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Laurence J. Kotlikoff's "Purple Plans" for the economy
Old 02-26-2012, 05:44 PM   #1
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Laurence J. Kotlikoff's "Purple Plans" for the economy

Today's Scott Burns column was devoted to this. Referring to Kotlikoff, "He calls them 'the purple plans' because purple is the color you get when you mix blue and red, the colors associated with our traditional parties".

There are plans for taxes, health, Social Security, financials, generational balance, and energy. The format is a main intro, then each plan has it's own intro, then one-liners for more detail so it is a reasonably quick read of the concepts.

I always grouse that politicians on both sides of the aisle are too busy sniping at each other and making mounds out of molehills instead of coming up with a plan of what they would do if they were elected or re-elected (I mean something sensible and thought-out).

Whenever a major change to a system is bandied about, I always wonder about how the transition would work, and if some people like us (savers, LBYM, investors) will be um, screwed, in the transition, for the greater good of the rest.

But, at least here is a plan.

I am posting this for your reading pleasure, and my posting of this should not be construed as support or non-support for any of the plans herein.

The Purple Plans | The Purple Plans

Edit: I forgot to add that Kotlikoff's XXX trillions of $ future liabilities does not specify the time interval into the future, unless I missed it somewhere. In previous writings he did with Scott Burns, I think he used 75 years on. Would be nice if he would have stated the parameters.
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Old 02-27-2012, 09:56 AM   #2
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I've found what I've read from Kotlikoff re: investing/retirement mostly helpful so I hope to read through it all, but it's lengthy. It surprised me right off the bat when he states "Last year's national saving rate was 0.1 percent." I thought we'd collectively done much better since the 2008 meltdown.

And FWIW: "In January 2012, Kotlikoff announced his plans to run as a third party candidate for President of the United States in 2012. Kotlikoff said he would seek the presidential nomination of the non-partisan advocacy group Americans Elect."

I am sure Porky will be watching closely...
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Old 02-27-2012, 12:03 PM   #3
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Originally Posted by Midpack View Post
I've found what I've read from Kotlikoff re: investing/retirement mostly helpful so I hope to read through it all, but it's lengthy. It surprised me right off the bat when he states "Last year's national saving rate was 0.1 percent." I thought we'd collectively done much better since the 2008 meltdown.

And FWIW: "In January 2012, Kotlikoff announced his plans to run as a third party candidate for President of the United States in 2012. Kotlikoff said he would seek the presidential nomination of the non-partisan advocacy group Americans Elect."

I am sure Porky will be watching closely...
You missed the other component of national savings rate. From ehow (not sure why it was at the top of my search, but it had what I wanted).. my bold... also, not saying his number is correct, just commenting on the definition....


"The National SavingsRate, published by the U.S. Commerce Department's Bureau of Economic Analysis, is an estimate of income that remains after the subtraction of consumption-related spending. The number consists of two parts, private and public savings, and is calculated in percentage terms.

Read more: What Is the National Savings Rate? | eHow.com What Is the National Savings Rate? | eHow.com
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Old 02-27-2012, 12:05 PM   #4
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Originally Posted by Texas Proud View Post
You missed the other component of national savings rate. From ehow (not sure why it was at the top of my search, but it had what I wanted).. my bold... also, not saying his number is correct, just commenting on the definition....


"The National SavingsRate, published by the U.S. Commerce Department's Bureau of Economic Analysis, is an estimate of income that remains after the subtraction of consumption-related spending. The number consists of two parts, private and public savings, and is calculated in percentage terms.
Thanks! I thought private savings had improved some, and I can understand how that's different from "national savings rate." Didn't know the terms...
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Old 02-27-2012, 12:48 PM   #5
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The national savings rate has three components: households, domestic business and net gov't. There is a wealth of data and excellent tools at the BEA to see this in enough detail to satisfy even the wonkiest. See here click on the section on savings and investment.
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Old 02-27-2012, 01:11 PM   #6
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Originally Posted by Telly View Post
I always grouse that politicians on both sides of the aisle are too busy sniping at each other and making mounds out of molehills instead of coming up with a plan of what they would do if they were elected or re-elected (I mean something sensible and thought-out).

Telly, We all grouse at politicians who don't have the courage to step on the 3rd rail. But, complaining about a politician trying to stay a politician (i.e., get reelected) is like sticking one's arm in the tiger cage and complaining that the tiger bit the arm off. It's the nature of the beast.

Much as it pains me, and much as I despise all politicians, the "rational me" puts the blame squarely back on the American public who can be quite greedy, self centered, one-issued, when it comes to electing those who represent them. I don't see a good end to our current situation. We WILL resolve it ONLY when we have no other choice. NO one will really go first. It will continue to be finger pointing and pontificating about those "greedy... fill-in-the-blanks".

I like Kotlikoff's other writings, see esp. THE COMING GENERATIONAL STORM (with Scott Burns). He seems quite reasoned and measured. He "shows his work" when he makes a suggestion.

Midpack, I didn't know he was running for Pres. I hate to see him become a "politician". I'm afraid that could ruin an otherwise valuable resource. YMMV
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Old 02-27-2012, 02:18 PM   #7
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Okay, I bit on the Social Security plan. This is my Cliff's Notes version.

It's an "add-on" plan.

We continue to pay the existing social security taxes to fund the benefits already in payment status or already earned.

In addition, we pay 8% to the federal gov't.

The gov't decides where to invest the money (world index fund followed by TIPS). The workers and retirees have no say.

The gov't decides when to start sending checks and how big they will be (basically running a closed group life annuity pool). Again, no options for the retirees.

Each birth-year of workers is a closed group. Individuals will not get back their 8% plus investment income, but each birth-year group will in total.

The benefit is progressive, in that the poor, unemployed, and disabled are credited with contributions made by the government. No indication of what tax revenue supports those additional contributions.
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