Cato Institute
Cato Daily Dispatch
September 20, 2004

“Iyad Allawi, Iraq’s interim prime minister, Sunday insisted national elections would take place on schedule and called on the United Nations, which has cast doubt on plans to hold the vote in January, to deepen its involvement in the country,” the Financial Times reports.

“With large parts of the country beyond the control of the U.S.-led coalition’s forces and insurgents last week striking in the center of Baghdad, the possibility of holding elections has been called into question.”

In “A Democratic Iraq May Not Be Friendly to U.S.,” Christopher Preble, director of foreign policy studies, writes: “Sadly, given the United States’ history in the region, those who doubt the Bush administration will allow Iraqis to choose their own government have grounds for skepticism. In neighboring Iran, the CIA orchestrated the overthrow of nationalist leader Muhammad Mosaddeq in 1953, and then supported the autocratic Shah. The anger and resentment felt toward the United States for its support of the Shah’s secular regime ultimately exploded in the Islamic revolution of early 1979 that brought the Ayatollah Khomeini and his followers to power.”

‘Ownership society’ contingent on social security reform

“President Bush’s vision of an ‘ownership society’ is built, as much as anything else, on a sweeping promise: that he will transform Social Security so younger workers can divert some of their payroll taxes into private investment accounts,” the New York Times reports.

“Advocates of private accounts say they would solve the government pension program’s long-term fiscal problems, letting today’s younger workers retire with nest eggs bigger than the government could provide.”

Cato has a Web page devoted to the ownership society. Further, 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/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.”

United States, Europe expect to work out deal over Iraqi loans

“U.S. and European officials said they expect to hammer out a deal by year-end to forgive most of the loans Iraq owes industrialized nations, giving a big boost to the new Baghdad government’s ability to sort out its tangled finances,” the Wall Street Journal reports.

“At recent meetings in Paris, the group of 19 wealthy nations known as the Paris Club edged closer to a deal involving the more than $21 billion in loans they are owed by Iraq and a like amount in interest. The issue is expected to be a high priority at a series of meetings among the World Bank, the International Monetary Fund and the Group of Seven major industrialized countries in early October.”

On Sept. 28, Cato will release a new policy analysis, “Iraq’s Odious Debts,” by Patricia Adams. She argues that an open arbitration process, as opposed to the typically closed-door nature of the Paris Club, is a more fair and equitable way to handle Iraq’s debts.