Ruth Marcus Tries to Show Her Beltway Badge of Seriousness

Ruth Marcus shows two things in her commentary today, "Krugman vs. Krugman". First, she hasn't a clue about Social Security financing. Second, she has no problem at all presenting a distorted picture to rationalize her clueless position.

On the Social Security financing issue, the most recent pieces I've seen are by Dean Baker, "The crisis that isn't," and Paul Starr, "Hold that Tax," but there's been so much written that it's hard to believe that anyone who isn't being willfully ignorant could be unaware of the true magnitude of the problem - the system is not headed for disaster, for a crash, or anything like that.

Anyone interested in understanding the financing issues ought to read America's Senior Moment by Paul Krugman. I refer you to this particular piece, from the New York Review of Books and written in 2005, because Ruth Marcus uses quotes from Paul Krugman dated 2001 or earlier to try to show he has been inconsistent on the Social Security financing issue. The subtext is, or course, that he is being dishonest.

But had Ruth Marcus included this quote from Paul Krugman's 2005 piece in her editorial (or quotes from other pieces of the vast amount Krugman has written about Social Security after 2001), it would have changed the interpretation of the quotes she includes in her article. Here, Paul Krugman explains why the future of Social Security was at issue at that time:

Four years ago, I and many other economists urged policymakers to think about the future cost of Social Security benefits, not because we thought there was anything wrong with Social Security itself, but because we regarded the future costs as a compelling reason not to cut taxes even if the overall budget was in surplus.

Keep that quote in mind, i.e. that the worry was that the Bush tax cuts would eat away at the accumulated Social Security surplus, as they did, as you read Ruth Marcus' desperate attempt to justify her doom and gloom about the future of Social Security:

Krugman vs. Krugman, by Ruth Marcus, Commentary, Washington Post: In liberal Democratic circles, the debate over Social Security has taken a dangerous "don't worry, be happy" turn.

The argument has two equally dishonest components. The first is to deny that Social Security faces a daunting financing problem... The second is to mischaracterize the arguments of those who advocate responsible action, accusing them of hyping the system's woes.

One prominent practitioner of this misguided approach is New York Times columnist Paul Krugman. "Inside the Beltway, doomsaying about Social Security -- declaring that the program as we know it can't survive the onslaught of retiring baby boomers -- is regarded as a sort of badge of seriousness, a way of showing how statesmanlike and tough-minded you are," Krugman wrote last week. "In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided."

Somebody should introduce Paul Krugman to . . . Paul Krugman.

"[A] decade from now the population served by those programs [Social Security and Medicare] will explode. . . . Because of those facts, merely balancing the federal budget would be a deeply irresponsible policy -- because that would leave us unprepared for the demographic deluge, with no alternative once it arrives except to raise taxes and slash benefits." (July 11, 2001)

"Broadly speaking, the next administration . . . will face two big economic tests. One . . . is whether it can stick to a fiscal policy, including a policy toward Social Security, that prepares this country for the demographic deluge." (Nov. 12, 2000)  ...

You get the idea, a lot of the article is just quotes from Krugman from 2001 or earlier (she even reaches back to 1996 at one point) as she tries to turn his concern over the effect tax cuts would have on the surplus, and hence our ability to meet future obligations, into more general concern over a potential crisis in the Social Security program even though that isn't what he was saying (and note the first quote also includes Medicare). The article then discusses whether or not Krugman mischaracterized the positions of politicians and the Washington Post editorial board, and again selectively quotes Krugman and others to try to justify her argument, but that, of course, has nothing at all to do with whether there is a Social Security "crisis". If there is no crisis - and there isn't - then it is being over-hyped. She doesn't think it's being over-hyped, but that's because she misunderstands the nature of the problem.

Not much of an argument - all it does for the most part is compare quotes from Krugman then and now without putting them in context (and leaving out a whole bunch of other quotes between 2001 and now). Even if there weren't an obvious context to Krugman's prior remarks, what if he had changed his mind as the evidence became clearer. What's wrong with that? That is, showing that someone said one thing in the past, and now says something different as they have learned more about the problem does not imply that what is said now is wrong or dishonest. What matters is if the new position is justifiable, and if Ruth Marcus wants to debate Paul Krugman on the correctness of his current postion on Social Security, which is, by the way, consistent with his prior position, all I can say is good luck --  though even the best of luck won't be enough to overcome the reality that she is on the wrong side of this argument.

Update: Here is Paul Krugman's response.

Update: More from Paul Krugman:

A thought about political discourse, by Paul Krugman: A meta-thought inspired by the Social Security craziness:

Faced with a major public issue, such as the future of Social Security, one might think that the crucial thing would be to ascertain the facts. If I say “there is no crisis,” and you think there is, well, produce the evidence that shows that my arithmetic is wrong — not something I once said that you think proves that I’ve changed my mind. Making this a game of gotcha is just childish.

But here’s the thing: this childishness infects a lot of political discourse. Think about what passes for a “tough” question on the Sunday talk shows. It’s not “Senator Bomfog — you say X, but the statistics show that it’s actually Y. How can you explain this discrepancy?” In fact, I’ve never seen that happen. In political reporting, being wrong means, at most, that your claims are “in dispute.”

No, what actually passes for “tough” questioning is “Senator Bomfog, you say X but last year you said Y. Aren’t you flip-flopping?”

Like I said, it’s childish — and destructive.

Comments

[reason]

Somebody needs to start yelling:

YES THERE IS A FISCAL CRISIS COMING.

NO, IT IS NOT DUE TO INADEQUATE PAYROLL TAXES OR EXCESSIVE SOCIAL SECURITY PAYOUTS.

YES, IT IS DUE TO THE BUSH ADMINISTRATIONS STEALING FROM SOCIAL SECURITY AND GIVING IT TO THE RICH.

[Movie Guy]

If there is a problem, as most know it will be observed in the availability of discretionary funding subject to the budgetary limits of the fiscal year Federal budgets. I don't know anyone who knows with any certainty what programs will be slashed, eliminated or increased should there be a shortfall in available Unified Budget funds made available to the General Fund. Similarly, I don't believe that anyone can prove that changes in any mandatory funding programs will not occur under any future Congresses.

If one can prove that Social Security benefits and revenues rates will not be changed, I would like to read that. The last time I looked that matter was left up to the Congress for bill action and implementation by the President once he signs whatever relevant bill submitted for her/his approval and endorsement.

If there is no concern that there will be impacts on discretionary funded programs, then we should be pretty good shape going forward. But, thus far that is not the general viewpoint expressed by Members of Congress. And I don't know what actions they will take to balance the budget scorecard, nor does anyone writing on this blog and elsewhere.

Guess we will have to wait and see what the future Congresses really do.

[anne]

Me, look at me, call on me, I know.

