Social Insecurity

To achieve unpopular goals, George Bush has to lie. He can't achieve his goals by making an open, honest argument to citizens about the best course of action. Instead, he creates a crisis where there is no crisis. The most obvious example is the invasion of Iraq. Even his current Iraq-policy supporters would not have agreed to invade the country if they had known there were no WMDs. So he had to lie—he had to create a looming crisis.

Now it's Social Security, which is not in crisis and will not be for an estimated 37 to 48 years. And it will never be bankrupt—that is, it will never run completely out of money—as long as there is a payroll tax. The pessimistic estimate is that around 2050, if nothing is changed, new retirees might have to receive about two-thirds of what they currently qualify for—but even that reduced amount would be more (in real dollars) than current retirees get.

It's not a crisis, unless Bush makes it one. That sounds a lot like Iraq too: a somewhat worrisome situation that Bush pretended was a crisis, and then his radical actions made it into a real crisis. Better keep George Bush's hands off of anything you really care about.

Bush has kept the details of his plan intentionally vague to discourage real analysis. But enough is known to recognize that his underlying goal is to destroy Social Security, to get government out of the business of insuring retirees, survivors of workers, and disabled people. Based on the little Bush has made clear, Kevin Drum of The Washington Monthly has written an excellent synopsis of the arguments against, and he concludes:

Social Security is not in crisis, no matter how many times George Bush says it is. The trust fund has gotten a lot stronger over the past decade, and our best bet is to wait and see if it continues to get stronger.

If it doesn't, there are simple and fairly painless remedies available. Conversely, private accounts strike me as little more than a desperate desire for a free lunch — although they might be worth trying if they were implemented by paying for them honestly. George Bush, however, has no such intention, and would instead combine huge benefit cuts and massive borrowing with increased risk and an implied contempt for the very idea that the federal government should guarantee our elderly a dignified retirement.

In the meantime, we have bigger problems to worry about: Iraq, defense transformation, Medicare and rising healthcare costs in general, the growing federal budget deficit, and the skyrocketing trade deficit, just to name a few. Social Security "reform" is little more than a smokescreen to avoid dealing with harder problems that George Bush doesn't have any easy answers for.

Drum lays out the facts clearly and succinctly. I would prefer tweaks to some of his suggestions: for example, we should raise the earnings cap immediately rather than waiting 10 years—in fact, I see no reason for any cap at all, given the regressive nature of many other taxes. In that case, Drum's chintzy paring of cost-of-living increases would probably be unnecessary.

Brad DeLong also has a list of lucid talking points, beginning with:

Social Security's Troubles Are Smaller than Our Other Fiscal Problems

DeLong continues with the details and the reasons why:

• The projected long-run Social Security Trust Fund deficit ranks no higher than fourth in urgency and in size on our list of fiscal problems.


• Bigger fiscal problems include:
  • The current $600 billion a year General Fund deficit.
  • The long-run problems of finding financing for and controlling the growth of rapidly-rising Medicare and Medicaid spending.
  • The need to make sure that the General Fund has the resources to meet its commitments without undue strain after 2020--when it will no longer be able to borrow from the Social Security Trust Fund.
  
  
• If our current General Fund deficit is like having an impaired driver who has just crashed us into a tree, and if the Medicare-Medicaid problems are like a melted transmission, and if the post-2020 General Fund is like having no brake pads left, then our long-run Social Security deficit is like a slow tire leak.

Many other bloggers have written illuminating pieces on the economics of the system and on the forthcoming battle in Congress. Mark Schmitt imagines what might be possible in an ideal world where we could design a system from scratch. Mark A. R. Kleiman (who coined "Social Insecurity" as an accurate description of Bush's "reform") discusses what's really behind the GOP attack on wage indexing for retirees: a return to the storied days before the New Deal, when old people were supposed to be paupers. And Max Sawicky provides clear numbers on the wage-indexing issue—and some cause for optimism about the system's long-term solvency.

Bush can't make his crisis-inducing changes by himself. It's all coming down to votes in Congress, and Josh Marshall is on top of that, identifying Democratic members who are less than enthusiastic about protecting Social Security (he calls them "The Fainthearted Faction") and Republicans who are less than enthusiastic about Bush's attack on the system ("The Conscience Caucus"). Despite the GOP gains in the election, it's a case that can be made, and it's likely to provide leverage for Democrats in 2006 and 2008. Alan Abramowitz has identified 25 Republicans who are vulnerable on this issue, and Steve Soto has pulled together details on each district.

There is no imminent Social Security crisis, and there is some cause for optimism about convincing American voters of that fact—and, therefore, about convincing members of Congress. From this date onward, Bush must learn that repeated lies are not enough.

Comments

[jeffers Dodge]

MediaDrool.com

Social InSecurity
by Jeffers M. Dodge
February 5, 2005

I am a baby boomer and very afraid of the obvious math problems presented when less than two young workers, like my 11 year old son and his friend, will be funding one Social Security recipient.

The private plan roughly laid out by President Bush allows for the individual to have more of a say as to where his money is going. People who work, vote and are raising a family should be afforded this dignity especially as they age.

The benefits of additional cash flow into the capital markets allow companies to expand their business, markets and employee base. This will increase the tax revenues strengthening the balance sheet of the US Treasury making default on Social Security far less than a reality.

What are the Democrats afraid of? No matter which way they vote they will lose. Either they allow a major victory for the Bush Administration and the country now or they obstruct reform resulting in the inevitable melt down of the system in which history will point back to the great Social Security debate of 2005 and place the blame squarely on the backs of the Democrats.

If I were a Democrat I wouldn’t want to be faced with a choice like this, but Democrats survival depends on social insecurity. Doesn't it?

[Robert Silvey]

It's too bad Bush has made you so fearful when you need not be. The chimera of Social Security bankruptcy is identical to the chimera of Hussein's WMDs—it does not exist.

You apparently have not read the details of Bush's privatization plan. In fact, it does not give you control over your private account at all until retirement. At that time, if it has not increased in value more than 3% (inflation-adjusted) per year, you will still have no control. An annuity will be purchased for you by the government which will provide you with a total pension less than current SS. In that case, there also will be nothing left for your estate.

As for additional cash flow, there will be none. Bush's plan is merely a shifting of money that already exists in order to disguise his planned reduction of benefits.

Furthermore, privatization of SS will not solve the potential long-term funding issues. In fact, it will exacerbate them—and introduce additional short-term unfunded costs of $1 to $2 trillion.

Consider, too, the fact that SS is much more than a pension plan. It provides insurance for disablity and for survivors. Read more of the details here, take a look at the real effects of privatization, and don't be fooled by Bush's lies.

[Jeffers Dodge]

I haven't read the details of Bush's plan because he hasn't offered one yet. What planet are you from, doesn't 11 trillion dollars count in your books. You are intellectually shallow if you think that the current SS is safe for ever.... Just like a liberal. May I recommend the following sites: http://sayetright.blogspot.com/

Here you will get a good idea of what it means to be a modern liberal.

The other site is: http://thenewsocialsecurity.com/

Here you will find out about the real meaning of making the poor rich the result of one generation of a 100% privatized Social Security program...

[Robert Silvey]

Jeffers, you sum up the problem very well when you say you haven't read the details because Bush hasn't made them available. He doesn't want a point-by-point discussion of the program because he wants to destroy it, and keeping his proposals vague makes it difficult to have a useful discussion. In short, the current Social Security program is safe as long as Bush doesn't meddle with it.

Now, another point. It impedes rational discussion to use phrases like "intellectually shallow" and "just like a liberal." If you have facts, please share them. If you want to call people names, please go somewhere else.