Social Security
June 2nd, 2005...
More Mental Gymnastics With Social Security
Talk about an ideological blind spot. From the Los Angeles Times comes a plan from a legacy employee of a legacy institution:
Joel Havemann - May 30th, 2005 Like many other retirees, Bob Ball is concerned about what's going to happen to Social Security.
...
He shot up through the bureaucracy to become commissioner of Social Security for three presidents. On his watch, Social Security became the biggest and most popular benefits program. And in 1983, when he had been collecting retirement benefits for four years, he was a key negotiator of the law that rescued Social Security from the brink of insolvency.
...
"FDR talked about a basic retirement income that would guarantee a certain replacement rate for everybody to build on," Ball said. But the individual investment accounts proposed by Bush, which would allow younger workers to use some of their payroll taxes to ride the ups and downs of the stock and bond markets, would undermine that guarantee, he said.
Emphasis added. Contrast it with this, later in the article:
Joel Havemann - May 30th, 2005 His most controversial proposal: let the government invest some of the Social Security trust fund's surplus in stock index funds. Although this would allow the government to profit from expected — but not assured — market gains, critics have warned that it could also open the door to government meddling in corporate affairs, despite safeguards that Ball has proposed.
Aha! Now it all makes sense. It's risky to let people invest their own money in the market, but letting the government do so is another matter. Granted, we're talking about a surplus in this case, though in case you haven't noticed, the system's not exactly going to be rolling in cash over the next few decades.
Regardless, the attitude underneath seems to me that such things must always fall on some official body. This is likely why those who generally oppose personal retirement accounts also often have, for example, an undying faith in the value of institutions like the United Nations; they're addicted to process, to procedure, to official proclamations and oversight. Perhaps it makes them feel safe. Certainly much safer than the idea that individuals are running around, doing whatever they want with their own money and property and time.
It's an understandable fear, but one that we (and by we, I mean everyone) should not be taken in by. The processes and procedures of government are necessary, but it is important to resist the illusory feeling of safety that official, sanctioned decisions give us.
April 19th, 2005...
Social Security and Warning Labels
I was having a conversation with a friend of mine a couple of weeks ago (who, it so happens, is majoring in journalism), and the discussion turned to Fox News and the gradual merging of news with editorial content.
She raised fair points about the importance of keeping the two seperate, and rightly noted that Fox, in particular, seemed to blur that line more than most. My response was that even though the point was mostly valid, I thought we needed to trust people to differentiate between reporting and editorializing for themselves. I don't want my news to appeal to the lowest common denominator.
These two viewpoints are ultimately at the heart of the Social Security reformation debate, as well. Nowhere is this made clearer than in a Washington Post article yesterday titled "Bush Social Security Plan Proves Tough Sell Among Working Poor." Here's a quote:
Jonathan Weisman - April 18th, 2005 Somewhere in this busy life stews roughly $13,000 in retirement savings from her 14 years at the U.S. Postal Service, in accounts that she doesn't really understand or monitor.
"I don't know what's going on with it," she said one night at a tax clinic in Southeast D.C. "I just know I have these three accounts, so I just say, 'Let's hope and pray. Let's hope and pray it's not going into Enron. Let's hope and pray it's not going into Tyco.' It's just hard to absorb all I'm supposed to absorb."
This is, presumably, how opponents of privatization/reformation view your average American; incapable, uninformed, and uninterested.
The article, to its credit, is even-handed enough to say as much (or, in this case, to let someone else say as much):
Jonathan Weisman - April 18th, 2005 "I'm 1,000-percent convinced of this: The president cares the most about this $10-an-hour person," said Allan B. Hubbard, director of the White House National Economic Council. "And what he gets most irritated by is when it is suggested, 'Oh the $10-an-hour person isn't sophisticated enough to deal with a personal retirement account.'"
Social Security is controversial not just for its massive political implications, but for its societal implications as well. It's difficult to see opposition to the kind of reforms being proposed as anything other than part of a warning label culture that, no matter the topic, always starts with the assumption that people just can't handle things.
