You might think that WA Cares is a "free" long-term care plan, but it's actually more like "Pay Forever, Pray for Nursing Home Later." Washington's big-hearted (but wallet-busting) idea to help folks with old-age expenses is indeed mandatory for most workers, sucking cash from paychecks like a vampire at a blood bank, even though most people paying it will never get any benefits from it themselves. Now, enter SJR 8201 on the November ballot, which – to paraphrase Red Bull – is proposing to give that piggy bank some tremendous financial wings! Let's see what's going on.
Here are Five Fast Facts on WA Cares joining the stock market…maybe:
- 💸 Your Tax Dollars Pay For It - WA Cares hits W2 workers with a mandatory 0.58% payroll tax – that's 58 cents out of every $100 earned – and when you add it to the state's Paid Family and Medical Leave program, full-time folks fork over hundreds to thousands of bucks a year for benefits they are unlikely to ever use. Too bad all that money can't pay for a crew to clean up the mess this program is creating!
- 🤦 Fund Flop - The program's got a measly $2 billion in the bank right now and is stuck earning a snooze-worthy 4% return because of a century-old restriction forcing investment in super-safe government bonds and CDs. The rule dates back to the "horse-and-buggy era" which probably explains why the fund’s growth is moving at the speed of a carriage ride. It's about as exciting as investing in a collection of antique doorknobs.
- 💪 SJR Supercharge - This ballot measure would let the fund play with the big kids, investing in diversified stocks via the pros at the Washington State Investment Board, who've been crushing it with an 8% average yearly return over the last 25 years on teacher and firefighter pensions, turning "meh" money into "wow" wealth without extra risk.
- 🤝 Bipartisan Backing - SJR 8201 sailed through the legislature like a greased pig -- 42-7 in the Senate and 86-9 in the House -- with even Democratic Gov. Bob Ferguson and Republican Leader John Braun teaming up to say, "Vote yes!" Wait, that's not a greased pig, it's actually a greased pig riding on a unicorn!
- 👍 Future Fortune (Or Fumble) - If approved, that extra few percentage points of annual boost could balloon the fund by a whopping $67 billion to $113 billion over 50 years, dodging the doom of tax hikes like the Paid Family Leave rate that doubled in just five years -because nobody wants their paycheck feeling like it's on a bad diet.
🔥Bottom line: Whether you like WA Cares or not, it is state law and we all have our tax dollars flowing into it now. The question is: who manages those dollars, and how do they do it? The stock market is always higher risk than bonds, but the WSIB has an excellent track record of serving our teachers and firefighters well for decades. This seems like a great way to literally double our contributions over time, and maybe let the program actually be sustainable. One final thought: maybe we could suggest a provision to prevent the folks in Olympia from spending those extra billions on other things...? Just a random thought, no particular reason. It's not like government spending ever gets excessive, right?
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