BW on Soc Sec VII: Present Value vs Present Values

In the last post and particularly in comments there was some discussion of Present Value more fancifully described as Infinite Future Horizon in relation to Social Security solvency. Which raised the question: Why should current workers care about the interests of retirees in year 2041 or indeed 2086? as opposed to say the interests of uninsured children in the here and now? Because in large parts these populations overlap, today’s 10 year old sick school kid will be 2055’s new retiree (assuming he survives the illness). Given that under current assumptions he will be getting a better benefit in real terms than a similarly situated retiree today, why exactly is this particular policy matter elevated to the top of the agenda?

The key I think is to understand that advocates of Social Security privatization overlap with advocates of ‘tax cuts in all circumstances’ which in turn overlaps with the Norquistian ‘drown it in the bathtub’ people all of whom are starting from the ideological position ‘Big Government is not the Solution, Big Government is the Problem’. These folks simply don’t believe in Social Democratic solutions to anything, including Retirement Security. Never did, never will. I have to conclude that when someone tells me with a straight face that he is deeply concerned about retirement checks in 2086 but is simultaneously against funding SCHIPS because some insurance company might miss out on a premium dollar along the way that he is just trying to con me.

Movement Conservatives demonstrate every day that they simply don’t believe in social solutions to social problems, instead they will continually assert that all solutions should start with the individual in the marketplace. Well the problem for them is that society perceived in the case of Retirement Security and Health Care market failures. Social Security did not solve the entire Retirement Security problem nor did a combination of Medicare and Medicaid solve Health Care. But both were and are tremendously popular because they moved the ball forward on these issues. Much to the alarm of people who do not draw a line between Social Democracy and State Socialism, believing fundamentally with Hayek that one leads to the other right along the Road to Serfdom. Social Security Privatizers taken as a whole are just Movement Conservatives. They can protest all they like, they can try their best to appeal to liberal guilt about future generations, but in the end it is all about rolling back the New Deal.

Present Value calculations showing a $10 trillion dollar additional theoretical funding gap beyond 2086 are simply a gimmick to disguise the fact that these people have a whole different set of Present Values. Those calculations are a recent innovation simply designed to allow Movement Conservatives to undermine trust in the Crown Jewel of the New Deal, that is Social Security. They cannot afford to have Social Security be perceived as a success, that would just to them be another step towards Serfdom, who knows the next step might be Universal Single Payer Health Care. Unfortunately for them they may well be right, at least about the next step. The road to Single Payer runs right through Social Security solvency, they are right to be afraid.