"Why is Social Security Under Examination?"
This is the title of a post of a diary at another site, one of no particular interest on its own because it just puts people on the wrong road.
A straight out analysis of the economic numbers underlying Social Security ‘crisis’ shows pretty clearly that there is no ‘there’ there. To the extent that there is a gap between future projected income and cost it is small, distant, based on pessimistic assumptions, and totally fixable even if we waited years to take the first step. You can show this on paper or in pixels and I have spent much of the last six years doing that here and there and mostly without numeric push-back, the counter-arguments tending to be thematic and not number based at all.
So why do they push this? Well simple, the Right cannot afford to have a Social Security system that is perceived to be working going forward. They can survive people liking Social Security as is, after all they can spin that as people just enjoying a Free Lunch via that ol’ Backwards Transfer pushed by the nice folk at AEI, that just helps their overall ‘mushy headed liberal’ narrative, a modern day Grasshopper and the Ant. What kills them is to find out that the Grasshopper actually has an actuarial sound insurance policy in his back pocket, and one guaranteed by the Federal government, such a realization might lead the rest of the ants to doubt the ‘Big Government is not the Solution, Big Government is the Problem’ message being spread by the Ant Queen and her Drones.
In 1993 the anti-Social Security narrative revolved around Trust Fund Depletion, which was a real event which would have real consequences, if not as significant as people would have them (see ‘Rosser’s Equation’ at a Google near you), but by the late 90’s Trust Fund Depletion had been pushed so far out in time even as the cost to address it steadily dropped that there grew the need for a new crisis narrative. And so ‘Phony IOU’ was born. But otherwise nothing much had changed, the definition of ‘crisis’ was malleable but the solution was always the same: we needed to Destroy Social Security in Order to Save It.
Typically people on the Left tend to assign three motives for the desire of the Right to ‘reform’ Social Security. One is to get their hands on the assets in the Trust Funds. This is a total category mistake, those assets though real as real are not tappable in the way this narrative would require. A second is to get their hands on surpluses going forwards. Well this is the same mistake with a slightly different twist, cash surpluses which were as real as real could be in 1999 are existentially different today. And a third motive advanced was the fees that would be generated on private accounts. Well I don’t think this pencils out as well as people would think at least for the accounts of people in the lower 50% of income, if it were a pure scheme for extracting account fees they wouldn’t be pushing for universality, but instead for opt-out for higher-income workers.
Nope in my opinion the fundamental motive for opposing Social Security is not driven by greed as such but instead an ideology that depends crucially on the perception that Big Government is always and everywhere a failure, and that the bigger the counter-example the higher the risk to that overall paradigm. If Social Security was just headed for the cliff, its enemies would just stand back and watch it go, arguably this is where they were at in 1993. It is only when they see the coach driver beginning to get the team under control and steer it away from the cliff that they have to jump in and try to spook the horses again.
Which is why people asking why the actions of Social Security opponents don’t seem to be particularly helpful in guiding the stage coach away from the cliff are asking the wrong question, looked at in that way their actions don’t make sense at all. On the other hand if you flip it around a lot of things become clear, there being more than one definition of ‘fixing’.
Because there is too much money in war to stop that binge.
Let’s do something!
Sign up to this and stop the military madness part:
Barney Frank (D-Ma) and Ron Paul (R-Tx) see a clear and large amount of funding in the war machnie to fix things like the deficit.
Sign up to include excess war spending in the deficit commission.
Note, their view of cuts is too small but 10 times Gates’ cuts.
Social Security is NOT “under examination.”
Nor is there a “debate” about Social Security.
No one is examining anything. And no one is listening.
What there is is a public relations campaign to prepare the ground for cutting Social Security by filling the people’s heads with false, and completely stupid, claims about Social Security causing a terrible burden of debt for future generations. This is not true, and it doesn’t even make sense. But it’s what people have been told so long and so often they all “know” its true. And even the defenders of Social Security begin with the assumption that “something has to be done.”
