Wednesday, August 16, 2006

Chet-stay in the safe box.

After mimicking Jim Nussle to the point of literal plagiarism, Chet Culver came out swinging with his campaign's first original policy proposal. How short the memory, only a year ago Chet and almost all other Democrat leaders squarely opposed permitting taxpayers to invest two and one half percent of social security in a diversified portfolio of Blue Chip stocks and government bonds. Now Chet proposes investing the public pensions of every Iowa public employee, including his most loyal and left wing supporters in the ISEA, in start up ventures. This proposal came in a prepared policy statement so it was no slip of the tounge.

Now, my last name isn't Smith, Malthus or Mills, not even Keynes, Friedman or Galbraith but that sounds nuts. While market investments are an excellent and necessary source of increasing pension savings for us baby boomers, but a 100%? Start up companies - you know, investments with a 90% failure rate? Chet's not a bad guy but doesn't this - his first display of new thinking - demonstrate that ingenuity isn't really his strength?

Chet's proposal is a form of strange egalitarianism - give everyone a chance to participate in failure. While I, like almost all Republicans, believe that Iowa must become a more hospitable environment for business creation, we've always thought of a more rational and less reckless alternative than the revolution in investment strategy Chet is now selling. Don't tax cuts, less and more certain regulation, and a non-adversarial relationship with government certainly appear safer than permitting, much less requiring, the IPERS fund managers to invest up to 100% of the fund in start up businesses.

The Real Sporer has learned that the Culver campaign didn't run this idea by anybody outside the campaign. While the Culver campaign having an original idea appears shocking in itself, even Chet's most liberal and loyal supporters in places like the ISEA are shocked by what emerged as that first original idea.

Do you really want to invest your IPERS savings in companies that are under represented in Iowa - demonstrating their inability to compete? Maybe Chet has a few more sawmills and bee keeping as advocated by team mate Denise O'Brien in mind? Chet's proposal is prohibitively reckless while concentrating breathtaking new economic power in the hands of government - a liberal exacta - but it does demonstrate a bold new and creative direction for the Culver campaign. Keep it up fellas.

43 comments:

Kenboiraq said...

Any investment idea like that would get you fired in real life.

Erich Riesenberg said...
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Erich Riesenberg said...

Hello - I am confused by your comment that Democrats are opposed to investing 2.5% of social security tax in government bonds. Are you aware that 100% of social security tax is invested in US Treasuries?

Also, can you please cite the source for your claim that Chet wants to require IPERS to invest 100% of its assets in venture capital?

I am confused how one would privatize IPERS. If the state guarantees the pension, would the state be guaranteeing the investment performance of the private accounts?

Thank you.

Erich Riesenberg said...
This comment has been removed by a blog administrator.
Cedar Waxwing said...

Erich.. Democrats were united in their opposition to allow citizens to take 2.0 percent of their Social Security witholdings and invest it in a mix of very conservative stocks and bonds.

The government would have still held control of the money, but we as citizens would have been able to direct how a very small portion of it would have been invested.

Democrats called it "privatization" of Social Security, demogoged it to the extreme and REAL Social Security reform has gone by the wayside.

Chet's proposal would allow IPERS managers to invest 100% of IPERS funds in these so called "start-up" companies.

Let's look at facts here..no matter what the business climate..start ups have a high failure rate. Just on that fact alone Chet's proposal is extremely risky.

The hypocrisy here is MAJOR..Dems like Chet oppose citizens like us making investment decisions on our government retirement funds yet..they're for government making the same decisions about them.

Erich Riesenberg said...

I will ask again...

Can you please cite the source for your claim that Chet wants to invest 100% of IPERS assets in venture capital?

Cheers!

Anonymous said...

Erich

Why don't you tell us what Chet really meant? Tell us what we have wrong? Make your case for investing any percentage of teachers retirement savings in one of the riskiest of all investments.

Even if only 2% - how is this good for teachers?

IPERS already sucks as a investment provider. Didn't we just bail them out with more taxpayer money? TIAA-Cref isn't much better.

