Relevant and even prescient commentary on news, politics and the economy.

Backwards Transfer is Back: Social Security’s Unfunded Liability

Awhile back we had a series of posts about the causality of Social Security’s ‘unfunded liability’ in response to a comment by Jim Glass over at Andrew Bigg’s. The first post was XXXVI: $17 Trillion Backwards Transfer. Andrew answered back with Responding to Angry Bear: Where does the $17 trillion deficit come from? to which I replied with XXXVII: Backwards Transfer: Biggs Responds

Well clearly Andrew was not convinced because he is now back with some new charts with More on How Future Deficit is Caused by Over-Generosity to Past Participants. I am still not convinced, he is trying to stick a $15 trillion dollar future tab on past extra benefits collected by a past group that only collected a portion of a total of $999.7 billion paid out by 1980. My response is over there. Feel free to add to it or contrawise explain to me in comments why I just am just not getting it.

If you want to start with the basic numbers they will be found in Table IV.B7.—Present Values of OASDI Cost Less Tax Revenue and Unfunded Obligations for Program Participants[Present values as of January 1, 2008; dollar amounts in trillions] and Table IV.B6.—Unfunded OASDI Obligations for 1935 (Program Inception) Through the Infinite Horizon[Present values as of January 1, 2008; dollar amounts in trillions] along with some definitions in the associated text. For extra credit you might consider what the implications of adopting the new CBO: Updated Long Term Projections for Social Security does in this context. Because by lowering the payroll gap going forward from 1.95% (Trustees 2007) to 1.06% (CBO 2008) you end up with trillions slashed off of future unfunded liability. Since this effect cannot in any way be attributed to new actions by past and mostly dead participants it seems to be hard to attribute those unfunded liability effects back to start with. There seems to be a fatal confusion of past and future going on here.

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On Those Allegations Against Mike Wooten

Governor Sarah Palin is accused of abusing her power as governor and lying about the whole reason why she had Walt Monegan fired. Monegan refused to buckle to Palin’s pressure to have Mike Wooten fired for what appears to be personal reasons. Palin’s sister was in a bitter divorce with Wooten. In classic slime and defend style, Team McCain’s minions are now saying we Democrats don’t care whether Wooten threatened to shoot someone. Talk about changing the issue. No one is defending Wooten and maybe Palin’s sister is smart to end her marriage with this fellow. But let’s take a look at those charges as provided by Alan Suderman:

Grimes suspended Wooten for 10 days. He also was punished for illegally shooting a moose and using a Taser on his 10-year-old stepson. The trooper admitted to using the Taser on his stepson in a “training capacity” and said he shot a moose on his wife’s tag, but didn’t think the act was illegal.

Shooting a moose may be grounds for a temporary suspension but only the most anti-Cheney leftwinger would have a policeman fired for this. The stepson apparently asked Wooten to taser him but let’s be clear – only an idiot would have honored such a request. OK, Mike Wooten is an idiot.

But what about those other charges?

A former top official of the Alaska State Troopers reversed a finding in a 2005 investigation of the conduct of trooper Mike Wooten, the former brother-in-law of Gov. Sarah Palin, a step that’s unprecedented, according to the head of the trooper’s union. John Cyr, executive director of the Public Safety Employees Association, said former Alaska State Trooper Col. Julia Grimes punished Wooten, who has a rocky relationship with the Palin family, for drinking beer before and while operating a marked patrol car even though there was no “just cause” to do so. An earlier internal investigation done in 2005 by Sgt. Ronald Wall, who is now a lieutenant, found that those claims were unsubstantiated. Cyr said it was the first and only time he’d seen the findings of an internal investigation in a trooper’s conduct revised by a top agency official. “It’s totally outside the expected norm,” Cyr said. Cyr said when he asked Grimes why she had reversed the agency’s own findings, she said: “Are you going to call Sarah Palin a liar?” Wooten has become a key figure in a political imbroglio for Palin that began when she fired former Department of Public Safety Commissioner Walt Monegan on July 11. Monegan said he was pressured by members of Palin’s family and administration to fire Wooten after Palin took office. Palin has denied those claims and said Monegan’s dismissal was the result of her seeking a new direction for the department.

In summary, Governor Palin had the findings of the investigation changed, fired Monegan for not going along with her plans to abuse her office to help her sister, and then lied about the whole incident. For Team McCain’s minions to use this revised set of findings as evidence that Wooten is even more of a creep is sheer dishonesty. And I find it interesting that Suderman didn’t even list that allegation that Wooten threatened to shoot someone. But this issue here is not whether Wooten is some sort of saint – he’s not. The issue is the unethical behavior of Governor Palin.

Update: Let’s add Mayor Palin’s firings of Irl Stambaugh and Mary Ellen Emmons:

It seems that John McCain’s vice presidential pick Sarah Palin is not squeaky clean. In fact, she may be as corrupt as pretty much every other still living Alaskan Republican to have held statewide office (the Murkowskis, Ted Stevens, Don Young pretty much covers it) … So for Sarah Palin, security does not come first. Like George Bush, it takes a backseat to personal loyalty and cronyism.

