you want to determine the historical rate of return for the S&P 500 (or any other index) for any period of your choosing, use R=(ln(final value/initial value))/T, where R is the rate of return as a decimal (you need to multiply by 100 to get per cent) and T is the period of time in years that you are examining. I challenge the reader to find a 30 year period where the rate of return is less than the best we can expect of Social Security (2%).

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Demagoguery and Lies, But A Flourishing Finish

I listened patiently and he did not disappoint. Barack Obama finished his acceptance speech with pretty decent oratorical flourishes with content that could have been equally delivered at a Republican convention. Maybe that was the point. But first I had to keep my cool while he demagogued and delivered lies and half-truths and just a little stupidity. Also, the whole Greek column thing was a set up, the stage was made to look like the set of West Wing, as in, see Obama already looks like the President.

First, the stupidity:
He got the crowd chanting "Eight is enough." An allusion to the popular TV show starring Dick Van Patten that ran from 1977 to 1981. And who was President during most of that time.......(drum roll please). That's right boys and girls, Jimmy Carter. So maybe he is seeking to remind us of the last Democrat candidate who promised change on this scale.

Some lies:
He implies that the economy is in recession, not a "mental recession." However, GDP grew at a 3.3% clip in the last quarterly statistics. He also accuses John McCain of saying $5 million a year income was middle class. McCain never said that, was clearly having a joke with Warren when that was asked, and the question was "Define rich."

Some half truths:
That somehow the Republicans proposals of the "ownership society" meant dismantling health care, welfare and unemployment benefits. Over and over making out McCain to be the third coming of George Bush.

Demagoguery:
Somehow Obama is going to prevent jobs from going overseas. First there will always be job growth and destruction in a free market. (Obama promises to continue with free markets, a big relief for me.) Without the freedom to make changes, we will turn into France iwith its high unemployment because businesses are afraid to hire because they can never fire or lay off. It is the sheerest demagoguery to suggest these laws of economics can be repealed without consequence. And I think Obama knows this.

The finish and in my view the rhetorical highlight:

Instead, it is that American spirit — that American promise — that pushes us forward even when the path is uncertain; that binds us together in spite of our differences; that makes us fix our eye not on what is seen, but what is unseen, that better place around the bend.

Unfortunately he never really closes the deal and clearly explains what exactly American promise exactly is. Certainly, Obama explains that the spirit is that we never turn back, no matter the obstacle.

Transcript here, so you can judge for yourself.