Dean

I keep fighting this war even though friends of yours say it isn't necessary ("they" aren't doing anything about SS now")

and that what i say is counterproductive.

but here's what i say anyway:

under the intermediate projection of the Trustees, the cost of "fixing" Social Security would amount to a one dollar per week tax raise each year... probably from about 2030 to 2050 if the Trust Fund is honored. or from 2016 to 2036 if it is not. during that time the average wage will be increasing about ten dollars per week.

and the money does not go into a government black hole. it come right back to the worker when he needs it most.

As long as the people do not understand that the potential cost of "fixing" SS is not only low but laughable, the bad guys will play the "crisis" card until the stars line up for them, and then they will destroy the system while claiming they have saved it.

again and again, one wonders why it is that once journalists get a phrase embedded in their minds, they can't give it up. is it peer pressure? characterological flaw? not being very bright in the first place? intellectual dishonesty?

howard

all of the above.

and the fact is that humans are breathtakingly stupid. i count myself in that so don't take offense. just realize it is so hard for humans to grasp a new idea that even physicists say that science progresses "one funeral at a time."

but to be fair to the journalists, they are only repeating what they are told by "the experts," who turn out to be mostly paid by the people who would benefit...or think they would benefit (see "breath taking stupidity" above) by destroying Social Security.

and, sad to say, as I have finally realized, there are plenty of people on the left who think the way to save Social Security is to get the "rich" to pay for it.

the whole beauty, and safety, of Social Security is that it essentially has nothing to do with the rich. it is merely a plan whereby working people can save their own money for their own retirement safe mostly from inflation, but also from market gyrations, and the more personal ills that cash is heir to.

Howard, a great deal of deliberate effort has been put into the establishment of a specific narrative on Social Security. The anti-Social Security team has a deep bench of think tanks, academics, and journalists behind it, some of them too lazy to actually read up on something that "everyone knows" is broken, others intellectually dishonest, and others who are honest enough if taken on their own terms, they hate Social Security on essentially ideological grounds. Or at best think it distorts macro outcomes.

Take Andrew Samwick and his joint LMS (Leibman, MacGuineas, Samwick) 'Bipartisan' Social Security plan If you look at the scoring of the plan by Social Security Actuaries on p.7 you will see that in addition to raising payroll tax by 1.5% (not shown in this table for legitimate reasons).
Table 2 Contributions to 75-year Actuarial Balance &
Policy Improvement in Actuarial Balance
(% of payroll)
Raise Taxable Maximum 1.00
Change in Benefit Formula 2.08
Increase in Full Benefit Age 0.62
Diversion of Trust Fund Revenue to PRAs -1.56
Total 2.14

that n the face of a current payroll gap of 1.95% (1.92% when the plan was drafted) they are proposing tax increases of 2.5% of payroll and benefit cuts of 2.7% of payroll and not particularly promising that the returns on the PRAs will actually replace all of that for everyone. In particular all one earner couples would be better off taking a tax increase alone (Table 1). (And it would be nice to see their economic assumptions).

Samwick aknowledges openly that either his payroll tax increase or his benefit cut would separately 'fix' Social Security, 'fixing' Social Security is not his policy goal at all. Now it is likely that he doesn't mind the fact that most people don't understand the financials, and personally I find the use of 'Infinite Future Horizon' a little self-serving, but that does not make him and his colleagues dishonest, or unbright, or flawed in character, or victims of Cato's narrative. They want to end the interrelationship of the Trust Fund and the General Fund over time, not a bad policy goal necessarily but not having much to do with Social Security 'Crisis' as normally defined.

Samwick though is generally an exception. Most of the rest of the privatizers I see are some combination of dishonest and ignorant.

Howard when I first started looking at SS seriously in the late 90s I thought the fundamental problem was one of education. Just point people to the Reports, ask them if the numbers of Low Cost were reachable, and if not why not, and let sweet reason take it from there. Didn't work so well

Later I figured the problem was maybe was one of authority (who was I after all?) and was delighted to be able to point to Baker and Weisbrot and Social Security: the Phony Crisis. Surely we could have an honest discussion based on a shared data set (the Reports) and a policy analysis by professional economists. At least it was a point of departure. Well largely that train never left the station.

Well in the early years of this decade I wised up. Opponents of Social Security simply didn't want to know, worse the more they clearly knew about the numbers (in context you can tell) the less they wanted to discuss them directly.

Finally a certain conviction hardened. Not only do a lot of these guys know that 'Low Cost is out There', they are counting on it or some model close enough to fund the growth of their private accounts. They know that an economy growing at trend will fund Social Security as is, they simply plan to hijack the credit. Essentially it is the same game plan as tax cuts, if the sun comes up in the East this morning, explain that it is due to a combination of tax cuts and private accounts.

If we needed proof we had the No Economist Left Behind challenge. Nobody I know of came up with a convincing investment model that would give historic returns on stocks under Intermediate Cost assumptions. Which fact did not cause Privatizers to back off but demonstrated adequately, to me anyway, that they were not taking IC seriously, that in fact little of this was actually about solvency and everything about ideology.