Sarah Palin is the perfect VP pick for McBush!

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To the heart of the chant on tax cuts

Mark Thoma started a chain of posts on the efficacy of tax cuts that bears watching as research becomes published. Following the money apparently is more possible in this day and age.

Richard Serlin (first here) followed up with two posts, the second here.

Don Pedro of Economists4obama says in comments:

I want to point out that one of the author’s took strong issue with the post in comments on our blog and offered to send me the paper (which I hope to get soon.)

So I may revise my opinion of the paper and even retract my criticisms after further reflection!

But I stand by the fundamental point that outfits like the Tax Foundation don’t get the benefit of the doubt when publicizing results based on unpublished research.

Serlin also points to a book by Peter Lindert Social Spending and Economic Growth since the Eighteenth Centry>

The book focuses on government transfer payments, rather than investment focused projects in a high tech modern economy, where such projects can have enourmous return, and be especially underprovided by the private sector. Nonetheless, even redistributive transfer payments end up not costing growth in his analysis. From famed Columbia economist Jeffrey D. Sachs:

“Two of Lindert’s major conclusions are that the spread of democracy has historically played a pivotal role in the rise of social expenditures; and that social spending has not gravely weakened economic incentives and long-term economic growth, despite the drumbeat of criticisms from free-market devotees. Indeed Lindert concludes that the net national costs of social transfers, and of the taxes that finance them, are essentially zero.” (

And from the book’s product description, you’ll note that they call them policies that redistribute income”

“Peter Lindert inquires as to whether social policies that redistribute income impose constraints on economic growth. Although taxes and transfers have been debated for centuries, only recently have we been able to obtain a clear view of the evolution of social spending. Lindert argues that, contrary to the intuition of many economists and the ideology of many politicians, social spending has contributed to, rather than inhibited, economic growth.” (at:

As I said, in a future post I’ll talk about the compelling research both theoretical and empirical showing that many categories of government investment programs have extremely high social returns, especially in a complex, high tech, modern economy, and this isn’t cherry picking, the evidence and logic is for types of programs, not just specific ones.

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The Efficiency of the Private Sector

by cactus

The Efficiency of the Private Sector

Recently, the wife and I moved to a new state. When you do that, you need to get a new driver’s license, plus re-register your vehicles. The whole process, including taking the written (well, computerized) exam, from the moment we walked in until the moment we walked out, newly minted driver’s licenses in hand, took 50 minutes. My only real complaint – the picture on my license is awful.

The same week we went down the Verizon store. Essentially, we wanted to see if there was a plan that made more sense for us than the Verizon plan we were already on given that we aren’t getting a land line. We were told when we walked in by the young lady taking names that someone would be with us in ten minutes, fifteen at a max. We finally walked out the door plenty pissed an hour and twenty minutes later. We didn’t look at any new phones, we didn’t ask for brain surgery, heck – we didn’t even ask to re-register our vehicles or get a driver’s license. We just wanted to inquire about the cost of plans.

And yet, I keep hearing about the efficiency of the private sector.

(Rdan here…the all or nothing guys can’t handle this nuanced approach)

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Candidate reactions

hat tip to Movie Guy

Here is part of what Presidential candidate Obama said on Friday about the Republican Vice Presidential candidate:

Senator Obama called Governor Palin from his campaign bus on Friday afternoon (local time) and spoke with her for “several minutes,” campaign spokesman Robert Gibbs said.”He told her she would be a terrific candidate and that he looked forward to seeing her on the campaign trail. He also wished her good luck, but not too much luck,” Mr Gibbs said.

In keeping with his pledge to show respect for his rivals despite disagreements over policy, Senator Obama and his running-mate Senator Joe Biden earlier issued a statement congratulating the 44-year-old mother of five and her family.”We send our congratulations to Governor Sarah Palin and her family on her designation as the Republican nominee for vice president. It is yet another encouraging sign that old barriers are falling in our politics,” the statement said.”While we obviously have differences over how best to lead this country forward Governor Palin is an admirable person and will add a compelling new voice to this campaign,” it added.

And Democratic Vice Presidential candidate Biden: Senator Biden, on his first joint campaign swing with Senator Obama just a week after his own rise to the presidential ticket, said simply: “I’m looking forward to meeting her.”

—–Pretty decent of the two Democratic candidates.

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EconomistMom on Sarah Palin

We need a woman’s perspective. Actually, EconomistMom offers three – including her own:

Yes, and even mid-40s, 20-years-married, working moms of several children don’t vote for mid-40s, 20-years-married, working moms of several children because they’re, you know… Geez– please don’t insult the intelligence of middle-aged working mothers that way!

The other two perspectives she offers were published here. EconomistMom seems to agree with Kiki McLean:

Women don’t vote for women because they are women. Women have high expectations — and have always had to meet them…The dramatic increase in female voters this year wasn’t just about a woman being on the ballot. It was driven by an intense debate on a broad agenda of bread-and-butter issues and national security

EconomistMom isn’t so fond of what Lisa Sciffren – former Dan Quayle speechwriter had to offer. But what does “sizzle and energy” have to do with the real issues. As far as cutting pork, Palin was for the Bridge to Nowhere before she was against it.