So that's the issue. Will people rise to the occasion when presented with an opportunity to take greater control over their retirement?
Place your bets. My money's on people knowing what to do with their money.
March 15th, 2005...
Stop the Presses! Polls Used to Mislead!
From our wacky friends at Daily Kos:
Markos Moulitsas - March 14th, 2005 Do you approve or disapprove the way Bush is handling social security?
Approve 35 (38)
Disapprove 56 (55)
...
We are winning this battle. Any Democrat who thinks we should compromise is blind. The GOP won't keep at this for much longer. The political danger is too high.
Notice that the question cited above does not mention personal savings accounts in any form whatsoever. It simply asks about "handling," even though Bush hasn't really done anything at all about Social Security so far. What is there to approve or disapprove of?
Seems to me it'd be quite easy for those polled to take this as a question more about the state of Social Security than Bush's handling of it; and, as you'd hope, most people don't like the state it's in. But to take it as a disapproval of Bush's still ambiguous proposals is silly, because the same poll asks about those proposals specifically. Behold:
ABC News/Washington Post Poll "Would you support or oppose a plan in which people who chose to could invest some of their Social Security contributions in the stock market?"
The results? 56% support, 41% opposed. Kos, naturally, excludes this.
Favoring the vaguer question over the more specific one is a bit like favoring exit polls over actual vote totals, don't you think?
Once again, my hat is tipped in the general direction of PoliPundit. They're wearing my brim out at this point.
March 14th, 2005...
Ever Since They Dropped Analogies From the SATs...
...a few people seem incapable of forming appropriate ones. From Pandagon:
Jesse Taylor - March 11th, 2005 Progressivity is an important part of public policy - but only if the policy itself would be a good idea. Giving out vials of anthrax would be a bad idea - adding progressivity to the distribution process wouldn't make it any better of an idea.
What is this scourage that Taylor likens to antrhax? Why, it's none other than Bush's proposed personal savings accounts for Social Security.
Hello Mr. Taylor, I'm perspective. I don't think we've met.
But wait, there's more:
Jesse Taylor - March 11th, 2005 Privatization does not do anything for Social Security, and adds trillions of extra dollars to the deficit.
This is misleading. It merely shifts the debt from one time period to another. The so-called "transition costs" are not actual costs, in the typical sense of the word. They refer to the short-term borrowing that needs to be done to fill the time gap; the actual money, however, is not going anywhere. It's simply being used at a different time.
Taylor's primary gripes seem to be deficit-related. He talks about them as if they spell certain doom, despite the fact that a) we've run higher deficits before, when inflation and the size of the economy is taken into account, and b) the CBO projects that the deficit will get smaller before it gets larger. This is the same CBO which has overshot its deficit projections the last two years; in one case by nearly $80 billion.
And all this assumes that the deficit is something to be worried about in the first place; which has by no means been established.
To Taylor's credit, he at least seems to accept the obvious, demonstrable fact that there is a problem, and that it needs to be dealt with somehow. I don't see anything in the way of real argument against it, however. No examples of its alleged riskiness that cannot be easily cured by a shift from one form of asset to another over time.
March 9th, 2005...
Maguire: "Might this be a plan?"
Tom Maguire's on, and nobody can turn him off. He's making the same point made here multiple times over the last couple of weeks: Social Security privatization might be part of a larger strategy, and the back-patting going on now from its opponents might be playing into that strategy. Here's a quote:
Tom Maguire - March 8th, 2005 But the balance of manpower favors the Reps, who may simply have decided to engage the Dems on as many fronts as possible. In this view, Social Security is the stalking goat drawing Democratic fire, while other important bills fly through under the radar.
Bingo. Restrictions on class-action lawsuits and now the bankruptcy bill. Is it possible that Bush is going after Social Security (at least in part) to ensure that other fronts are left somewhat undefended?
March 8th, 2005...
Premature Declaration of Victory on Social Security?