I know that Social Security and Medicare will not be slashed and bashed in the coming year because there is an election coming and, like, older Americans vote; while each year that passes relatively more Americans have a direct interest in preserving and strengthening Solcial Security and Medicare an will express that interest. So, I know that no matter the rantings of Social Security and Medicare slashers and bashers, there will be no cuts nohow from here.

The political game has been won, and that must be done now is to answer the rantings of those who would slash and bash Social Security and Medicare for the sake of war and war and war.

says...

There is a common characteristic to the Social Security and Medicare bashers and slashers, such folks are incapable of mentioning the idea that we are squandering what will be more than $2 trillion dollars on the needless tragedy of war and occupation. Rather than stopping the war in and occupation of Iraq, the focus is on denying our grandparents and parents and ourselves our right to Social Security and Medicare.

Our rights to Social Security and Medicare are supposedly to be set aside by fiends for whom war and occupation is gloried in while the pretense is made that they are costless. Sorry, I like my grandparents. I know the difference between the insane waste of war and occupation and the wonder of our right to Social Security and Medicare. Our rights will not be taken from us.

I do know the future.

[anne]

Forgive my computer, for not telling you that the comment above was mine. I will be punishing her severely, when I figure out how.

[ken]

there was a key event that occured between Mr Krugman ( and many others) changes in viewpoints: a Republican administration tooknover from a Democrat one. Unfortunately this was, for many experts - even those who promote themselves as intellectually independent - sufficient to automatically redefine views to insure they were for and against the "right" side.
It is this which has prevented honest discussion and solutions to a building problem and reflects Krugman's altered view as well as many others.
Social Security will remain an untouchable issue with political leanings trumping facts untll there I'd a real crisis or one party gains unstoppable control of the administration and two houses. Perhaps this was Ruth's point, intended or not.

[calmo]

Well, shoot, I don't. But that keeps me interested...not knowing if the sun is really going to make another appearance this morning...curious like. (ok, pretty batty too.)
And about this notice that little Ruth gets (you (others beside Mark) figure she's worth the trouble of doin a Marcus vs Marcus in the same vericose vein?)

Not much of an argument

Why do we need to bring out the microscope on this pipsqueak? Surely there is somebody a little less runty?
In the meantime...waiting hopefully in the dark, I am stirred by this from anne

Me, look at me, call on me, I know.

Like the moon rising...not a disappointment but a surprise. Stripped of its context with the thread (who could sustain an interest in that? not me) [ok, until just now], I am quite mesmerized by this little poem.
All of a sudden I want to know...whatever itiz, you know?

[anne]

http://www.nytimes.com/2007/11/21/washington/21military.html

November 21, 2007

Gates Halts Cut in Army Force in Europe
By THOM SHANKER

Defense Secretary Robert M. Gates has decided to freeze plans for further reducing Army forces in Europe and will maintain about 40,000 soldiers in Germany and Italy, according to senior Pentagon and military officials.

[Germany and Italy must no doubt be protected against invading Goths and Vandals, so there is always a reason for military spending and never a reason to allow our grandparents and parents the right to Social Security. Me, I am always afraid of Goths and Vandals rampaging through Europe after, well, shoes, but I like my grandparents even if my parents are a nuisance.]

[Cyrille]

Ken, I didn't remember that there was a Democratic administration in 2001.

[anne]

http://query.nytimes.com/gst/fullpage.html?res=9F0DE5DC1F38F932A25754C0A9679C8B63

July 11, 2001

Outside the Box
By PAUL KRUGMAN

During last year's campaign, George W. Bush solemnly pledged that his tax cuts would not come at the expense of future retirees, that the reserve the Social Security system was accumulating to help it pay benefits to the baby boomers would be kept in a ''lockbox'' -- that is, that Social Security surpluses would not be used to cover deficits in the rest of the budget.

Ever since Mr. Bush was sworn in, however, it has been apparent that he takes some of his promises more seriously than others. And so no sooner were big tax cuts for the rich in the bag -- an event followed, with breathtaking speed, by the revelation that revenue projections are in free fall -- than administration officials suddenly discovered that the lockbox is a silly idea. Here's what Mitch Daniels, director of the Office of Management and Budget, said last weekend: ''There is no box, there is no mattress. Paul O'Neill doesn't have a hole in the backyard where this money goes. . . . What's unfair is to mislead the American people into thinking this money's in a box somewhere. It isn't. That box has nothing but promissory notes in it.'' (Thanks to Joshua Micah Marshall for that quote.)

Clearly, Mr. Daniels knows that because of the tax cut Mr. Bush will soon break his promise to protect the Social Security surplus. (I could have told you that would happen eventually. In fact, I did. But the truth is coming out ahead of schedule.) And he probably also knows that, administration claims to the contrary, the budget shortfall is not just a temporary consequence of the slumping economy. So now he needs to play down the significance of that breach of promise....

[anne]

Molly Ivins would draw the sort of animosity of Paul Krugman. We are a country in which champion women bridge players who modestly tell of not voting for George Bush after winning a bridge tournament in China are banned from touraments by American official bridge thugs, just to show China what freedom really means. So, imagine the rancor for the courageous truths of an Ivins or a Krugman. Such is thuggery.

http://krugman.blogs.nytimes.com/2007/11/20/i-get-an-endorsement-from-tom-delay/

November 20, 2007

I Get an Endorsement From Tom DeLay
By Paul Krugman

No comment: *

"But, lest you think that The Hammer is about to start playing for the other team, he did poke fun at New York Times columnist — and favorite conservative punching bag — Paul Krugman: 'I'd like to (-----)-slap him.' "

* http://www.examiner.com/blogs/Yeas_and_Nays/2007/11/20/DeLay-Knocks-GOP-The-leadership-just-isnt-getting-it

[anne]

"There was a key event that occured between Mr Krugman ( and many others) changes in viewpoints...."

Paul Krugman wrote repeatedly through 2000 of what would be the squandering of the budget surplus if the tax cutting proposals discussed by Governor George Bush were legislated by Congress. The Republican Congress and President George Bush did however cut taxes in 2001, and immediately on cutting taxes there were complaints made that Social Security was in crisis.

The supposed Social Security crisis was expressly manufactured by Republicans and Krugman immediately and repeatedly pointed this out. Krugman had the same viewpoint in 2000 and beyond.

Social Security has been a program increasingly bashed and smashed by Republicans, but the program is happily in massive and growing surplus and Republicans have lost the chance to destroy the program while Democrats will never do so even though a few Democrats now and then worry.

[ken melvin]

Oh the Ruths do understand; they just don't want to pay back the money they've borrowed.

[bakho]

The General Fund is THE problem. SS is not the problem. If you get that fact wrong, then everything else is downhill.

[save_the_rustbelt]

The only problem with SS is that we need politicians of both parties to act like grownups for a change.

And the odds of that are...........?