But it doesn’t matter what they think anyway. The “deciders” aren’t listening. They sure as hell aren’t
We all know that the GOP will never listen to the facts on this because the GOP’s opposition is not based on facts, but on ideology. The real problem I have is with the Democratic appeasers. There was a mainstream media report on Simpson yesterday which described him as the co-chair of the commission to examine social security. While it is certainly appropriate to refer to the commission as the catfood commission given its make-up and predilections, I thought it was actually suppose to look at debt and deficit reduction and as we discussed a few days ago social security simply has no role to play unless the proposal is never to pay back the special treasuries. The Democrats–with Obama as the first –should simply say that because social security neither contributes to the debt nor deficits, it is “off the table”. Who knows maybe it would reassure seniors enough that the economy would get a boost and Democrats might hold onto control of Congress. The idea of appeasing the GOP because of ideology, make Neville Chamberlin seem like a stand up guy. I will vote in November because I always vote, but it is without any enthusiasm and while I will not vote for the GOP it is by no means a done deal that I will vote for the Democrats.
We may not know for another 100 years, when serious historians and historical novelists finally publish works about the silly things people did 100 years ago.
And they may not even be humans, but rather space alien anthropologists whom noticed an EM spike on their radar and changed course to investigate the unforecasted supernova in this region of the space-time continuum only to find that the EM source is a planet and not a sun and planets do not go supernova and something else must be amiss.
Ms. Tengle in 6th grade English class would have called that a run on sentence, but you know what I mean.
“ The idea of appeasing the GOP because of ideology, make Neville Chamberlin seem like a stand up guy.”
And progressives continue to vote for democrats like lemmings.
I fully expect Obama to seek additional “bipartisan” compromises with republicans after 2010. Like clinton (elimination of welfare) obama want to leave a legacy.
Well for some reason the title posted before the body of the post.
But I think Dale gets to the heart of the issue, there is no ‘examination’ as such, just an illusion of such in order to reach a pre-determined end. And that end is not necessarily determined by the dollars on the table, if so we would have won the battle by now. Which is why I gave up the illusion that the answer was just to do a better job educating the opposition, that at some point they would just throw in the towel and concede they just don’t have the numbers. Because as i said in one of my original posts on this back in 2004 “it is not about the numbers, and in most respects never was”.
“Why is Social Security under Examination?”
Bruce, its a simple question to answer and you know the answer. It’s becuase Democrat President Obama wishes it to be.
Its that simple, not one ‘Rep’ was involved in setting up or ordaining the ‘catfood commission’ (I love that name!). That is a Democrat party initiative by the leader of the Democrat party.
Yet not once in your 7 paragraphs do you mention these simple facts. Not once. (Not that I’m surprised).
Islam will change
The coach and cliff analogy is a good one but a bigger view is a more useful view. Is the aggregate Federal budget headed off a cliff? If so, what needs to be done? Many believe that health care costs are now pushing the government to the cliff’s edge and then over it in the not distant future. Are there changes to the Social Security system that could keep us further away from that cliff? Sure there are. There are changes to our defense programs that can do that. There are changes to our tax laws that can do that. That the Social Security program itself has only minor funding issues for many years to come is not a compelling reason to not look at changing the program if it could help manage other critical national concerns. Sure, it isn’t exactly an accident that now that the net redemption phase of the trust fund is getting close there is a choir singing the need to make changes, but their obvious hypocrisy shouldn’t limit the available choices.
“Is the aggregate Federal budget headed off a cliff?”
The General Fund is already over the edge and heading down. But don’t pay any attention to it, SS (which is still on solid ground) is the true problem.
Until Alan Simpson opened his e-mail typer. It is so obvious!
Check Congressman Ryan’s budget fix. No cut to the empire, minimal cuts to other discretionary, no tax increases, nonsense.
Where does deficit reduction come from?
Cut medicaid? Almost all SS recipients end up there. Maybe there need to be death panels.
Cut food stamps? Cut unfunded or stop unfunded draws on OPM and military retirement trust funds? Stop upgrading the air traffic system, or highways?
