Cato Daily Dispatch for November 12, 2004
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AARP Opposes Social Security Individual AccountsSarbanes-Oxley Compliance Costs Companies Millions
Frist: Republicans Won't Allow Judicial Nominee Filibusters
AARP Opposes Social Security Individual Accounts
"Gearing up for battle over the future of Social Security, AARP, the influential lobby for older Americans, said Thursday that it opposed President Bush's plan to divert some payroll taxes into private retirement accounts. But it supports new incentives for private accounts that supplement Social Security," the New York Times reports.
"White House officials and many Republicans in Congress say workers could get higher rates of return if some of their retirement savings were invested in private stocks and bonds rather than in government securities."
In "The 6.2 Percent Solution: A Plan for Reforming Social Security," Michael Tanner, director of the Cato Project on Social Security Choice, proposes a plan that allows younger workers to invest their portion of the FICA payroll tax (6.2 percent) in individual accounts. The other 6.2 percentage points of payroll taxes, paid by employers, would be used to cover transition costs.
The Cato plan puts individuals, not the government, first. It protects younger workers and future generations. It puts each citizen in charge of his or her retirement. It allows workers to keep more of their own assets. As Tanner writes: "It would be a profound and significant increase in individual liberty."
Sarbanes-Oxley Compliance Costs Companies Millions
"The cost of completing Sarbanes-Oxley corporate governance legislation has risen to $5.1 million for the average large U.S. company, with a further $3.7 million in ongoing compliance bills," the Financial Times reports.
"The vast bulk of this cost relates to updating and documenting internal management controls the final stage of a controversial reform process that applies to companies reporting from Monday. Some very large companies such as General Electric say they have spent $30 million on this alone."
In "Accounting at Energy Firms after Enron: Is the 'Cure' Worse Than the 'Disease'?" Risktoolz Managing Director Richard Bassett and Chief Technology Officer Mark Storrie argue the Sarbanes-Oxley Act reinforces the measures and bodies that failed to do their job in the recent accounting scandals -- namely, the accounting profession and the Securities and Exchange Commission -- rather than the groups that processed the available information in the most timely manner -- that is, the debt and equity markets.
In addition, Sarbanes-Oxley will discourage risktaking on the part of corporate executives, impose significant costs on all companies through the new Public Company Accounting Oversight Board, and increase the quantity, but not necessarily the quality, of financial reporting, say Bassett and Storrie.
Frist: Republicans Won't Allow Judicial Nominee Filibusters
"Issuing a blunt warning to Democrats, the Senate majority leader, Bill Frist, said Thursday that the newly strengthened Republican majority would not allow filibusters to block action on judicial nominees in President Bush's second term," reports the New York Times.
"With the possibility of multiple vacancies on the Supreme Court in coming months, the comments suggest that Republicans intend to take a harder line with Democrats than they did when the Senate was more narrowly divided in insisting on floor votes for Mr. Bush's judicial choices."
In "How Constitutional Corruption Has Led to Ideological Litmus Tests for Judicial Nominees," Roger Pilon, Cato vice president for legal affairs, writes: "The battle between politics and law takes place at many points in the American system of government, but in recent years it has become especially intense over judicial nominations. That is because judges today set national policy far more than they used to -- and far more than the Constitution contemplates. Because the original constitutional design has been corrupted, especially as it relates to the constraints the Constitution places on politics, we have come to ideological litmus tests for judges.
"... That will not change until we come to grips with the first principles of the matter -- with the true foundations of our constitutional system. Yet neither party today seems willing to do that. Democrats have an activist agenda that a politicized Constitution well serves. Republicans have their own agenda and their own reasons for avoiding the basic issues. Thus, it may fall to the nominees themselves to take a stand for law over politics, the better to restore the Constitution and the rule of law it was meant to secure."
Jonathan Block, editor, jblock@cato.org
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