[calmo]

Downhill? everything is what?
Don't mind this pipsqueak stuck in edit mode, bakho, but I'd say If you get that wrong, you're excommunicated.
Of course, only the Catholics would get that maybe, but "downhill" sounds like the "fact-dispenser" can coast once he has sold you the Big One...and although this might be true, we want to crush him, not encourage him, yes?

I can see Cyrille is a stickler for details...compared to ken...but only today maybe.

[anne]

There is no problem with Social Security, there is only a problem with military and war and occupation spending.

Since the initital budget of George Bush in 2002, spending for all social benefit programs has increased more slowly than the economy has grown. We are and should be far more able to afford social benefit programs in 2008 than in 2002. Military spending has however grown far faster than the economy has grown since 2002.

There is no problem affording social benefit programs, there is only a problem with the squandering of resources for needless tragic war and occupation.

Affording Gramdma is not a problem, affording military insanity is a problem.

[anne]

http://www.epi.org/printer.cfm?id=2806&content_type=1&nice_name=webfeatures_snapshots_20071010

Non-defense discretionary spending as percent of GDP

2002 3.7 initial budget under George Bush
2003 3.9
2004 3.8
2005 3.9
2006 3.7
2007 3.6
2008 3.6

Defense discretionary spending as percent of GDP

2002 3.4 initial budget under George Bush
2003 3.7
2004 3.9
2005 4.0
2006 4.0
2007 4.0
2008 4.3

This includes all sorts of defense spending under the non-defense classification, such as Homeland Security and maintaining the nuclear arsenal under the Energy Department budget.

[pgl]

Mark - you and Brad DeLong have said it all. Over at EconoSpeak, I simply turned the microphones over to both of you. Well, I did end by suggesting WaPo is imitating the National Review.

[anne]

http://krugman.blogs.nytimes.com/2007/11/21/they-hate-me-they-really-hate-me/

November 21, 2007

They Hate Me! They Really Hate Me!
By Paul Krugman

Wow. Early in my tenure at the NYT, I was advised that it’s a bad idea to devote a column to attacking another columnist — not just at the Times, but anywhere. Why? Because it makes you look small — as if you have nothing better to do than snipe at other commentators, rather than trying to deal with real problems.

But I’ve obviously touched a nerve with my recent writing on Social Security. The Beltway crowd loves their Social Security crisis, and they won’t give it up without a fight.

I won’t waste scarce column inches on this, but I guess this needs a reply somewhere.

Part of Ruth Marcus’s attack involves selective quotation from my writings circa 2001. Mark Thoma has already done the spadework here. What I was arguing then was not that Social Security itself was in crisis, but that the rest of the government budget should be run responsibly — basically, that the lockbox should be honored. As I explained later,

"Four years ago, I and many other economists urged policymakers to think about the future cost of Social Security benefits, not because we thought there was anything wrong with Social Security itself, but because we regarded the future costs as a compelling reason not to cut taxes even if the overall budget was in surplus."

As for what I wrote in 1996: the world looked very different then. On one side, Social Security projections were much more pessimistic than they are now, basically because the projections assumed that the 1973-1995 era of very slow productivity growth would go on forever. On the other side, the 90s were the era of the great pause in health expenditures, the (it turned out) brief era in which the rise of managed care stabilized health spending as a share of GDP. So Medicare and Medicaid looked less important as sources of fiscal problems than they do now.

John Maynard Keynes is supposed to have said, “When circumstances change, I change my opinion. What do you do?”

[Jim]

If we actually wished to reduce health care costs we would get rid of the funding. People are not interested, however, in reducing overall costs, only their own. The mis-perception that others are paying leads to higher costs for all, particularly once the administrative overhead is included. Keep the money. Use it to pay for your own health care.

[Cyrille]

Well, Jim, why we're at that, why not stop the police funding? Let people pay for their own militias, I'm sure they'll work out a way to cut costs. I suppose people who are so sick they cannot work should be left to starve, too.

[Tom Heiden]

The Right is always uncomfortable with context, because such people cannot deal with grey areas or ambiguity. They justify postions by, in effect, anecdote, because systematic, rational inquiry never supports their views.

[calmo]

Dang.
A stickler for details AND mean an nasty.
Geeze we already do pay for Blackwater (now in Iraq, and later when they return, either to "retain possible enemy combatants" (you, fellow citizen) or to act out this role in a non-paid performance (the experienced sociopath).

[The Baron]

anne, calmo, and others, I have a question. The SS 'problem' is really two different beasts. There are the slashers and bashers, who are wrong, and I, like anne know that in any foreseeable future they can not win as they have no political traction. (However, I think anne is a bit myopic, as I believe the military-industrial complex has at least as much political traction as ageing baby boomers, so the likelihood of meaningful military cuts is about the same as the likelihood of SS cuts.)

The other problem, really isn't one of SS, it is one of Current Account Deficit and Federal Deficit Spending. This is the problem I'd like to hear addressed, that I haven't seen any serious discussion about, and maybe some of you can send me pointers to articles. What happens when the Treasury goes to put out its next $100 Billion in 10-y T-bills... and no one buys?

The Chinese and oil producing countries are seriously looking at their hole card, and seeing that they are way over-invested in T-bills, for a poor relative return. I'm not even talking about any of them dumping what they have, though I personally did so long ago, but only their decision not to buy any new ones, and instead invest in equally secure, yet higher yielding alternatives. Add to this that very soon, the other great sop to sponge up American debt, the SS Trust fund will no longer be buying T-bills, and in fact will be dumping those they already hold onto the market as the SS Income vs. Outlay begins to balance then tilt sharply to the outlay side.

Now 'market forces', I guess will adjust the interest rate on these new T-bills to make them profitable to someone, and so this theoretical market will absorb them and Congress will still have their barrels of money to roll into whatever money pit their lobbyists deem fit that day, but is that assumption certain? Is there a scenario where the Government needs to go further in debt, because no one on the Hill has the cajones to actually cut any spending, and the world VISA/MC just says "No, we won't raise the limit on your card?"

[howard]

mark, just so we're clear here, it is, of course, willful dishonesty.

[Patricia Shannon]

I would say Socia Security is already being cut back by raising the age of eligibility to receive full Social Security payments.

[calmo]

I refuse to be separated from the others, The Baron. [Snoopy's alter ego?]

