I normally wouldn't condone the booing of a public speaker. But in the case of last night's State of the Union Address by President Bush, I think it was highly appropriate.
We didn't get straightforwardness from the president about Social Security -- a program that will affect all our pocketbooks.
Don't believe me? Then read today's article by Post reporter Jonathan Weisman -- "Participants Would Forfeit Part of Accounts' Profits."
In describing his plan last night to allow workers younger than 55 to divert up to 4 percent of their wages into private accounts (up to $1,000 per year), President Bush said, "Best of all, the money in the account is yours, and the government can never take it away."
But the president left out some details, according to Weisman. Based on information he received from a senior administration official, Weisman reported that workers who choose personal accounts would ultimately get to keep only the investment returns that exceed the rate of return that the money would have accrued if it had been left in the Social Security system.
Scratching your head?
Weisman's piece says it means this: "If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's." The money the worker keeps "would augment a guaranteed Social Security benefit that would be reduced by a still-undetermined amount from the currently promised benefit."
The senior official told Weisman that "the 'benefit offset' merely ensures that those who choose personal accounts are not given an unfair advantage over the traditional system."
So in truth, under Bush's plan, workers wouldn't really get to keep all gains the money might earn.
Want to boo now?
A separate Post story by Michael A. Fletcher and Peter Baker reported that Democrats have promised to fight Bush's plan for Social Security -- "Bush Makes Case for Social Security Plan."
"Democrats are all for giving Americans more of a say and more choices when it comes to their retirement savings," said Senate Minority Leader Harry M. Reid (Nev.). "But that doesn't mean taking Social Security's guarantee and gambling with it.
And that's coming from a senator who represents Las Vegas, Fletcher and Baker pointed out. I love that line!
The Post's Web site has the full text and video of the president's State of the Union Address. And the White House Web site has a page devoted to the president's Social Security agenda.
Finally, The Post continued its series of editorials on the Social Security question this week. Read the latest installment: "No Social Security 'Crisis'" (Feb. 1).
More Reader Feedback on the Social Security Debate
There's one thing this debate isn't short on -- opinions. Here's another selection of comments from real folks (as opposed to TV pundits):
* Sharon Reinders of Sanford, N.C., had me in stitches with this comment: "Just remember that some of the same conservative people who want to privatize Social Security also believe that SpongeBob SquarePants is gay. Do you really want these folks making decisions about your retirement?"
* H.G. Gilbert from Mineral, Va., wrote: "Before we 'fix' the Social Security program, let's get all those 'Social Security funds' that have been borrowed repaid. In other words, let's get fiscal responsibility by the federal government before the Social Security program is raided again."
* Aaron Grady from Urbana, Va., said: "I'm not sure about the president's plan, but it's obviously very expensive. If we want people to save more ... why can't we increase the IRA amount from the measly $3,000 per year? That's an adequate set aside only for the low income worker."
* Finally, John Espenmiller from Logan, Ia., came in on the side of the White House: "The president's initiative to partially privatize Social Security is long overdue. It's high time Americans began assuming more responsibility for their financial futures and placing less demand on government services. A safety net is a fine idea, but a complete reliance on Social Security for a person's retirement needs is just plain irresponsible. The Democrats hate it because it begins to chip away at the entitlement mentality and class of citizenry they have carefully crafted over the last 50 years. They fear losing the power they hold over people's lives."
Let's keep this debate going. Now that you've heard the president describe his vision for Social Security, send your thoughts to email@example.com. In the subject line put "Social Security Reform." Please include your name and home town.
And you can read more of what readers had to say about this topic in last week's Personal Finance e-letter.
February Color of Money Book Club Selection
In my Sunday column, I announced this month's Color of Money Book Club selection -- "Love & Money: A Life Guide for Financial Success" By Jeff D. Opdyke (John Wiley & Sons). Opdyke's main message is that couples need to find constructive ways to talk about money issues, the sooner the better. Read my column for more about the book.
Opdyke will be joining me for a Web chat on Wed., Feb. 16, at noon ET. Please join us. If you can't be online at that time, submit a question or comment in advance.
Answers to Your Tax Time Questions
Jim Dupree, the IRS spokesman for Maryland and Metropolitan Washington, joined me yesterday for a Web chat in which we answered readers' questions about filing their income taxes. If you missed the discussion, read the transcript here.
Each week, Dupree is answering readers' basic tax questions in this e-letter. If you have a tax question, send it to firstname.lastname@example.org with "Tax Question" in the subject line.
Q: My husband is a partner in a law firm. Each firm member owns every dollar he or she generates. At year's end, the expenses are divided among the six firm members and deducted from each partner's earnings. This year, however, my husband earned less than his share of the expenses. He will have to find alternative resources to fully reimburse the firm for his share. Can we write that loss off as a business deduction on our joint couple's l040 filing?
Dupree: In general, a partner cannot deduct partnership expenses paid out of personal funds unless the partnership agreement requires the partner to pay the expenses. These expenses are usually considered incurred and deductible by the partnership. If this is a requirement as stated in the agreement at your husband's firm, he may be able to report these expenses on Schedule C of IRS Form 1040. The law firm should give him an itemized list of the expenses so they can be reported on the correct lines of the Schedule. Check IRS Publication 535, "Business Expenses," and Publication 541, "Partnerships," for additional information.
Q: My son is 23 years old, living at home with me, and attending school full-time. He commutes 100 miles round trip to school daily. I have paid all his expenses, including books, tuition, etc. Can I claim the educational deduction for him, including mileage? Can I file as head of household?
Dupree: If your child is under 24, and has been a full-time student for at least five months, he can be claimed as a dependent. For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. If your son is an eligible student, and you paid all qualified education expenses for your dependent, then you can deduct the qualified education expenses that you paid. Your dependent cannot take a deduction. To determine if your son is an eligible student and to determine what qualified expenses are deductible, you should see IRS Publication 970, "Tax Benefits for Education."
Generally, to qualify for head of household status, you must be unmarried and not entitled to file as a qualifying widow or widower with a dependent child. You must also have provided more than half the cost of maintaining your home. You may also qualify for head of household status if you are married but file a separate return, your spouse has not lived in your home during the last six months of the tax year, and you provided more than half the cost of maintaining your home, which was the main home for a qualifying child for more than one half of your tax year.
More detailed information on each filing status can be found in Publication 501, "Exemptions, Standard Deduction, and Filing Information."
Dupree's tax tips are compiled online here.
You are welcome to e-mail comments and questions to email@example.com. They may be used in a future column or newsletter with the writer's name unless otherwise requested.