Duncan Black, Ph.D. who Specializes in the Economies of Cities, Explains It All to You
Bruce has made this point repeatedly. Dr. Black puts it in more direct language:
[I]nevitably the Social Security Trustees will, perfectly justifiably, tweak a few assumptions about future economic activity so that there will be a DOOM scenario, an EVERYTHING’S AWESOME scenario, and a “uh oh maybe in about 40 years we will have a problem” scenario. And then Fred Hiatt will print another million ZOMG WE MUST DESTROY SOCIAL SECURITY NOW IN ORDER TO SAVE IT FORTY YEARS FROM NOW columns and some future president will marvel at those worthless IOUS and blah blah blah.
We know how this works.
And the Sensible Centrists* are gathering behind someone who wants to do just that.
When the Voice in the Wilderness is Andrew Samwick (who is at least honest about his willingness to steal from the Trust Fund), two things are certain:
- Jason Furman should work on his c.v., and
- Even as only Nixon could go to China (because only Nixon was enough of a bastard to sacrifice Tibet to Chou En-Lai), only the Obama Administration can turn the Social Safety Net into something the Republicans “saved” (by making it look like Dresden).
UPDATE: Tim Duy at his branch of Ecoonomist’s View piles on (h/t Steve Randy Waldman‘s Twitter feed, or maybe Felix Salmon‘s), giving the lie to whatever was left of the DeLong argument that being left of a cadre of Bob Rubins makes one a “liberal.” Pull quote:
The strong Dollar policy takes shape in 1995. At that point, Rubin made it clear that the rest of the world was free to manipulate the value of the US Dollar to pursue their own mercantilist interests. This should have been more obvious at the time given that China was last named a currency manipulator was 1994, but the immensity of that decision was lost as the tech boom engulfed America.
Moreover, Rubin adds insult to injury in the Asian Financial Crisis, by using the IMF as a club to enact far reaching reforms on nations seeking aid. The lesson learned – never, ever run a current account deficit. Accumulating massive reserves is the absolute only way to guarantee you can always tell the nice men from the IMF and the US Treasury to get off your front porch.
Full Disclosure Update: Bob Rubin’s son is a college classmate of mine. Haven’t really seen him in the past not-quite-thirty years.
*I’m 99.44% certain those are assigned correctly. The Sensible one thinks that “attempt[ing] to push Clinton administration economic policy a little further to the left” was a Liberal position, while the Centrist is stupid enough not to believe people who have said for years that they intend to pick his pocket have something valuable to contribute to a discussion of his welfare, and does not remember that he lived through a decade when “the program [was] officially in balance.”
If H*ll exists as a form of reincarnation, my next life will be spent as a Centrist. If all my sins are venial and Purgatory awaits, I could live with being Sensible. At least until my neighbors couldn’t send their academically-achieving issue to college for purely monetary reasons, after which point I would consider this post to be rampant optimism.
The inutility of left-right categories has never been more stark than in an age where Duncan Black’s deeply orthodox neo-classical economics (now with attitude) can be considered “left” and reactionary defense of horrible compromises made during the New Deal can be marketed as “principled”.
If Duncan Black and other hype artists want to whine and stretch the facts, or outright ignore U.S. Government projections, they should be complaining about information released during 2010 by the Obama Administration and the Congressional Budget Office.