Which is where Coberly and I are having a little private disagreement offline. He still thinks that if you just fight hard and fair that Reason will Out. Whereas I don't see that the opposition has the slightest interest in playing fair.

Bruce

i don't think we are disagreeing at all.
not understanding each other perhaps.

but we agree that the only sane thing to do with social security for the forseeable future is to leave it alone.

where we differ, if at all, is that i keep thinking that if the people were educated enough to understand exactly what SS does for them (a lot) and exactly what it costs (not much) and "might" cost even under the intermediate projection (a tiny tiny bit more... it works out to less than a dollar a week increase each year) then whatever the liars and paid idiots said, the people would laugh at them.

as for Samwick... trying to change Social Security under cover of "the crisis" is what i would call dishonest.

SS is a program for workers, not for economists to test their theories.

we would not need the opposition to play fair, if we took the fight to the people.

I agree fully with Bruce. Part of the reason that this myth has gotten so entrenched and accepted by the MSM prettty much mindlessly, is that it has been hawked by economists from both parties. The original stupid projections, which have not been altered even though the last decade has made even the "optimistic" low cost scenario look too pessimistic, were made by Dem economists and policy wonks put on the SSA Board of Trustees by Wall Streeter Robert Rubin. Those folks are likely to be back with a vengeance once Hillary gets in, assuming she does. They will be a much more dangerous enemy than the nearly mindless Republican privatizers, who have maintained the goofball Clinton-era projections.

One of these economists was Orszag, although he seems to have become more sensible recently since going to the CBO. But there are others, Eugene Stuerle at the Urban Institute, a mostly liberal think tank, and even Brad Delong, who used to be in the Clinton Treasury. Most of these people do seem to know the numbers, but many of them have made big careers or pubs and consulting out of coming up with various "improvements" or "reforms" for SS.

And to coberly, once again. Please, your talking about how these small tax increases in the future could take care of the intermediate projection just continues to give credibility to that worthless projection. We who know better should not be doing this at all in any way shape or other. We should confront head on and fight this worthless garbage, as Dean has been doing for a long time now.

Again, this is directed mostly at coberly.

There is a very hard political reality here that must be recognized. Your suggestion of a small tax increase in the future, and that alone, is simply not something that would ever be put into place. If all these "reformers" do get their mitts on social security, we will see something like Samwick's plan: tax increases, benefit cuts, and quite possibly some privatization, in short nothing good and certainly not something needed, most definitely not now. For political reasons, it is simply easier to defend the current system as is, with the prospect being very high that eventually reality will become clear that nothing needs to be done. After all, these bozos are forecasting a deficit in 2017. If in a few years it is clear that that is not about to come true, maybe we can finally change this so-far rotten discourse.

Barkley

I agree with you.

only one small point where we seem to differ.

you say a tax raise will never be necessary so we shouldn't talk about it because it gives comfort to the enemy.

i say a tax raise may never be necessary, but by talking about the "huge deficit" the enemy can change Social Security whether it would ever need it or not.

I do not advocate a tax raise, now, or ever. I certainly do not think that Social Security ever needs to be changed. Exactly the opposite.

But, I don't see how it can hurt to point out to people that the huge horrible deficit they are talking about could be covered by a tax raise of one dollar per week. Their own prediction, their own numbers, show that, in easy to follow arithmetic.

I don't have to ask anyone to take my word that "nothing needs to be done." I can show them with simple arithmetic that nothing needs to be done until and unless a shortfall actually occurs.

I am, by the way, glad to see that you understand that Orszag was... wrong... It seemed to me for a long time that I was the only one who undertood that.

Purely to keep the record straight.

Th Social Security Trustees are made up by 4 Ex Officio administration officials including the Secretaries of Labor, Treasury and Commerce along with the Commissioner of Social Security and the two 'Public Trustees' who are chosen by the President one from each party. Which doesn't prevent the President from picking a pro-privatization D. The official Trustees are to be strictly differentiated from the career professionals of the SSA Office of the Chief Actuary on the one hand and the Social Security Policy Board on the other. Only onthe policy board would you expect professional economists to make an appearance.

That was a little unclear. There is not even a pretense of isolating the 'Trustees' from the Administration, half of them are Cabinet Secretaries, and the rest are presidential appointees, nor am I aware of any barriers against packing the SS Policy Board. In my experience the career professionals have done a great job of keeping the math straight but have clearly come under pressure on the initial economic assumptions.

Bruce

thanks. i think you can almost tell that from the way the Report is written. The math does not support the doleful language.

and, just to keep the record straight,

nothing i say depends on the honesty of the Board, and certainly not the honesty of the Peter Petersons and that ilk who exaggerate the "crisis" far beyond what the Board might dare.

i simply show what the numbers really mean: IF their numbers are right THEN the cost of "fixing" Social Security amounts to a less than a dollar a week raise in the tax.