[paine]

why this phoney crisis ???

think tax burden shift

yes right now we wagelings are funding the general budget
with our payroll rax surplus
when we stop that and in fact ask to be reimbursed
then those who net lose would well ...net lose

them ???
most likely

high bracket income tax payers

narrative:

some day the SSI trust fund
stops growing
because pay out equals pay in
ie
the SSI system
stops the cash flow its now
sending into
the rest of the fed budget
ya ya we're talking even before
the SSI system
actually starts draining off trust fund rinciple
but is cashing in some of its interest income

two things start to happen :

first since the budget will
likely already be deep in deficit
the treasury borrows more
then other wise
from other sources
to pay the interest income needed to fund
the pi-po gap as it opens up

and talk becomes action
if the citizen voters
want to "close the grotesque deficit "

this sends the policy wonks
on a hunt for a another tax source
---likely more progressive ---
to at least cover
the payments first of interest
then of principle

at any rate
stuff will start to flow back
out of one of these two sources
additional arms length borrowing
or higher taxes revenues from elsewhere

and given the who's ox that the tax will gore
is likely to be top down funded
we arrive among long viewers
at todays and yesterdays
fake a crisis

its to protect [reserve and extend
this outrageous payroll robbery
this rip off gig
and by making it worse

you know
by a clip to benes here
and a blip to rates there...

makes sense to act irrational
if your advocating something
that's only rational for
top of the heapers

[The Baron]

Now calmo, I was just showing you the elevated respect that I have for your insight, along with anne's. I almost also invoked paine, but since he hasn't graced this thread yet, I refrained. And bahko posted while I was typing the message, saying concisely what I rambled about.

[paine]

mel sez all

"Oh the Ruths do understand; they just don't want to pay back the money they've borrowed."

[bakho]

The General Fund is the problem. Fix the General Fund. SS is not the problem.

Calmo:

Get the facts wrong and everything else is downhill.

down·hill (doun'hĭl') adv. Toward a lower or worse condition: The alcoholic's health went downhill fast.

http://www.answers.com/downhill&r=67

[Lee A. Arnold]

Ruth Marcus is being dishonest for rhetorical purposes, in what appears to be the new coordinated campaign against Social Security.

(Starting in her first sentence: No one writes "don't worry, be happy." Not about anything. Not in "liberal Democratic circles" at least.)

She quotes Krugman from 2000-2001, before the Clinton Administration showed that balancing the budget plus "growing the economy" is a realistic policy.

Similarly she quotes Orzag from before and after, conveniently disregarding the fact that Diamond and Orzag's Brookings book came out of that same time period, and then was updated as a policy alternative to Bush-Cato's cynical privatization push.

In addition to sowing confusion, this sort of "gotcha" argument is based upon the rhetorical premise that future facts and ideas don't really change, and if we see it, it reveals hypocrisy. Fresh from the grade-school playground principles of argumentation.

She acknowledges that healthcare is the "bigger" problem (omitting to mention that it is bigger by a magnitude: 10x.) But she fails to explain why it is that fixing the lesser problem, which may not manifest for decades if ever, should be the primary concern.

Exactly the reverse is true, in any approach to problem-solving which isn't the "shoot-yourself-in-the-foot" Washington D.C. kind.

Marcus should NOT be believed on this issue until she weighs in on whether the Bush Tax Cuts for the rich folks should be sunsetted, to reconstitute the General Fund. Now THAT should be an interesting column...
__________

"What the crisis-mongers do, however, is switch between views to suit their convenience." --Paul Krugman, NYRB, March 2005.

It was Paul's sentence here that led me to the capstone animation after minute 5:00, the "presto change-o," in the 2005 Social Security animation (put up on YouTube in 2006):

http://youtube.com/watch?v=Tts2uTWt6e8

The companion piece from 2004, which shows the Bush Tax Cuts in the macroeconomic setting, is here:

http://youtube.com/watch?v=SA1f2MefsMM

[skeptonomist]

1) There is a common type of misunderstanding about the SS Trust Fund which is apparently shared even by some commenters on this blog, which is that the government is pillaging the Trust Fund (or even that it is a pyramid or Ponzi scheme). Actually, it is just borrowing from the Fund as it borrows from the public in general by selling Treasury securities. As long as the accounts of SS and general funds are kept separate and the government honors its legal obligations to repay the Treasury securities there is no dishonesty or illegality in the way the money is spent

The dishonesty comes in when politicians use SS tax income which is legally going into the Trust Fund to represent the yearly deficits as smaller than they really are - and they almost all do it, President or Congress, Republican or Democrat.

2) The real debate is not about what happens to the SS system more than 40 years in the future, which is a phony issue, but about privatization. There are many reasons why conservatives want privatization including a) small-government ideology (which Krugman acknowledges - he does not mention the following); b) Wall Street wants to get its hands on the money; b) increasing SS tax income now will help to hide the size of deficits (as above), and make it easier to make or sustain tax cuts for the rich (of course SS tax income comes disproportionately from lower-income people); c) people who own stocks will get an immediate windfall profit as soon as a privatization bill passes (or even when passage becomes certain). Note that the usual suspects here include corporate executives who typically get much of their compensation in stock options, and who control a great deal of money for political contributions and lobbying which they do not own.

Privatization is class warfare and I think that this should be pointed out explicitly whenever the subject comes up.

[paine]

cartoon think

"the world VISA/MC just says
"No, we won't raise the limit on your card?"

no nuance needed
only a forex change
we won't get shut off
just pay more

[paine]

"she fails to explain why it is that fixing the lesser problem, which may not manifest for decades if ever, should be the primary concern. "

why ??

cause unlike ssi which is just cash for homers pop
real identfiable corporate and pro-assocs
pecuniary interests get gored
if america's elected reps
take a look
at the benefit side of the medi twins
and get dreams of a hack job
or
maybe some serious lobby outfits
have clients in the pill push et al biz
or
medical cost controls
on high income suppliers prices
wiggle there way onto the table

nope unlike
f homer and his SSI
this has a down side for the top side

[paine]

IF THE MSM
declare a medical funding emergency
then we might get

single payer

yikes

[Bruce Wilder]

Krugman: "On the other side, the 90s were the era of the great pause in health expenditures, the (it turned out) brief era in which the rise of managed care stabilized health spending as a share of GDP."

I noticed the above in Krugman's own NYT web comment.

The "great pause" was due to "managed care"?? I don't think so. Let me, see? Could it be a Democrat was President?

Even without the leverage of a system of national health insurance, the "price" of health care is a completely political question.

[Tano]

Mark,

Sorry, but I dont follow your logic.

Krugman raised the warnings about SS in the context of an argument against the Bush tax cuts? Arguing that by eliminating the budget surpluses by cutting taxes that we would not be preparing ourselves for the oncoming deluge?

But we lost that argument. Taxes were cut. The surplus evaporated.

So are we not now left unprepared for the deluge?

As for the "crisis". I think we all understand that the crisis is not, in a technical, legal sense, in SS itself. It has those "IOUs" - i.e. good-as-gold T notes in the trust fund that guarantee it for another 34 years.

But the "crisis" revolves around how the federal government itself is going to repay all those notes. That can only come from the taxpayer. The crisis is in the federal budget, not in SS per se. That doesnt make it less of a crisis.

[Tano]

And, in line with my point above, how the money is going to have to come from somewhere...