Update: Palin has her own views on a couple of other women. For example, she does not like the supposed whining of Hillary Clinton. Greg Sargent notes Palin thinks it’s funny when people attack Lyda Green for being a “bitch” or a “cancer” (Green is a cancer survivor). Karl Rove’s kind of woman!

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David Frum and Joe Klein Agree: McCain is the Risky Choice

Joe Klein sees the Palin problem less as a problem with Palin and more as a problem with respect to McCain’s (lack of) judgment:

I woke up this morning and realized that the most significant aspect of the Palin pick isn’t Palin–we really don’t know all that much about her yet–but the process by which she was selected. McCain really doesn’t know that much about Palin, either. He met her once in February. He interviewed her as part of the vetting process…and that’s it … All this raises again–yet again–the question of whether McCain is temperamentally suited for the presidency … the Palin pick reflects the most dangerous tendencies in McCain’s foriegn policy–the tendency to react, to overreact, to crises, without thinking it through. It also reflects a defiant, adolescent “screw you” attitude toward governance … his is not to disparage Palin. Her views seem very extreme to me–teaching “intelligent design” in schools?–but she may turn out to be a invigorating public presence, with the ability to learn fast (she’s going to have to do the latter). The problem is, there is absolutely no way on earth that John McCain can know what sort of person she really is, which is why this choice–his first major presidential decision–should be a matter of real concern for all Americans. He has proven himself, yet again, ready on day one–to shoot from the hip.

Klein notes us that conservative David Frum had a similar reaction:

The longer I think about it, the less well this selection sits with me. And I increasingly doubt that it will prove good politics. The Palin choice looks cynical. The wires are showing … I’d guess that John McCain does not have a much better sense of who she is, what she believes, and the extent of her abilities than my enthusiastic friends over at the Corner. It’s a wild gamble, undertaken by our oldest ever first-time candidate for president in hopes of changing the board of this election campaign. Maybe it will work. But maybe (and at least as likely) it will reinforce a theme that I’d be pounding home if I were the Obama campaign: that it’s John McCain for all his white hair who represents the risky choice, while it is Barack Obama who offers cautious, steady, predictable governance. Here’s I fear the worst harm that may be done by this selection. The McCain campaign’s slogan is “country first.” It’s a good slogan, and it aptly describes John McCain, one of the most self-sacrificing, gallant, and honorable men ever to seek the presidency. But question: If it were your decision, and you were putting your country first, would you put an untested small-town mayor a heartbeat away from the presidency?

Memo to Bill Kristol – David Frum is not a liberal Democrat!

Update: Ruth Rosen notes that Sarah Palin belongs to a group called Feminists for Life:

Feminism is all about having choices, Foster told me, after her talk. I couldn’t agree more. Young women, she says, should have the right to bear a child and have access to high-quality, affordable child care. Again, I heartily agreed. But Foster is cleverly disingenuous. When I asked what she does to promote child care, her answers were vague and evasive. When I read the organization’s brochures aimed at campus physicians and psychologists, I found nothing about campaigning for child care. The real goal is to convince professionals to persuade young women to “choose” to bear a baby. Despite its protestations, Feminists for Life is not really about choice. You can see this on its Web site, where the slogan “refuse to choose” appeared repeatedly. Nor does the organization challenge the real difficulties working mothers face. Instead, it cleverly appropriates the words “feminist” and “choice” to convince young women that abortion is always an unacceptable choice. Part of the problem is that Foster either does not know her history or purposefully distorts the past. She spoke that night as though she had invented the idea of child care and describes pioneer feminists of the 1960s and 1970s as selfish, diabolical creatures who never wanted women to have the choice to bear a child. But she’s wrong. The three demands made at the first national march in New York City in 1970 included child care, equal pay for equal work and the legal right to “choose” an abortion. Many feminists, moreover, spent years trying to persuade the institutions where they worked that real equality for women required family-friendly policies, including child care. Foster also accused Planned Parenthood and NARAL Pro-Choice America of supporting abortion in order to stay in business. But I had to wonder about her own financial goals when I saw, in the organization’s magazine, that I could buy a “stunning new logo pin” in either sterling silver or 24-carat gold for $75. In the end, I decided that Feminists for Life is neither about feminism nor about choice. It is a cunning attempt to convince young women that choice means giving up the right to “choose.” Sarah Palin is the inexperienced woman Sen. John McCain has chosen as his running mate, hoping that she will attract the vital female vote.. It’s the worst kind of affirmative action, choosing a person he barely knows, who is completely unprepared to assume any national office. It’s like nominating Clarence Thomas for the Supreme Court. It’s all about ideology and not about competence. To put it bluntly, Sarah Palin is no Hillary Clinton. Nor does she have the vision and brilliance of Barack Obama. This is an incredible insult to most American women. Just how stupid does he think we are?

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