As this blog has already pointed out, there's an inconsistency present when opponents of the Bush administration simultaneously express joy at their alleged victory on Social Security, as well as horrified awe at Karl "Keyser Soze" Rove's advanced political manueverings. He can't go from Emperor of the Electorate to Captain of the Titanic overnight.
Today, Dan Balz of the Washington Post makes a similar point:
Dan Balz - March 8th, 2005 But at a time when many Democrats are congratulating one another, others are beginning to worry that their strategy of rigid opposition has not begun to pay any political dividends and that Bush could yet outflank them before this fight is over.
The party's situation was posed most provocatively by two veteran Democratic strategists, Stan Greenberg and James Carville. In a memo issued last week, the two wrote: "We ask progressives to consider, why have the Republicans not crashed and burned?"
"Why has the public not taken out their anger on the congressional Republicans and the president?" they added. "We think the answer lies with voters' deeper feelings about the Democrats who appear to lack direction, conviction, values, advocacy or a larger public purpose."
What worries some Democrats about the debate over Social Security is that Bush stands for something and they do not, other than opposition to the creation of private accounts. So far, party leaders believe that posture has served them well. But some Democrats fear that Bush, by having pushed for changes and by appealing to younger voters with his proposal for the accounts, will score a political victory even if he does not get the main element of his plan.
This is not to say that Bush will win this particular fight. But it's becoming increasingly clear that this is not the end of the fight, but the end of Round One.
March 7th, 2005...
Semantics Won't Fund the System
"We have no crisis."
-- Ted Kennedy
"[Social Security solvency] is a serious issue. We ought to address it …"
-- Ted Kennedy
Not a direct contradiction, but Kennedy and his peers (not that he has many, mind you) haven't exactly been fostering an environment friendly towards those who want to "address" the issue.
March 2nd, 2005...
Who's Winning the Social Security Fight?
The lefty blogosphere is abuzz (yes, I'll be using that word periodically, until someone suggests a better one) over a recent CNN/USA Today/Gallup poll indicating that overhauling Social Security could be an uphill battle for the President. Both Atrios and Daily Kos are salivating at the thought of a major victory.
Of course, this is completely inconsistent with the evil-but-insanely-brilliant characterization they've repeatedly assigned to Rove and the stratagems of the administration. If they're so incredibly diabolical and clever, why would they walk right into an issue that looks so uninviting?
There are only two possibilities, if we rule out that they've momentarily lost political competency: either they know something we don't, and thus Social Security reform is more viable than it currently appears, or -- brace yourself -- they're not really hoping to reform it now at all.
After all, the poll in question shows that, while only 38% of those polled believe we need to reform Social Security within the next two years, a whopping 75% believe we must make changes within the next ten.
Let's not rule out the possibility that the Bush administration is playing for the long haul here. Democrats are thirsty for some sort of political victory, and the Republicans might be perfectly willing to let them have it if it means they've gotten a chance to shape the debate. People now believe there's a problem with the system; it's not out of the question that Bush aimed for the sun (privatization) with the intent of hitting the moon (establishing the need for reform down the line).
Another possible factor is that Bush has made a habit of attacking Democratic strongholds, of which Social Security is the biggest. During and before the campaign, if memory serves, he visited the fairly reliably blue Pennsylvania more than any other state. He went on the offensive and forced Democrats to defend their base, leaving them scant time to pick off stragglers from his own.
And, of course, it could be (D) all of the above.
UPDATE: turns out Glenn Reynolds was saying some of the same sorts of things a month ago.
February 19th, 2005...
The "Guarantee" of Social Security
I love the smell of anecdotal evidence in the evening. Courtesy of the Washington Post, in an article inflammatorily titled "Poorest Face Most Risk on Social Security":
Jim VandeHei - February 19th, 2005 No group of Americans would be affected more by President Bush's Social Security plan than those earning the least. Just ask 46-year-old Brent Allen.
Allen, who recently lost his job at a Massachusetts paper mill, faces a retirement financed exclusively by the money he has been paying into the Social Security system for the better part of 30 years. Like nearly half the U.S. population, he has no pension or savings to speak of. And his brief flirtations with the stock market have largely flopped.
