Cato Daily Dispatch for December 17, 2004
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President Opens Health Savings AccountBush: Social Security Plan Would Reassure Markets
Sarbanes-Oxley Costs Provoke Wave of Complaints
President Opens Health Savings Account
"President Bush may enjoy the best healthcare in America, and for free, too. But that didn't stop him this week from setting up a tax-deferred health savings account," the Los Angeles Times reports.
"As president, he has championed such accounts as a way to make health insurance more affordable, and Congress created them last year in the same legislation that provided prescription drug coverage to some seniors."
The portion of the Cato Institute's Web site devoted to the notion of an "ownership society" details the benefits of HSAs: "HSAs offer the account holder the ability to both fund their short-term health care needs and to offset financial risk related to illness or injury. In those two ways, HSAs serve the basic purposes of those seeking health insurance. However, HSAs are unique and offer other advantages to the purchaser such as the development of financial assets, tax-free savings for health purchases, flexibility during retirement, portability, leverage in price negotiation, the ability to comparison shop, the capture of savings for future health care purchases, and finally, protection against the insolvency of Medicare."
Bush: Social Security Plan Would Reassure Markets
"President Bush said yesterday that addressing the long-term problems in Social Security would reassure the financial markets, offering a rationale to offset criticism that his plan to add personal investment accounts to the retirement system would require up to $2 trillion in new government borrowing," the New York Times reports.
"On the second day of a White House conference on economic issues, Bush continued to lay the groundwork for a strong effort by the White House and its allies to overhaul Social Security and pursue an economic agenda next year that also includes re-examining the tax code, limiting lawsuit awards and reining in the growth in government spending."
In "No Second Best: The Unappetizing Alternatives to Social Security Privatization," Michael Tanner, director of Cato's Project on Social Security Choice, writes: "Most opponents of privatization would prefer to avoid comparing various proposals for reform. That is probably because their alternatives boil down to some very unpopular options -- raising taxes, cutting benefits, or government investment in the stock market. ... Allowing workers to privately invest Social Security taxes makes sense on its own. It gives workers ownership of and control over their money, increases rates of return, allows low-income workers to accumulate wealth, and moves the system toward fiscal balance."
Sarbanes-Oxley Costs Provoke Wave of Complaints
"U.S. regulators are to consider how they can write specific rules for smaller public companies following a wave of complaints about the costs associated with the Sarbanes-Oxley legislation," the Financial Times reports.
"The Securities and Exchange Commission yesterday announced the establishment of a task force that will make recommendations on how the SEC could write rules that differentiate between big and smaller listed companies."
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.
Jonathan Block, editor, jblock@cato.org