Friday, May 4, 2001
PROVIDING AN INCENTIVE for Americans to invest in the stock market as well as the Social Security system in preparing for retirement is an intriguing idea that helped George W. Bush get elected to the White House. Such government-sanctioned privatization of retirement funds could enlarge the nest eggs for those whose days of employment are likely to stretch far into the future.
fix must protect
The issue: President Bush has appointed
a commission to report in the fall on
how the Social Security system could
include investments in the stock market.
The challenge will be to achieve that goal without jeopardizing the Social Security blanket for baby boomers nearing their golden ages. That may be impossible, but we await a report assigned by President Bush this week to a transparently bipartisan commission. Members of the commission were screened to assure their agreement with the president's position on this issue.
An estimated 76 million baby boomers are scheduled to reach retirement age in the next 15 years. To sustain the system, their benefits could be reduced by as much as one-fourth, payroll taxes of those who support the system could be increased by as much as one-third, or the retirement age could be extended -- or some of all three. Allowing workers to divert a portion of their Social Security payments to stocks and bonds without substantially increasing the amount of those payments could seriously tear away at the safety net. Bush says he opposes any increase in payroll taxes.
The commission appears stacked not only in favor of privatization, which is understandable, but also in favor of what is known as the "carve-out" approach. That means diverting money from existing payments.
The other method would require stock market investments to be in addition to the payroll taxes. Virtually all of the 16 commission members have supported the carve-out approach. In a related matter, the House has approved an increase in the annual limit on contributions to individual retirement accounts -- 401(k) plans -- from $2,000 to $5,000, but that offers no backup for most Americans. A study has found that only 4 percent of all taxpayers eligible for IRAs reach the maximum contribution. Raising the limit will benefit only those few who can afford to make such payments.
The consequences of treating limited stock market investments in the same way as IRA accounts -- exempt from income taxes --probably would be bearable as a first step toward privatization. If the commission insists on allowing diversion of funds from Social Security payroll taxes to stocks and bonds in the near future, it faces the daunting task of how to avoid putting a large generation of Americans at risk as they near retirement.
Supporters of recycling efforts who were disappointed by the Legislature's failure to pass the bottle bill can take comfort in the city's successful recycling program. Lawmakers deferred action on a bill aimed at recycling and controlling litter that would have put redemption fees on the estimated 800 million beverage containers sold in Hawaii each year and used the collected money for a recycling program.
Litter control measure
hits the trash can
The issue: The public has
shown it is willing to make
the effort to recycle.
This deferral was unfortunate because the people of Oahu have shown that they care by filling 84 recycling centers with almost 9,000 tons of material a year. The program is simple. Receptacles for glass, plastic and aluminum containers, and newspaper and cardboard are set up, mostly on school grounds, and residents drop off material there. Recycling businesses pick up the contents, which they sell, giving the schools a piece of the action.
The schools use the money in a variety of ways. At Noelani Elementary, the school bought plants to beautify the campus. At Lanikai Elementary, recycling dollars paid for small repairs, such as painting a building. Lanikai principal Donna Estomago says the program "is a good thing." Her school benefits from Oahu Community Recycling, a business owned by Bryce Sprecher.
Sprecher has done on a small scale what the city tried at one point. He provides curbside collection of recyclable material to about 260 homes in Kaneohe and Kailua for $12 a month. Whatever he collects goes to recycling sites, such as Lanikai Elementary's.
The city's 18-month experiment with curbside collection showed that labor costs would be too high. Sprecher agrees. "It takes a ton of time and effort," he said and although he can make a small living, his two employees have other jobs to keep them going.
Nonetheless, a wider program of curbside collection should be examined. In San Jose, Calif., households have one bin each for newspapers and junk mail, aluminum cans, and glass and two for plastics. They are picked up once a week and the service is mandatory at a cost of about $10 a month. To reinforce the recycling, trash bins furnished by the city are deliberately kept small.
On the Windward side, Sprecher's collections since July have helped Lanikai collect $1,234 from recycling. Lanikai Elementary's Estomago is glad to have the money, but she sees a more important point. "It shows a consciousness in the community that we can't just dump stuff."
This should be a signal to lawmakers and the beverage industry that opposed the bottle bill.
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