Tony Snow: Case Study for Social Democracy

Daniel Gross points out that a Press Secretary who has never funded his 401(k) is a powerful argument for social democracy--and against the "ownership society":

Daniel Gross: May 07, 2006 - May 13, 2006 Archives: OWNERSHIP SOCIETY: Tony Snow, President Bush's new spokesman, reveals today that he's not quite on board with this whole ownership society thing. Via Talkingpointsmemo:

TONY SNOW: No. As a matter of fact, I was even too dopey to get in on a 401(k). So there is actually no FOX pension. The only media pension I have is through AFTRA.

I'd bet my weekly wages against his that he hasn't opened a health savings account either.

Snow is 50, and worked at Fox since at least 1996. So in his prime years of earnings he didn't bother to start a 401(K), even though it was likely subsidized by his employer. Oh, and AFTRA, of course, is a union that runs one of those old-fashioned defined benefits plans that are slowly disappearing.

Of course, we should expect to hear lots from Snow in the coming months about how important it is for people to save for their own retirements via 401(Ks) and not to rely on old paternalistic solutions like defined-benefit pension plans or Social Security.

Comments

[Terminator_X]

I have no idea how much Mr. Snow made with Fox, but highly compensated employees (typically executives) are frequently offered deferred compensation to get around the $15K annual limit that applies to 401(k) plans. Such an employee would have retirement needs met without a 401(k). There's a lucrative sub-specialty for tax lawyers who create such plans.

[Ralph]

Bush's new press secretary Tony Snow has barely started his job but he is about to face his first test and it will be a doozy. Latest new reports are saying that Karl Rove will soon be indicted for perjury by the grand jury in the Plamegate case. See www.truthout.org/docs_2006/051206Y.shtml

[BroD]

Cool--we have a union man in the White House!

[PaulC]

I imagine Snow has enough non-retirement assets that he won't have much to worry about on retirement.

But there is something dumbfounding about a person turning down free money (employer matching) out of sheer ineptitude and then (presumably) joining the conservative chorus whining about taxes.

David Brooks, another conservative, said something similiar in his "Bobos" book, characterizing the "Bobo" attitude toward money as not actually caring about it or paying attention to it, but considering it part of a mysterious natural ebb and flow (I don't have the exact text handy; I was reading a library copy)--e.g. if you're David Brooks, you might not know where the next paycheck is coming from, but you can count on a book advance to show up at just the right moment.

This must be yet another conservative thing I don't understand. I max out my 401(k), save a good percentage of what's left after taxes, watch my investments like a hawk--and vote consistently Democrat. Anyone with the luxury of treating money as something beneath their attention is either an irresponsible fool or a coddled member of the elite.

[David Camp]

Like Paul C., I am dumbfounded by the lack of foresight and thrift of so many "conservatives". It certainly puts the fiscal policies of the Bush administration in context - they truly epitomise the behaviour of a whole swath of Americans. Borrow and spend, save nothing, splash and flash, shock and awe......what fools, what ignorant crackers, slaves and hostages to fortune!

[sm]

Shock and awe...will be a badge of shame for as long as civilization lasts.

[Hedley Lamarr]

As a member of our petted upper class, Snow needs no 401k. He has had so many tax cuts during the last five years that he has no withholding and actually gets money back each quarter from the IRS through a secret rebate system for high-end Republicans.

[Dave]

Given that Snow had colon cancer, a health savings account would have been a very bad deal for him. HSAs are great as long as you don't actually, you know, get sick.

Also, the 401(k)/Social Security debate shouldn't be "either/or". There's no reason we can't have both an inflation-indexed guaranteed benefit _and_ a private savings program (maybe even with a progressive match).

[PaulC]

One way to read Snow's story is as an example of satisficing rather than maximizing.

One the one hand, putting money into 401(k) with employer matching is likely to be the highest return risk-free investment on that part of your income, so from that standpoint, his behavior sounds dumb.

On the other hand--let's face it--by the time Snow was working for Fox, he wasn't seeing soup kitchens at any point in his future. So he just didn't bother to start a 401(k) because he didn't perceive any need for one. It's too much paperwork (whine whine) too much bureaucracy (pout pout).

I think David Brooks's point about "Bobos" as the "New Upper Class" and their supposed insouciance about money is probably very narrowly true, if his analysis is limited to the pundit class. There are certainly people out there awash in money, who make very foolish financial decisions but are still unlikely to be parted with *all* their money as a result.

The trouble is when these same people start opining on what the vast majority of wage earners ought to be doing.

[Ralph]

Dave commented, "Also the 401(k)/Social Security debate shouldn't be either/or." A good point that is often excluded and not discussed by both sides in the debate over social security privatization. Why should we jeopardize the current SS system by privatizing it when we know personal accounts (pre-retirement withdrawals) do not address the SS solvency question and may in fact make it far worse. The whole argument for privatization clearly revolves around the simple appeal for choice over savings vehicles as opposed to forced savings. Why not just increase current limits on IRA's and widen the ability of corporate employees to invest their 401(k) contributions according to their own assessments of investment opportunities? Currently, most if not all employees are locked into 401(k) plans that severely limit where their contributions go into.

[ob]

"HSAs are great as long as you don't actually, you know, get sick."

Huh? HSA's are just a method of spending pre-tax income on health care. In fact, they are only useful to the extent that you actually spend the money, so I would think that getting sick would be part of the plan! (Luckily, you can use your HSA for all sorts of "optional" expenses, in case you don't actually get sick.)

HSA's are just a tax break. They are no replacement for health insurance, but like a 401k, they are a benefit to be used. If they are available to you, and you can predict your health related expenses, then HSA's are always great, not just for the healthy (in fact, the opposite is true).

[99]

*****"But there is something dumbfounding about a person turning down free money (employer matching) out of sheer ineptitude and then (presumably) joining the conservative chorus whining about taxes."*****

Actually, I don't know that there is anything dumbounding about it, because the money in question is absolute chicken feed to a man of Snow's income. You can't blame someobody for being so rich that an extra few grand going into a retirement account simply hasn't been a sufficiently large priority to get done. (Though I will grant you it sounds like he needs a new financial advisor).