If the people were free, like us that aren't unionized, they could have choice about what to do with their retirement savings.

Oh yea..D's don't believe in choice except the choice to kill their inconvenient pregnancies.

Anonymous said...

Erich,

Social Security isn't "invested" in Treasury bonds. All Social Security money either is immediately paid out to beneficiaries or is used by politicians to pay for things right now, like the deficit, thanks to bonding.

Bonding is debt. Maybe you don't understand what this means. It's sort of like if you take out a mortgage on a house. If I get a $200,000 mortgage on a house, I'm not worth $200,000. I've still got to pay it back, plus interest.

Social Security money in T-bills has to be paid back, with interest. Where's that money coming from? From future generations of taxpayers.

There's no lock box. There's no room with gold or dollars bills in it, waiting to be spend. Some day you may understand this.

Erich Riesenberg said...

You do not contradict me at all, though you do contradict yourself when you first say the trust is not invested in Treasuries, then you state the money is in T-Bills which must be repaid.

I certainly never said the SSA trust has gold or dollar bills, it does have US securities. Your comment that it does not have dollar bills is a bit ironic, as US dollar bills certainly can't be considered any more safe or tangible than US government securities.

At least we can agree that it would be hard to divert ssa trust money to private accounts, as there is no money to be diverted.

Now please, could someone cite Sporer's claim that Chet wants to invest 100% of IPERS in venture capital?

Cheers!

Anonymous said...

What is the correct percentage? Maybe Ted had the wrong percentage. Please educate us.rt

After you answer that, explain the upside to this to the people whos retirement funds you are taking to benefit another person via "venture capital investement?"

How is this different than the values fund? How is this different thatn the Ag version of the values fund?

How many taxpayer provided funding schemes are out there?

None of them have worked. What is the reason to try it again using the retirement money of low paid workers who have no other option for retirement savings?

Erich Riesenberg said...

My good anonymous friend, Sporer made the claim that Chet is calling for 100% investment of IPERS in venture capital. I did not say Ted Sporer is wrong. If I were to label him as wrong, I would provide a citation. I am merely asking why he makes the claim, and the source of his information.

As to IPERS, they already invest in private equity and IPERS' overall returns have been above average. I don't think this has much relation to the governor's race, except to highlight that the claims made here and elsewhere are factually wrong.

http://www.ipers.org/news/ipersinvreturn20060331.htm

I do hope IPERS will be kept largely free of political agendas and social engineering, as they have apparently done quite well on their own.

I do pray there will be a time when fiscal conservatives have a voice within the Republican party and an honest debate about solving the problems which confront this country and state.

The Real Sporer said...

Chet's initial presentation indicated all IPERS funds, or at least didn't describe any limit on the funds. Multiple Democrats sourced the 100% claim-all of whom were so reporting based on their disbelief with the silliness of such an idea.

Chet's campaign has been back peddling hard on this plan, so I assume that they are now claiming that they only want to invest some IPERS funds-the proverbial unspecified percentage-into Iowa venture firms, or other unspecified industries that have had difficulty in accessing capital.

Either way, IPERS savings aren't appropriate to use for venture capital investments, that are highly risky and even more so when the target industries are evaluated on the basis of their inability to obtain capital on their own merits.

So, Erich, what is Chet advocating? What percentage of state employees pensions, including several of my family members, should be invested in high risk ventures? How do you square any part of this plan with the Democrat opposition to any use of SS funds in private investments-particularly when the investments would be in diversified blue chippers?

Anonymous said...

WAR SPORER!

Erich Riesenberg said...

Oh Ted, if I were advocating a specific IPERS allocation in venture capital, I would surely provide factual data to back it up. The same way I am asking you to source your claim that Chet wants 100% of IPERS' funds invested in venture capital.

But I am not advocating that, so it would be foolish for me to try to support a claim I never made.

And you apparently are unable to support the claim you did make.