There is no need for Black and others to pretend that Government information isn’t available and that the howlers and screamers have to wait for the SSA Trustees to supposedly falsify future information releases to promote a phony issue of concern. Stop faking it, Black and others. Go ahead, challenge this info:
Table VI.F9. OASDI and HI Annual Income Excluding Interest, Cost, and
Balance in Current Dollars, Calendar Years 2010-85
[In billions]
http://www.ssa.gov/OACT/TR/2010/VI_OASDHI_dollars.html#176345
2010 Long-Term Projections for Social Security: Additional Information
CBO
October 2010
http://www.cbo.gov/doc.cfm?index=11943
Social Security Policy Options
CBO
July 2010
http://www.cbo.gov/doc.cfm?index=11580
and, as i never tire of pointing out
even if the Trustees projections are absolutely true, the work out to, when you do the arithmetic, a probable need for a payroll tax increase of forty cents per week per year.
or, as Bruce and I have proposed, a triggered increase of about eight cents per week whenever short term projections suggest an actual decrease in the Trust Fund (reserve) might leave Social Security with only enough in the Bank to pay a full year’s benefits with no income whatsoever.
i think this is important, because just waving your hands and saying the Trustees projections are nonsense is not very convincing. The bad guys know the numbers. They work very hard to keep the people from knowing them. And, sadly, the liberal defenders of Social Security don’t do arithmetic so they never have anything to say, but “oh, the poor poor. we can’t cut Social Security because the poor poor.. we need to save it by taxing the rich.” You can see how well that sells.
Meanwhile of course, Obama has gutted Social Security with a payroll tax holiday, and no one objected. No one saw it coming. No one understands what has happened. Yet.
It turns out that “we” are the ones who “stole the Trust Fund.” We took our retirement savings and spent it at Walmart in order to save the economy. The economy thanks you.
and, as i never tire of pointing out
even if the Trustees projections are absolutely true, they work out to, when you do the arithmetic, a probable need for a payroll tax increase of forty cents per week per year.
or, as Bruce Webb and I have proposed, a triggered increase of about eighty cents per week whenever short term (ten year) projections suggest an actual decrease in the Trust Fund (reserve) might leave Social Security with only enough in the Bank to pay a full year’s benefits with no income whatsoever.
i think this is important, because just waving your hands and saying the Trustees projections are nonsense is not very convincing. The bad guys know the numbers. They work very hard to keep the people from knowing them. And, sadly, the liberal defenders of Social Security don’t do arithmetic so they never have anything to say, but “oh, the poor poor. we can’t cut Social Security because the poor poor.. we need to save it by taxing the rich.” You can see how well that sells.
Meanwhile of course, Obama has gutted Social Security with a payroll tax holiday, and no one objected. No one saw it coming. No one understands what has happened. Yet.
It turns out that “we” are the ones who “stole the Trust Fund.” We took our retirement savings and spent it at Walmart in order to save the economy. The economy thanks you.To
coberly,
Did the payroll tax holiday actually get implemented? I missed that one. Well Obama was the left’s man and they are getting just what they wanted – right?
Hope you had a great Christmas and New Year! With TCU winning its been a great two weeks!!!!
Islam will change
Buff
it’s not the first time “the left” has been fooled. if you will admit that “the right” is fooled by its leaders, i will admit that so is the left. hell, i’ll admit it anyway.
“Obama was the left’s man and they are getting just what they wanted – right?”
Exaclty to the right, as right you are, right? Because that’s all that is in the game. There is no left of the center. There is only left of the right and that brings you to the center. The center might be acceptable to the left if the center weren’t so right side of the real left. So there is little or nothing left of any left ideology as it might apply to our poliltical economy. The references to left vs right are just that sensible or not.
“even if the Trustees projections are absolutely true, they work out to, when you do the arithmetic,….”
And they’re only twenty-five years into the future, and we all know just how accurate twenty-five year economic projections have always been. So we can expect the Great Liberal Obama to sacrifice the integrity of the program now so that he can say he has saved the future of our children. We won’t be here in twenty-five years to point out the error of his ways and he’ll be blaming the trusted Chairs of his Deficit Committee for getting it all wrong.
It’s fascinating how grossly this has been distorted. What Obama has done is reverse some of the reactionary Moynihan/Reagan Social Security scam in the 1980s which allowed funding of Republican budget deficits with a regressive social security tax. Why that’s bad is something that I have yet to see explained.