I wonder why progressives seem so averse to plans such as Obama's, which will raise a goodly chunk of that money by raising taxes on those making over 100K (or, in other iterations, those over 200K). How much more progressive a tax increase could you imagine?

If we don't do that, then taxes will have to be raised at some point, (or deep cuts in discretionary programs) and it probably would be a less progressive increase.

[paine]

bw

krug mid 90's was full of shit
anyone knew the pause was a temp artifact
and as to the larger issue of SSI projections
notice miss mid 90's alibi

trend productiviity looked lower

he might mention
we aren't living as much longer
as the time travellers reported back in the 80's
when the first of these fraud crisis was cooked up
to patch the reagan tax cut
fiscal gap

[paine]

tano

"the "crisis" revolves around how the federal government itself is going to repay all those notes. That can only come from the taxpayer"

crisis ????

we're talking 10 years away
when the first trickle begins

the taxpayer and the creditor

and hardly a crisis
letting a few bush tax cuts
expire as they will automatically
prolly will cover
the taper off taper on pretty fine
for the next 20 years or so

[paine]

teno
fine to increases taxes on the upper brackets
make my day
pop the SSI SALARY CAP

but while tour at it

CUT THE REST OF THE PAYROLL TAXES
TO PAY GO
that would show dems don't
tax work
when they don't have to

[Minja]

Here's the rub. If the GOP and its conservative allies (such as Ms. Marcus) want to continue using payroll taxes for the general budget (and disingenuously keep claiming that Social Security is in a state of crisis, when in fact it's the general budget, thanks to W's tax cuts and war, that's in a state of crisis), then we should stop having a dedicated payroll tax for Social Security, and start funding that program out of general tax receipts.

We should then immediately eliminate the regressive payroll tax, and increase taxes across the board. THis will, of course, have the effect of increasing taxes on the rich, and lowering taxes on the working class, but this seems to be the implied conclusion to Ms. Marcus's "argument", right?

[JC]

Marcus SKEWERED Krugman with his very own words. She made it crystal clear that Krugman is basically making this stuff up as he goes along. Krugman's credibility on this issue is NOW ZERO. Got it pricks?

[JC]

Marcus SKEWERED Krugman with his very own words. She made it crystal clear that Krugman is basically making this stuff up as he goes along. Krugman's credibility on this issue is NOW ZERO. Got it pricks?

[Bruce Webb]

The Baron "Add to this that very soon, the other great sop to sponge up American debt, the SS Trust fund will no longer be buying T-bills, and in fact will be dumping those they already hold onto the market as the SS Income vs. Outlay begins to balance then tilt sharply to the outlay side."

Well Baron all that would work a little better if you supplied numbers and dates combined with some probability analysis of the economic and demographic assumptions. 2017 is not "very soon" and is not likely to be the right date anyway, outcomes closer to Low Cost are more likely than those close to Intermediate Cost and the result is Trust Fund redemption that gets pushed out in time and lessened in magnitude. The difference between trust fund balances under Intermediate Cost and Low Cost in the year 2025 is just under $2 trillion which is about 5x what Chinese Treasury holdings are today. It's a point I have been trying to point out for a long time, Social Security solvency or anything close to it changes everything from our views on current account deficits to the sustainability of tax cuts. Trillions of dollars are in the balance and much of that riding on a proper assessment of economic growth over the short term, the next five years being totally determinative. But are we having an active debate over the probability of the economic numbers of Tables V.B1 and V.B2? The demographic numbers of V.A1? Well if so someone forgot to leave me a ticket.
My take from April 2005. Solvency and the Long Bond: Economic Life after Crisis

[Lee A. Arnold]

Tano, the Bush Tax Cuts sunset in just a few years. See:

http://youtube.com/watch?v=SA1f2MefsMM

and

http://www.youtube.com/watch?v=Tts2uTWt6e8

[anne]

Baron properly wonders about the politics of social benefit spending and military spending.

When there are actual trades to be made between butter and guns, the folks for guns have always been a formiddable political presence. The folks for guns however have a peculiar additional advantage. We are easily convinced that spending for guns is somehow costless, whether because such spending increases economic growth or simply because we pretend so often that spending for guns really is costless.

[Lee A. Arnold]

JC, the way to show how smart you are is by not following reason or logic. You convince everyone.

[RickD]

If Bush couldn't cut Social Security in 2005, when his popularity was still pre-Katrina, and he had just won an election, and the Republicans controlled both Houses of Congress, and Democrats were terminally supine, then I will go out on a limb and say benefit will not be cut by Congress for at least the next 25 years.

It really is a wildly popular program for the general public.

[Bruce Webb]

JC?

Name calling and innumeracy make a poor combination. You and Ruth quite literally do not know what you are talking about. Whereas plenty of the people on this thread do.

That faint sound you hear? Yes that is the sound of mocking laughter. And people are not laughing with you on this one.

Learn something and come back. You might start with the 2007 Social Security Report. And don't forget to get beyond the 15 page summary, the good stuff is hiding back in the data tables. http://www.ssa.gov/OACT/TR/index.html

[paine]

minja
" we should stop having a dedicated payroll tax for Social Security, and start funding that program out of general tax receipts "

not if the plan is a mandatory minimum pension plan
for improvident wage slaves

however i love the statutory burden shift

i think you can pass same
this way:

take
the medicare portion
now
grabbled from payroll
the hell out of there
and bundle it with the other parts now
paid out of general receipts

but really don't figure general revenue sources are al
that progressive
notice cap gains and various other scams

[paine]

b webb
is dah man
on this

btw where u bin ??

[anne]

Notice again the problem critics have in understanding that we have passed through 6 years in which spending on social benefit programs has fallen as a portion of our income. The economy has grown faster than spending on social benefit programs for 6 years, so such spending is simply no problem.

The only budget problem of significance is that George Bush and the Congressional Republican majority increased military spending far faster than the economcy has grown for 6 years. At the same time Republicans cut taxes, expressly for the wealthiest, 3 times.

We went from a budget surplus under Bill Clinton to a deficit, and all because of tax cutting for the wealthiest and military spending. The political question from here is whether we sacrifice middle and lower income Americans for the sake of war and occupation and tax cuts for fewer than few.

[Tano]

To those who counter my arguments above, - that if Krugman was right in '01 by saying that Bush's tax cuts would leave us "uprepared for the deluge", then we are, in fact unprepared - by pointing out that the tax cuts expire in a few years....

Sorry, but I had other plans for the additional revenue that would come in from the expiration of those cuts. Like health care, for example.

I still dont understand (really dont understand) why so many progressives are bashing Obama for proposing the most progressive tax increase imaginable.

There is no question that taxes will have to go up in the near future, or spending down. I want universal health care, and I want the trust fund paid back without decimating other programs. That will take additional revenues. The payroll tax is a very regressive tax.