It is guns versus butter and the biggest part of butter is SS.
As Bruce says, SS works, ideologically a butter program that works needs to quietly pay for the empire that is sucking the productivity out of America.
Click here: http://capwiz.com/fconl/issues/alert/?alertid=15852531
You can click a few times and then forward to 10 friends who can set up a chain.
Copied from the last coment on the Open Thread, August 27th:
“….but you are misssing the point that we are possibly at a point of economic collapse.” CoRev.
The sky is falling, the sky is falling. And the only way to prepare for the end of times is to throw the old folks out the door and into poverty inspite of their having been paying into a system that was required of them throughout their working lives. We’re not talking about any Palm Beach denizens in their Lexus cars. We are talking about working class Americans that participated in their country’s legislatively mandated system that was designed to keep them off the welfare rolls in their old age. I keep focusing on the legislation only as a way of pointing out that this system was not dreamed up by some patronizing beaurocrat, but well thought out by our Congress. Over the years the mechanism has been tinkered with by the Congress under the guise of “preserving” its finanacial integrity and promise to its future beneficiaries. Now, at a time when corporations and small businesses alike are offering little in the way of a defined pension plan to workers, Social Security takes on greater importance than ever in its role as the means of preventing abject poverty in old age.
So again I ask, what the devil is the intention of arguing the solvency of Social Security. It has been demonstrated repeatedly that the program is currently solvent and will be for the next quarter century. Its solvency will continue after that by either improved economic conditions in general or by modification of the contributions rate. Workers are living longer, therefore, they need to put in a bit more to assure their own financial well being in retirement. The clearest point is that Social Security does not contribute to the current budget deficit any more so than do bond holders in general. it is disengenuous to claim that the holders of government debt, and that is what the Trust Fund is, are responsible for the deficit and should be made to accept a discounting of their assets by the debtor. Bull shit!!! I don’t think that China, Japan, nor Korea will buy that scenario, and there is no reason that American workers should do so either. If the general budget needs balancing then the Treasury needs to raise its receipts and should be advicing the Congress of same. If the Congress is spending too much on unfunded programs, war and corporate welfare come to mind, then the
Congress needs to make adjustments to those spend thrift activities. If your 25 year old girl friend wnats a new Ferrari (or maybe you yourself and your guy friend do so) do you sell, or borrow against, your insurance policy to raise the cash, and tell your kids and wife to screw off? This entire public discussion is being promulgated and stimulated by a handful of extremely wealthy individuals and their paid for sychophants and propagandists. Hopefully the voting public will come to its senses and see this assault on their future for the dirty trick that it is. And for what? What do the One Percenters need more than they already have? We are living in and witnessing a level of personal avaricious greed that knows no bounds. The average working American has to protect his/her own best interests by letting their elected representatives know that they know it’s a scam.
The outcome is not seriously in doubt. Benefits will not be cut. The cap on the payroll tax will be raised. This has consistently been the President’s position, and it has consistently been supported a huge majority (60-70%) of poll respondents. There, are to be sure, a healthy contingent of cranks in Congress, but most members are experienced pols who, if they can do nothing else, can find the path of least resistance.
Why, then, all the hubbub?
Possible explanations (all likely true to some extent):
1. Liberal Democrats have worked themselves into a frenzy of paranoia that Obama is selling them out. With an unlimited supply of righteous indignation, they are generating most of the talk about this
2. Every one of us has some crackpot opinion or other, and there is a group of wealthy and influential Republicans who are obsessed with Social Security. Congressional Republicans like to ingratiate themselves with these donors, by making sympathetic statements (“we need to look into this”), knowing full well that they will never actually have to cast a vote on any of the unpopular options being looked into. (Note that with a Republican Congress and a Republican President, privatization never even made it out of committee.)
3. Congressional Democrats hope to gain support in the fall election campaigns as the public’s only hope to save Social Security from the evil Republicans.