That’s an interesting interpretation of the last bit of legislative surrender by Obama. It proves that the proof is in the description of the action rather than in the reality of the deed. I’m assuming that you are referring to the 2% “temporary” reduction in the employee paid FICA. You’ll need to more clearly explain Moynihan/Reagan SS scam before anything can be supported or not. If you’re referring to increased FICA rates, recall that the purpose was to enhance the ability of the Trust Fund to cope with the increased demand on its assets twenty-five years down the road, like now. That the current government seeks to create a smoke screen from a 25 years from now crisis is not a scam of the past, but a scam of the present. The assets of the Trust Fund are working just as they had been intended to work.
The current scam has to do with finding reasons not to raise the taxes of the very wealthy whose prior tax reductions had been off set by the surpluses in the Truast Fund. To avoid a general tax increase it is necessary to divert deficit attention to other funds of assets, like the SS Trust Fund. Reducing demands on the Trust Fund assets is the first step in assuring that the wealthiest Americans can continue to enjoy their tax relief, which is your retirement funding their tax holidays.
The bill replaces funds raised via the regressive payroll tax with funds raised by the more progressive income tax. The Moynihan/Reagan scam was to increase SS taxes, screwing the poor and middle class, and placing the money in a “trust fund” which essentially was used to fund the Reagan and then Bush deficits. The Obama “compromise” plan makes the funding of SS more progressive but since the Whinerati who claim to be the Progressive Left in this country are in love with their self-pity, none of them have been able to figure out this elementary fact. Instead, the Fake-Left has used this opportunity to join with the Right in making up more groundless panic about the future solvency of SS.
No rootless….the purpose of the tax was for workers to fund their own retirement with their own money and to leave the big money out of it. The size of the trust fund was not significant until late in this game over the last fifteen years. The Reagan years saw no significant trust fund dollars.
The theory was that the government would gladly pay workers back Tuesday for gross overpayment today. So we had a regressive flat tax with a cap, a particularly regressive form of taxation that took a higher percentage from the salaries of waitresses than from stock brokers and we “put the surplus away” by purchasing bonds that made it more apparently affordable for the government to give tax breaks to the rich and fight wars, and then when it came to the payback, shockingly, it turned out Republicans and Conservadems don’t feel bound by the contract. That’s the scam. And what Obama did in the tax compromise is give a 1 year tax holiday on this tax to workers and REPLACE THE FUNDS with general funds. That’s the reality of this issue that has caused people like Professional Gloom Predictor Duncan Black to, via the benefit of his econ Ph.D. explain that Obama was betraying Social Security and setting some sort of precedent. Because, apparently, we are all supposed to earnestly believe that “precedents” are what control the actions of the right wing and corporate classes. The massive stupidity of such an argument would be shocking if it were not so standard over the last two years.
rootless
you should not be referring to massive stupidity. you don’t seem to understand the importance of honest accounting. IF the “excess” social security tax cum Trust Fund is used to pay for the boomer retirement there is no “scam.”
cutting the payroll tax in the name of a “tax holiday” either reduces the Trust Fund below what is needed to repay the boomers, OR, requires that the funds be “replaced” by general taxes, turning Social Security into welfare as we knew it. This is very very dangerous. In fact, I suspect it is going to prove fatal.
Don’t imagine for a moment that those payroll taxes not collected will be going to the same people who paid the “excess” tax since 1983. Even if it were the same people, it would be kind of stupid to play games with their retirement savings. The”excess tax” did not go to pay for Social SEcurity current benefits, or for general fund expenditures…except as a loan. The excess tax was exactly the amount of tax needed to pay for the boomers benefits when the time comes. As all “pay as you go” Social Security taxes are… that is, even though the “cash flow” is to current beneficiaries, the amount you pay is the amount you expect to get when the effective interest from wage indexing is counted. This is a fairly ordinary business transaction, only made confusing by the hysteria people work themselves up to when the subject is taxes.