A progressive candidate proposes to make that tax more progressive and he gets mocked and ridiculed by progressives? What is wrong with you people?

[paine]

"I still dont understand (really dont understand) why so many progressives are bashing Obama for proposing the most progressive tax increase imaginable."

look its simple

the Dems need to give the tax brake
they promised working people back in 92
FIRST

recall clinton raised taxes on upper middle salariats and professionals

i say attack wealth
with a tax on wealth

take em on directly

this split in the job force between the upper 20%
and the belower rest is bunk

we ned to focus on the super inequality class
the top 1%

and tax their holdings not their earnings

will obama do that ??
not with the econ con policy advisers he's got

[paine]

tano

btw
i like your questions

just hard enough to be worth answering

[Paul G. Brown]

While I usually demure
to ranters who's obscure
presentation makes 'em very hard to scan.

I would just like to say
that on money, media and dismay,
in this thread, paine is 'da man'.

[Peter Principle]

Shorter Ruth Marcus: The Republicans and the Vichy Dems are looting the Social Security surplus. Paul Krugman is trying to stop them. How dare he.

[paine]

tano drinks rubin kool aide

"There is no question that taxes will have to go up in the near future, or spending down"

nope not on jobbled folks
better the deficit
given its nuget like size

try pulling out of iraq
and down sizing the kold war military plant
totally useless
in todays world

that
and waiting out the bush tax cuts
oughta keep uncle sam credit worthy enough
for the next 9 years

try closing the trade gap instead
if you're into rapid gap closing
by demanding
an immediate move to a balance trade dollar
and a full ewmployment interest rate
all at once

that oughta make the fedskins war whooop

and as to universal health

lets have cost controls in place first
before we dragoon the ass hole innocent populace
for even more
med sec ear marked revenues

[skeptonomist]

Tano:

Progressives are bashing Obama because he gives credence to the proposition that SS is a major issue which should take precedence over other budgetary considerations. The impetus for the phony "crisis" ultimately comes from privatizers who have their own ulterior motives - see above. Do you think conservatives are really concerned about what happens in 40 years to those who will depend on SS payments?

[joewweoj]

Ideology has no history! For Ruth Marcus and her cohort, the very existence of Social Security is the crisis. Hence, historical change is not possible and quotes, taken out of context, about Social Security from 1996 (or by Alan Greenspan in 1983 or by Herbert Hoover in 1936) speak to the crisis of Social Security today!

[Paul G. Brown]

Tano -

Doing the right thing for the wrong reasons can be as much of a problem as doing the wrong thing for the right reasons.

The criticisms of Obama have nothing to do with the tax increase he's proposing. They have to do with the arguments he's using to justify that increase. The response to Ruth Marcus' piece on Krugman in this thread have it exactly right - and let me emphasize it;

Tax Hikes To Bring The General Fun Back Into Long Term Balance Are Anathema To The Monied Classes Of This Republic.

Had Obama come out and said - "US Federal Fiscal balance is way out of whack. US Income inequality is on the rise. To address both of these issues before they become problems let us put up income taxes at the top tier. Payroll tax changes are a good place to start (finesing the point that the Payroll Tax is there to pay for Social Security)." I think we'd all be cheering.

[Arne (not anne)]

The Baron: "the SS Trust fund will no longer be buying T-bills"
Bruce Webb: "suppl[y] numbers"

Bush says the budget will be balanced in 2012. If so, why is there a concern about being able to pay back the SSTF loans?

[aml]

what i fail to understand is why our brave defenders of Social Security don't directly say that our country's rulers, the opinion-makers, and the rich simply do not want to make good on the promises of 1983. simply put they want to welch on the deal we the people made to prefund and simply keep that money. this is a plain old way of saying something that everyone will understand.

[paine]

"The impetus for the phony "crisis" ultimately comes from privatizers "

nice point
they are indeed

"with dogs in this hunt "

i liked your earlier post

add ing this:

as a long run strateeeegery
getting the bobo job jockey class
tied into the stock markets fate
has its intrinsic value
like home ownership

maybe the 401 k biz gets that off the ground
but an't deep enough a cut thru

unlike forcing people
to act free
you can force em all
to save up

[paine]

"Ideology has no history "

great great line

for the convinced ideologue
being right
is like a geometric figure
its a construct
that exits
all at once
and only in the mind

[skeptonomist]

Paul G. Brown:

Probably most commenters on this thread would cheer if the payroll tax were extended all the way up, but this might be a loser politically - certainly Republicans would scream that this is turning SS into socialism. US voters love SS, but they don't like socialism. Voters accept that income tax (not SS) should be progressive - why not work on restoring progressivity there?

Why should a politician commit to a policy that can be branded as "socialism" when the necessity for it is not proven? As Krugman said, Obama seems to have been suckered on this issue.

[bill]

Krugman is a worthless hack.

Social securiy is a regessive tax that has helped the budget for many years.

It will change from a net positive to a drag somewhere around 2017.

What will probably happen is they will raise taxes or chage the retirement age to close to the male life expentancy.

Sounds like a great plan! No problem here!

[Phoenix Woman]

Somebody please tell Ruth Marcus that her buddies the privatizers are trying to argue both Permanent Recession/Depression AND Permanent Boom, at the same time:

http://phoenixwoman.blogspot.com/2006/11/permanent-recession-or-permanent-boom.html

[Bruce Webb]

Hi Paine. I am here every day, it is just that Social Security was not on the agenda until Obama opened his mouth, and on the other topics of the day, esp housing and credit I am thinking my take was a little too optimistic. Not enough to make my change my overall opinion, but enough to make me not want to look like an idiot by expressing them.

And Robert Brown. I certainly wouldn't be cheering. If you want to restore some progressivity to the tax code you should start with the taxes the wealthy actually pay (income tax and capital gains) and not with the ones that they by and large don't (payroll). Plus I don't see anything in Obama's plan that explains how this extra flow of cash actually assists Social Security financing to start with. When one of your top three economic advisors is the author of a Social Security Reform Plan that combines one mildly progressive component (a cap raise) with three very regressive ones (payroll tax increase, retirement age change, benefit cuts) well it makes me nervous that you trot out that one mildly progressive one for discussion. I am seriously concerned that Obama is setting the stage for some version of LMS: Liebman-MacGuineas-Samwick. In this case the fox, in the person of Jeffrey Liebman, may not exactly be guarding the henhouse, on the other hand he seems to have a key to the back door.

Rather than cheering the sounds you would get from me are closer to Robbie the Robot: "Danger Wil Robinson! Danger!" (complete with flailing arms)

[Tano]

Paul,

So that is really the issue here? That Obama is doing the right thing but you think he is framing it in the wrong way? And for that reason he gets ridiculed mercilessly?
Sorry, but this strikes me as insane.