If you think IPERS should not be invested in venture capital, you are too late, as that is one asset class IPERS already uses. IPERS has earned above average returns for well over a decade.

http://www.ipers.org/news/ipersinvreturn20060331.htm

Just trying to inject some facts into your blog, Ted.

Anonymous said...

I certainly never said the SSA trust has gold or dollar bills, it does have US securities.

Erich,

What is the value of that asset, those Treasury bills that the Social Security "trust" is invested in?

Can you tell me?

The fact is that Social Security is not invested in anything. Those T-bills are debt that future generations will have to pay back, plus interest. It's not an "investment" in any way, shape, or form.

I don't know where you get this idea that Social Security is a "Trust" in the legal/financial sense. You have been seriously misled if you believe that Social Security has assets, much less investments.

Erich Riesenberg said...

My friend, I believe your error is in trying to infer that I do not believe there is a problem with funding social security. You are wrong, I definitely do feel there is a problem. However, the problem is not with social security, it is that the government, including the House Budget committe, chaired by Jim Nussle, is not planning for it.

I will first explain the background of the current social security funding process.

In 1983, Alan Greenspan chaired a commission to fund social security. They decided to have it run a surplus, which would be drawn down to pay future benefits. The fund is still in surplus, and will be for another 10 or 15 years.

That surplus is invested in US government securities. These securities are backed by the full faith and credit of the US government, like a Treasury Bill.

Like any Treasury, it is a piece of paper, or an electronic blip - a promise.

The problem is, while Clinton did a good job moving the federal budget towards balancing, that has all changed since Bush took office. As the surplus dwindles, the budget deficit grows. We are spending the social security tax on income tax cuts for the wealthiest and the war in Iraq.

So, while the US government definitely has a legal obligation to the social security trust fund, that is irrelevant, as it is the unified budget which will determine if the US can meet all its obligations, including social security.

Anonymous said...

Hey Uncle Teddy

What was going on outside Centro with you, Gordo and the Fox people? You took off your jacket and rolled up your sleeves looking fairly animated.

Anonymous said...

Ya know Erich

We are talking about Chet and his risky scheme. Why won't you talk about that instead of trying to change the subject to Social Security.

All of us under 40 know it ain't gonna be there for us so invest freely in the entire marketplace.

Now, as a public employee, I can't depend on IPERS either.

I guess I'll have to work at Wal Mart to survive into my 90's.

Oh yea, you are trying to shut them down too.

How will I survive with no Social Security, No IPERS, and I can't work at Wal Mart for 10 hours or so a week because you want to put them out of business.

What's up with you guys? Why do you have issues with secure retirement income? Is that so you can house us all in govt run old folk institutions?

Anonymous said...

I saw this in the Register:

As governor, I will not put IPERS at risk,” Culver said today.

Venture capital, is by definition RISKY! This is an outright lie or an indication of chesters IQ.

assets,” the program’s guidelines say.
........later on, this:

Culver countered Nussle’s attack by criticizing the eight-term congressman’s support for President Bush’s proposal to allow younger workers to invest a portion of their payroll taxes in private accounts.

Culver has said that proposal would put the solvency of the federal Social Security program at risk.

Can someone tell me how Chet squares these two opinions? If he believes his own words about SS, what he proposes to do is even riskier. On top of that, the employees don't have a choice about that. With SS reform, the choice to invest elsewhere is voluntary.

Erich Riesenberg said...

My most confused friend, I am certainly not trying to talk about social security, my simple question here was for someone to cite Ted Sprorer's comment that Chet Culver wants to require 100% of IPERS' assets be invested in venture capital. As a fiscal conservative, I would be very opposed to such a scheme. It would be a factor in considering whether to vote instead for a budget buster like Mr. Nussle. But, it appears to be a myth, an urban legend.

Someone else made a comment about social security and I am just providing some basic facts about how that system works. This blog is short on facts.

Now, you are completely wrong about the stability of IPERS. It has consistently below average costs per participant and above average customer service ratings.