4. The President has given the Commission on Fiscal Responsibility two tasks: first, to recommend actions to balance the budget by 2015, and, second, to recommend a strategy for long term fiscal responsibility. One can get away with all kinds of hand-waving on the second, but not on the first. Balancing the 2015 budget is such a daunting task that if you could succeed there, the long-term problem ends up being child’s play.
Not even Pete Peterson can cook up a Social Security plan that would have any impact whatsoever on the 2015 budget.
Balancing the 2015 budget entails serious tax increases, anathema to Republicans (and barely palatable to many Democrats), and/or serious budget cuts that will be fought tooth and claw by deep-pocketed vendor interests.
It’s hard to believe that the Commission can actually accomplish this. More likely, they’ll come up with a plan that reduces, but does not come close to eliminating, the deficit. However, if they can convince the press that it was Social Security that posed the greatest problem all along, they’ll be able to claim great success for solving it.
So the whole deficit question is actually fixed in the minds of some people by the fact that SS, which would have caused the problem by their definition but is fixed, has been addressed and postpones any real action on the deficit to keep kicking the can down the road for the next group to address, which won’t happen till something fails again.
… and then get to keep the money rolling in to these vested interests, and the economy of finance continues as Obama loses his best wealthy friends. And if the boat is rocked by uppity government types then out they go and the corporate persons take their money and pout.
Banks have hired out 150 of the people in DC recently who might have regulated them with the new ‘regulatory’ law in effect…the buy American takes on fresh renewed meaning.
The possible changes to SS will probably be steady, economicly unnescessary, and towards one goal…gone. That is what the fuss is about…the one thousand cuts.
I am not absolving Obama, but a claim that no Repub was involved can’t be supported, this was from the beginning their initiative. Why Obama bit is another question.
you are exactly right. but i suspect Bruce is also right: “It’s not about the money.”
They hate us for our freedom.
I mean how would you feel if after forty years of faithful service at five hundred a month and alternate Tuesdays off, your butler or cleaning lady said, “I’ve saved up enough to retire, so screw you.” ?
I don’t make this stuff up. The fund wants an IMMEDIATE increase of 1.84% or a 12% IMMEDIATE cut in benefits. Sounds lake a recomendation to me. Ignore this at your risk. From the 2010 Trustee report:
For the combined OASDI Trust Funds to remain solvent throughout the
75-year projection period, the combined payroll tax rate could be increased
during the period in a manner equivalent to an immediate and permanent
increase of 1.84percentage points,1 scheduled benefits could be reduced
during the period in a manner equivalent to an immediate and permanent
reduction of 12.0percent, general revenue transfers equivalent to $5.4 tril-
lion in present value could be made during the period, or some combination
of approaches could be adopted. Significantly larger changes would be
required to maintain solvency beyond 75 years.
i wonder if you have alcohol related brain damage?
The “fund” dosn’t do anything. It’s a pile of money, fer chrissake. The Trustees did not “recommend” anything. They describe the size of the projected deficit in terms of what it would take to close it. They most definitely are not recommending a 2% increase immediately as a solutioin. or a 13% cut, or finding 5 Trillion to put in the bank immediately.
And for those whose brains are still intact, allow me to repeat that a tax increase that averages twenty cents per week per year would not only close the 75 year actuarial deficit, it would “fund” Social Security going forward over the infinite horizon.
So what Krasting is offering you is that if he says crisis again and again, without actually knowing what he is talking about, maybe you will join him in running in circles, scream, and shout.
Read this strange insider story about a hedge fund operated out of Austria:
Whether this is a recommendation or not, it’s a great way to scope out the size of the problem.
If you start with the normal assumption that we need 75 years covered on paper and the forecasts are correct, it means we need 1% from the employee and 1% from the employer and the terrible problem goes away.
Maybe some are worried that the terrible problem could go away this easily and we are back to the fact that the GDP forecasts, National Debt growth, and 2040 being the year that all our taxes go for federal debt service is NOT a slam dunk?
Also, whenever economists are not busy blathering about inadequate Aggregate Demand, now and then they make a peep about the personal savings rate being too low. SS actually helps with that problem a bit.