And I think I prefer Obama's strategy over yours. To sell the American people on a tax increase for the over 100K crowd would be much easier if it can be argued to be a way to secure retirement benefits for all, rather than just a way to balance the federal budget.

Balancing the federal budget is one of those issues that average people think would be nice, but it aint something to get them very motivated. It is far too abstract for that. And when you have a motivated opposition (as the over 100K crowd would be - to resist it), vs. a lesser motivated general population, then guess who wins that fight?

But if the tax increase is sold as a means to insure YOUR retirement, then everyone gets very interested.

[Bruce Webb]

Sorry that should be Paul Brown

And welcome to Phoenix Woman. Yes indeed privatizers do use two set of books, one to predict Social Security 'crisis' and a totally different one to prove that tax cuts create growth. Their two narratives are in fatal contradiction and this has been clear for a long time. Serious people like Dean Baker addressed this with the No Economist Left Behind challenge of 2005. Me? I wrote a ditty back in 1997.

If Private Accounts are Necessary, they won't be Possible.
If Private Accounts are Possible, they won't be Necessary.

Any amount of growth that would allow private accounts to work would overfund Social Security if left alone. The logic and the numbers are if anything even more clear today than they were a decade ago.

[anne]

Barack Obama has been right on promising on so many issues on domestic and international affairs, but on Social Security there needs to be a re-thinking. I wonder which adviser is pushing Obama on Social Security reform. Does anyone know?

[Bruce Webb]

Tano. Two problems in Obama's approach.

One taking the economy as a whole a cap raise in regressive, it doesn't touch the top 1%. Steve jobs takes a $1/year wage, and probably does pay his 6.2 cents in. You don't get progressivity by taxing wage income.

Two Obama's proposal actually makes Social Security financing worse over the long run. It seems perverse but a tax increase is not what Social Security needs, instead it is more likely that we will be cutting FICA in a relatively short period of time. I know that sounds like something between odd and insane, but it is the end result of actual examination of the dollar figures as they are projected forward over the next couple of decades. It is a little complicated, but the end result is this: raising the cap simply increases General Fund obligations to the Trust Fund through increased accrued Interest without doing a single thing for long term solvency.

[Bruce Webb]

Anne "I wonder which adviser is pushing Obama on Social Security reform. Does anyone know?"

One of Obama's top three economic advisors in Jeffrey Leibman, a principal author of the privatizing Liebman-MacGuineas-Samwick Non Partisan Social Security Plan so I suspect that is the man in question.

When Obama brought him on board he was presented as the lead guy for trade, but there is exactly zero reason to think he wasn't sitting at the table when this foolish idea came up. http://citizen.typepad.com/eyesontrade/2007/05/clinton_trade_o.html

Three academics -- Austan Goolsbee, 37, a University of Chicago professor and columnist for The New York Times, Jeffrey Liebman, 39, a pension and poverty expert at Harvard University, in Cambridge, Massachusetts, and David Cutler, 41, a Harvard health economist -- form the core of Obama's economic team...

Great. A privatizer from Harvard and a guy from U of Chi. I don't even dare Google 'David Cutler'. Let's just say we don't seem to see Obama laying the ground for the New New Deal here.

[Lee A. Arnold]

Tano, you've asked the first good question in a while. I understand what you are saying. But separating the programs and arranging for their separate taxation and expenditure is a VERY good idea.

Why? No doubt we will need more resources for a healthcare overhaul. Although perhaps not as much as some people might think: current frightening projections are based on the structure of the CURRENT health programs. The whole thing may end-up costing less than current private health plans, which then you wouldn't need. Saving money. That is true in other countries. But FIRST healthcare should be structured to cover everybody, and to save on its current massive misorganization costs. Then after that, figure out the funding.

On Social Security taxation: PAYROLL TAXES HAVE BEEN REGRESSIVE FOR A VERY GOOD REASON. You may like it, you may not like it, but there is a very good reason. They are structured to make Social Security politically viable, as well as solvent. The regressiveness of payroll taxes, given the tax cap, justifies compelling by law EVERYBODY to pay in -- in return for allowing the slightly progressive payout decades later.

Compelling everybody = universal pay-in and pay-out. Universal coverage serves the purpose of avoiding a costly welfare bureaucracy and the stigmatization of means testing. Regressive payroll taxes are the psychological foundation of that.

So for individuals, this is an acceptable deal from the beginning of earnings, because you really don't know how your life is going to end up. And if you do well, it's not a lot of skin off your ass. That is why even very RICH retirees say, "You don't know how the world works. Leave Social Security alone." Because they are thinking about others not so fortunate. Regressive payroll taxes are the psychological foundation of that, too.

The Bush income tax cuts are a cynical swindle to reward the plutocrats and kill the SS program. Evidence? The very next domestic initiatives: First, overdose the prescription drug benefit without allocating new money. Then, jump immediately to yell "Social Security is goin' broke." Exact Presidential quote, over and over. Well, it's not.

The best way to rectify that is not to buy into this rhetoric at all, to keep the politics true and on-course, and don't mix-up the payroll tax with another program that must be structured very differently.

Senator Obama isn't saying this. He's saying Social Security is a problem. We shouldn't elect anybody who doesn't understand these issues. It's bad economics, it's bad politics. We have to get the politicians to think clearly. No more shenanigans.

[Tano]

Bruce,

Raising the salary cap is NOT regressive.
It makes a very regressive tax less regressive.
Looking at the economy as a whole, it does not make it all progressive, granted. But it takes a regressive system and makes it less so.

How on earth can you try to argue that taxing wealthy people is regressive?

"You don't get progressivity by taxing wage income."

You do get some progressivity by raising taxes on the wage income of the upper classes and not doing so for anyone else. It is obviously not the silver bullet to render the entire tax structure cosmically progressive, but that isnt the issue here.

How does doing nothing, which is what people here seem to be arguing for, seem more progressive than actually making the sytem a bit more progressive?

As for your second point, I dont quite understand what you mean. I understand that if we raise the cap, and thus bring more revenue into SS, that that money will then be lent to the Federal government - increasing the general revenue funds obligations to the Trust Fund.

Why is that a problem? We will end up with a SS system that will not enter the red after 2041. It would be sustainable indefinitly. This will take a huge rhetorical argument away from the anti-SS forces. They would no longer be able to point to a real problem (the post-2041 issue) and pretend that it means the system is broken. The question then is reduced to one that is simply whether we will repay the Trust Fund. And since that is not a real question - not to pay it back would destroy the credibility of our entire financial system - then there is no real political issue any more.

If you see things differently, then you would need to explain it a bit better.

[Phoenix Woman]

Bruce: Like your ditty! It's so very, very true, too. (I also Michael Kinsley's "The Meathead Proposition".)