Most importantly, it is very well funded, thanks in part to above average investment returns, including past private equity and venture capital investments. It is nearly 100% funded.

www.ipers.org

Please, use your spare time to become educated about your financial future!

Cheerio, mate!

Anonymous said...

Erich

So if IPERS is having good returns with this strategy on investing in venture capital, why did we just have to bail them out at the price of 2.2 billion?

Using the argument that they do it all ready falls flat. We didn't know that. Now we do. They shouldn't be doing that either for the same reasons.

You want to deal in facts? Tell us what the venture capital companies were and currently are that IPERS invested in and their current rate of return.

Anonymous said...

Ted: I know this post doesn't relate to yours but this is the only way I know to communicate with you. A democratic friend of mine sent this link to me and it's so shocking that it can't possibly be true. It's from Moveon.org so I have real reservations but if you follow the link it takes you to a video where George Allen uses a racial slur against the only non-white member of the audience at a speech he was giving. Is it for real? What do you know about it?
Here's the link. Please respond since his name is on your presidential poll:
http://political.moveon.org/withdrawallen/

Anonymous said...

Erich

So where is the 2.2 billion deficit?

You told us that the cost is cheap per employee - gee, since the employees don't pay those costs, the taxpayer does - why do you cite that?

You told us that you have great customer service.

Great - guess that makes up for the lack of returns, which you didn't cite.

I care about the rate of return more than that you have good customer service. With whom do you compete to be worse or better?

They have a monopoly.

Anonymous said...

Sporer has many many sources of information inside among the Democrats. He is very well informed.

Many many Democrats called many many Republicans about Chet's risky risky scheme.

I'm repeating myself already so I don't have to say the same thing in multiple posts like our Democrat posters.

Erich Riesenberg said...

My lazy friend, I did post a link to IPERS' returns in a prior post. As you care about returns, you should certainly begin reading IPERS' quarterly reports!

It does not copy and paste well on this blog. Again, here is the link:

http://www.ipers.org/news/ipersinvreturn20060331.htm

As you can see, if you choose to educate yourself, IPERS has outperformed all its benchmarks over the past ten years! And you may even note how well private equity has done.

I am well aware people here did not know IPERS has already had very good returns from private equity and venture capital. That is my point! You should know basic facts before you spread misinformation!

Cheers, my friends and neighbors!

Erich Riesenberg said...

Oh, also, based on actually reading IPERS' financial reports, which you are too careless to do, funding costs needed to be raised largely because participants are living longer! So people can either pay more to fund their retirement, retire later, or die prematurely.

And, do you really not understand that getting better service at a lower price is a sign of money well spent?

Ciao!

Anonymous said...

why didnt Gordon come inside Centro? too afraid of all the Rs?

Anonymous said...

why did you need 2.2 billion? No, being cheap does not mean it is money well spent. Only D's think that way. It's the collectivism thing.

Anonymous said...

Lower price - decent service,

The Wal Mart way at IPERS!

I thought you guys were against that kind of thing. How much do you pay your workers? Is it below industry average? How much do you pay for health insurance? Do your people get lots of vacation?

How much service does a typical worker bee putting away 2% of their income each pay period really need from their retirement provider?

Max Fischer said...

Erich,

Your right. So, when can we expect to see all your left friends apologize to GW and work to put Social Security in high performing investments? I know I would like to invest a portion of my own Social Security in something other than your "treasury securities." Please, you are so misinformed and a kneejerk liberal that you can't be intellectual honest about Chet's hypocrisy on this IPERS issue when you only last year criticized the GOP for wanting to allow private investment accounts of Social Security. This guy is pathetic and lazy minded.

Erich Riesenberg said...
This comment has been removed by a blog administrator.
Erich Riesenberg said...

Ah, my inexplicably rude Max, my question was simply, what is the basis for Ted Sporer's claim that Chet Culver proposed investing 100% of IPERS' assets into venture capital?