Wow, VandeHei actually managed to find someone who's lost money in the stock market. I guess the whole thing's just a big game of roulette, then!
Jim VandeHei - February 19th, 2005 So Allen, who lives on less than $15,000 a year in disability payments from Social Security and income from his live-in girlfriend, is distrustful of Bush's plan to allow workers to divert a portion of their payroll taxes into personal investment accounts.
"I have had stocks, and have had them for six years, and I have lost money continually," Allen said this week. "What's going to happen to people when they retire when the market is down? There is no guarantee [Bush] can make. There is a guarantee now," under the current system.
Why can't Bush make a guarantee? What cosmic force will stop Bush and/or Congress from instituting various triggers to safeguard private accounts from such short-term fluctuations? Is there any particular reason they can't shift the investments in people's private accounts from stocks to treasury bills and the like as the individual reaches retirement age?
The fact of the matter is that the government is making "guarantees" to everyone paying into the system right now, even though we've established that it cannot pay them all what they're scheduled to receive as things currently stand. If the bankruptcy date of 2042 and my incredibly simplistic calculations are both correct, this "guarantee" will not currently hold for anyone under 28 years of age.
In other words, the only difference between our "guaranteed" benefits and the benefits of private accounts is that the current system pretends to be a sure thing, when in reality neither is.
None of these counterarguments are even necessary, however, because the accounts are optional in most of their proposed incarnations. The Brent Allens of the world will be free to cling to an archaic system if they so choose.
More fisking of this article can be found courtesy of Power Line.
February 18th, 2005...
Krauthammer: "2042 lies somewhere in the Matrix"
Charles Krauthammer has an interesting piece on Social Security up this morning. Here's a quote:
Charles Krauthammer - February 18th, 2005 I do not know if President Bush's Social Security reform will pass, but if it does not, its demise will be traced to that point in the president's State of the Union address when he warned that the system would go bankrupt in 2042. It was a disastrous moment.
...
Moreover, the new millennium was always a science fiction idea, and now that we are there, years beginning with a "2" still seem fictional. Even 2011, the first boomer retirement year, has a Stanley Kubrick feel; 2042 lies somewhere in the Matrix.
My first thought upon reading this was "wait a second; Bush made a point to emphasize that the system will be spending more than it takes in in 2018." And indeed he did, saying "I recognize that 2018 and 2042 may seem a long way off. But those dates are not so distant, as any parent will tell you. If you have a five-year-old, you're already concerned about how you'll pay for college tuition 13 years down the road."
Krauthammer, to his credit, concedes as much:
Charles Krauthammer - February 18th, 2005 True, he mentioned 2018, but bringing up 2042 simply muddies the logic. It reinforces the idea that there really is a trust fund from which we will be drawing to pay the elderly for the quarter-century between the years 2018 and 2042. There is not. It is just paper.
Now, I'm quite a fan of Krauthammer's, and this is a fair point, but I think he overstates it a little.
Keep in mind that the group least likely to look forward -- young people -- is already the group most likely to support the President's proposal. He doesn't have overwhelming support in any age group, as far as I've seen, but in most polls he has a slight edge with the younger age groups, so it's only logical that most of his selling is aimed at older generations. He recognizes that this is one issue he cannot win with base supporters alone.
February 17th, 2005...
Alan Greenspan: Social Security Expert?
Courtesy of the Associated Press:
Martin Crutsinger, AP Economics Writer Federal Reserve Chairman Alan Greenspan urged Congress on Wednesday to take a go-slow approach in setting up the private Social Security accounts favored by President Bush.
Am I the only one who thinks Greenspan's got his fingers in other people's pies? He's Chairman of the Fed, not Grand Poobah of all things even remotely financial. It's his job to keep inflation under control, not relentlessly tweak the economy. Has he already forgotten what those six consecutive interest rate hikes did?
Unless he stayed at a Holiday Inn Express last night, he should stick with monetary policy. He's not the only one with suggestions, though: Tom Maguire has an idea for Dubya, too.
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