This money does not disappear into a govenment black hole, but comes back to the same worker when he needs it most.

The increase, IF it is needed will have nothing to do with the baby boomers, but will simply reflect the fact that the workers will be living longer in retirement.

As a worker, older than fifty, I can say with great confidence that no worker is going to want to HAVE to keep on working after 62. Some may decide they want to. Social Security won't stop them. But most will choose not to.

The economy can well afford to let them.

I'd say it's a political issue in the sense that the economists who are crying wolf, et al have an inherent bias against a program like Social Security. Just as they are biased against a universal single payer health care system.

However, there is a "social entitlement" program I'd like to see ended. It's the subsidies, dating from the '50's, that keep small airports open who have no other real users besides people wealthy enough to own or lease small planes, jets and helicopters. Many of these small airports would not be open--or would charge much much more for hangerage (if that's the right term), use of the navigational aides, etc., Instead, taxes subsidize all of those costs. Seems like a social entitlement program to me--those that met the wealth requirement get the benefit of these subsidy programs--it looks to me like an entitlement program for those above a certain income level. Plus we are subsidizing inefficient use of fuel, and air and noise pollution.

Why do I not hear these same economists and members of the GOP who rail against Social Security, Medicare & Medicaid attacking these social entitlement subsidies?

Guys, soon we won't be able to afford both a war machine and Social Security. We all know which one has to go.... Social Security! If killing SSI with lies is what we have to do to line the pockets of war profiteers like General Dynamics, Boeing, Lockheed Martin and their ilk, then that's that. Nobody said that war was pretty. This country has values, and we need to be clear about what they are.

"One two! One two! And through and through. The vorpal blade went snicker-snack! And with its head he left it dead and went gallumphing back"

Vorpal if we shared your attitude the Jabberwock would still be roaming the tulgey wood.

Your chances of earning 'beamish boy' honors are not being advanced here.

Not all of us are defeatest quitters.We still see frabjous days coming.

Callooh, Callay.

Maybe our answer to those who say "fix it now" should be, "Alright, lets raise the payroll cap to $150,000, that should do it."

By way, I took much delight to the excoriation of the obtuse Thompson by George F. Will in yesterday's Arizona Daily Star. If you missed it, here's the link to the article in the Star: http://www.azstarnet.com/allheadlines/201231.php

P.S. right on, Vorpal!

Jim Hannley

raising the cap would tend to turn SS into a welfare program. and that would weaken it politically.

workers can pay for their own social security.

it should either need no change whatsoever forever or

a tax raise amounting to one dollar per week per year starting in 2030 and levelling off by 2050. during this time the average wage will be rising more than ten dollars per week.

so here's the deal: "i give you ten dollars per week, but i take back one of them on the understanding that when you retire, the one i took back returns to you as four dollars per week when you may need it most."

i can show this by (fairly) simple arithmetic from the very projections that are made by the Trustees... the ones the "reformers" are saying mean "Trillion Dollar Unfunded Deficits!"

Thank you, Coberly. Social Security as it is currently funded is inadequate to provide a dignified retirement for millions of Americans. With the demise of U.S. industrial base and the substantial pensions that went with it, millions of new retirees are facing a retirement of want or no retirement at all. Work until you die.

A cumpulsory government sponsored retirment program is the only way to insure a dignified retirment for the majority of American workers. We need to begin to fund it as a retirment plan, not just a supplement.

Jim Hannley

the problem with your thesis is cost. the only place money can come from is either the workers themselves, or from the "wealthy."

social security is deliberately designed to be "worker financed." essentially it's an insured savings program. most definitely it is not supposed to be welfare.

trying to fund a "dignified" retirement by a tax on the wealthy will introduce all the evils of welfare and make certain the program will be killed by the political forces the wealthy can bring to bear.

trying to raise the benefits without introducing the welfare component would involve forcing a trade off between "current spending" and "future benefits." while the exact line for this trade off may be open to some differences of opinion, one should not fail to realize that it is in fact a trade off. by providing "minimum decent" benefits, the worker is left to do as he thinks best with the rest of his money.

if he wanted to invest it on the markets, for example, it would be relatively easy to set up a "universal" retirement plan similar to that of federal and state employees. but given the uncertainties of private markets, it would still be prudent to keep Social Security exactly the way it is.

then by 2030 or so we would have a better idea of where SS funding is going and decide to keep the private market component, or raise, or lower, the payroll tax.

according to the Trustees projections, the likely raise would be on the order of a dollar a week each year at a time when the workers were getting a pay raise of about ten dollars a week each year.

The fall of the dollar was inevitable. It is the only way to get the trade deficit down to size. The real problem was allowing the dollar to rise to the point that it made such a painful adjutsment necessary. This was the Clinton-Rubin high dollar policy. It felt good in the short-term (except for manufacturing workers), but just like tax cuts that lead to big budget deficits, it could not be sustained.