In the same post he also made the uninformed claim that the "Democrats" were opposed to putting 2.5% of the social security trust fund into government bonds, when in fact the full social security trust fund is invested in government securities. I did not advocate for or against private social security accounts, I simply observed that as the trust fund is not funded with cash, it would be a challenge to divert the non-existent cash to fund such accounts.

You call me misinformed, yet are unable to point to a single error in my detailed explanation of IPERS and social security.

Erich Riesenberg said...

I will ask again...

Can you please cite the source for your claim that Chet wants to invest 100% of IPERS' assets in Iowa venture capital?

Cheers!

The Real Sporer said...

Erich, are you a child? This isn't HS debate. Not one but several very highly placed Democrats confirmed the original story. Would you be happier if I cited a Jayson Blair or Dan Rather media source?

Chet has been backing off all week but that doesn't change his original "plan", such as it was.

Also, if IPERS is in such a good investment posture why is there such a large deficit? My source for that is the DMR.

Erich Riesenberg said...

Ted, do you know anything about IPERS? As a political leader you should learn a little something about the state retirement system.

As I cited in a previous post, IPERS needs participants to pay more into the fund because they are living longer. So, they will presumably take more money out.

Cheers!

Anonymous said...

Erich, you sound like a broken record. Do you think Sporer should burn his Democrat sources?

Why do you assert that IPERS is properly managed? The record shows shortfalls are routine-isn't that a factor that current fund managers should factor into their portfolio?

Or is this simply just another way the Democrats have of centralizing power even further, more money for welfare (corporate and personal) less money for taxpayers.

Kenboiraq said...
This comment has been removed by a blog administrator.
Kenboiraq said...

Democratic apologists/apologies/excuses/deceptions and risky truth schemes - all the same routine.

Chet gets the gold star for an original idea since most Democrats only run against Republican ideas and gets a kick in the butt for such a hairbrained idea.

Erich Riesenberg said...

It is truly discouraging that the Republican leadership of this state knows so little about IPERS.

"IPERS spokeswoman Julie Economaki said Culver's call for looking at Iowa companies would not violate the state law governing how the program's assets are invested. In fact, she said, state law requires its managers to consider Iowa companies."

http://www.jimnussle.com/nussle/wrapper.jsp?PID=4086-910&CID=4086-081806

Anonymous said...

Sporer: Instead of continually relying on ad hominym's about Jayson Blair, Dan Rather, and H.S. debate standards of evidence (which we all know are the last resort of the truly uninformed--or habitual liars), post the "prepared policy statement" you refer to from the Culver campaign regarding the Roveian "RISKY, RISKY, RISKY, RISKY" IPERS scheme. Why haven't you done so already? Obviously because it doesn't exist.

Anonymous said...

Awww. Here's he goes again.

Look, Sporer, if Jimmy Nussle has the chance he'll do the same thing. It ain't their person dough, after all, wha'do they care.

Both your boy and young Chester smell big bucks from biofuels. As usual Jimmy N was clueless until young Chester shot his mouth off.

They're both a couple of first-class jerks.

Anonymous said...

9:49

How is it you can predict that Nussle would do what Culver did? Is that how you rationalize this risky scheme to benefit the unions at the expense of the teachers and afscme?

This is risky and simply a payoff to the unions to create more union jobs.

Chet had a political reason to do it, not for economic development reasons.

If Chet is serious about economic development, how about he suggest legislative changes to the anti-business tax and regulatory environment which is causing all these companies to leave.

Heck, if Maytag wouldn't accept the $100,000 per employee bribe that Vilsack proposed, why do we keep thinking that just giving companies free money via the retirment savings of teachers and afscme people will do it?

Oh yea, because it isn't about economic development really. It's really about paying off the unions to get their vote.

Rate of return - be damned! I have to get elected first!!!

Anonymous said...

It's so sad that people who sound like they are promoting IPERS knows so little about the function of a retirement savings program.

But, it's good to know that your costs per saver (not paid by the employee) and your customer service numbers are good.

Mr. Ipers apologist - Is that why Chet did it? Will someone explain what Chet is up to? Why did he make this a political issue?

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