Here's how I typically explain it to folks:

So long as the economy grows at an average of 2.7% per year over the next few decades, Social Security is fine. (For reference: During the past 75 years, the economy averaged 3.6% growth -- and that was with the whole of the Great Depression thrown in.) The SS Trustees' predictions of doom 'n' gloom are based on laughably (and deliberately) inaccurate growth predictions of 1.9% per year.

But wait! The privatizers, in touting their plans, talk of humongously high rates of return (5% or 7% or whatever number they're pulling out of the air that day). As Bruce says, these rates are possible only if the economy is growing at a Clinton-era 1998 clip *forever*.

Hence, they're not only arguing Permanent Recession.

And they're not only arguing Permanent Boom.

They're arguing Permanent Recession AND Permanent Boom, at the same time.

Truly, this attains stratospheric levels of bullcrappery.

Links to data for the above are found by moving the mouse pointer onto my name.

[jack]

Ruth Marcus is right. In the NYT the other day, Paul said that

"nonsense like the claim that Social Security is a Ponzi scheme seems to be back in vogue."

A few years back, Paul wrote a (link is http://www.pkarchive.org/economy/inequality.html):

"Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today’s young may well get less than they put in)."

Nuff said.

[Tano]

Lee,

I accept your point that the regressivity of the SS tax structure was intended to facilitate political buy-in, and to keep the system from becoming a welfare system. I accept that their might be some minefields to address if the cap is eliminated completely.

But these are issues that touch on how exactly to implement a plan to build up the trust fund. The issue that seems to be generating so much heat here is the larger issue of whether we should try to build up the trust fund in the first place.

I understand and respect the fears that progressives have that even addressing SS might reawaken the calls for privatization from the other side. But I also feel that addressing the trust fund issue now, and making the system solvent well beyond 2041, ideally making it solvent indefinitly, will have the enormous benefit of resolving the issue forever.

The 2041 problem is real. It will continue to be pointed to by the right to convince, especially young people, that they will never get the benefits promised to them. A very large percentage of young people actually believe that now, for the logic seems pretty clear to them. If you are 32 years old or younger, then the simple fact is that, as things stand now, SS will not be taking in sufficient revenues to match outlays when you retire. That is a fact, and so long as it remains a fact, the under-32 crowd will find it hard to trust the system. They will be easy prey for those who propose alternatives.

By raising the cap, or by doing anything else to address the issue, we can make the trust fund sufficiently large as to solve the 2041 problem. At that point we can credibly claim that the system is solvent indefinitly. Then we can trust that young people will have an interest in protecting the system. As it is now, they dont.

And at the same time, we may the tax structure a bit more progressive. Seems like a win-win to me.

I think we should take confidence in the fact that with a newly reelected Republican president, and a Republican Congress, we were able to defeat privatization. The privatizers will not be that politically strong any time in the near, or even mid-term future. To allow our fear of them to paralyze us from doing something that can take the issue off the table permanently seems irrational.

[bakho]

The General Fund is the problem SS is NOT a problem.

Obama makes the same mistake that the rest of the village idiots are making. SS does not need fixing.

Beating the Republicans over the head with SS reform is a winner. Right wing pundits go ballistic when Dems use SS to beat up Republicans. The pundits want the Republicans to stay in power. Appeasing the pundits is not a winning strategy. Republicans should be forced to recant their position on SS privatization or face the voters as not supporting SS. Obama is throwing away a winning issue and providing cover for anti-safety net Republicans.

Why is this hard to understand?

[bakho]

Jack- The Krugman quote referred to the redistributional aspects of SS, not its solvency.

nice try

[paine]

tano tano tano
this xer guardian role
is based on what ??
not YOUR fear of system insolvency
that's just
your pitch to xers and below
their
soft fear of low expectations

passive reactive defensive politics

why not tell it like it is

there is no damn ssi crisis
no where gonna reshape the revenue base
by poping off the cap
not to increase the trusat funds rate of growth
but to pass the additional revenue
back to you

give all you over worked under paid
debt wrenched
jobbler folks a mf payroll tax brake

[paine]

bakho

yes ponzi schemes that have tax power behind them won't fail
just shrink the pay in get out ratio

enter the legacy tax
a claw forward
to smooth out the ponzi effects
ie
the otherwise super benes/to pay in ratio
early riders got..
still get
and
will get till mid century
eventually level waves
will strat braking over the system
more or less
at least thats the long range demo forecast

very late xers
and
early millenials
face flat land

not what the greatest got
fatland
from SSI

[paine]

oh
one final reason to scream crisis
diversion away from the real defaulters

all the corporate defined bene plans were ponzi schemes
and are all failing
and will cost tax payers a fortune

[Tano]

bakho,

Its hard to understand, becaues it is not true.

The argument made to Obama is that he should shut up about the issue. Not that he should use the issue in a different way that would be "a winner".

The claim that he should shut up about it seems entirely based on some irrational fear that this would help the privatizers. The privatizers have been defeated - at their moment of greatest poltical strength. The Democrats will almost certainly continue to control the Congress after the 2008 elections. Privatization aint gonna happen.

Obama's plan will take the issue off the table forever. Once the 2041 problem is no longer hanging over the heads of those who will be retiring then, they will no longer be prey to the arguments of those pushing an alternative. They will have reason to trust the system. They dont have that trust now.

Obama's plan is to extract tax dollars from the highest earners and to use it to make SS solvent indefinitly.

Any progressive who opposes that is not thinking very clearly.

[MInja]

paine:

I agree with you. However, how about this as a compromise? We eliminate the cap, since it's clear that payroll tax surplus is being used for programs besides SS, and we lower the overall tax burden.

Or how about we eliminate the payroll tax, and instead fund SS with a dedicated tax increase on the wealthy that EXACTLY mirrors the Bush 01 tax cuts? We can cut payroll taxes, increase hiring, and when the economy starts booming again, we can (once again) point to a real world facts that debunk the supply side nonsense.

If the Republicans want to start playing class warfare, I say give em class warfare.

[anne]

Barack Obama's worry about a Social Security crisis are unfounded, play to Republicans and will make a movement to more general health care insurance provision so much harder because of the anticipation of increasingly steep tax increases. No tax increase for Social Security is needed since there is no no problem now and may never be a probnlem with the program.

Obama has made a foolish proposal.

[Minja]

On that last post, first paragraph was meant as 1) let's raise the cap, and 2) let's then lower the payroll tax rate (since we'll have a larger tax base).

NOt meant to imply that raising the cap would lead to an overall lower tax burden.

[ilsm]

Obama is going to ask the rulers if, for a little while, they will pay taxes instead of lending us money and borrowing from payroll taxes, to run their little gumint.

[Hedley Lamarr]

Either Marcus was contracted by Fred Hiatt to do this hit peice, or the unhappy spawn of Milton Friedman really have burrowed well within the Post.

Bruce Webb says...

You do get some progressivity by raising taxes on the wage income of the upper classes and not doing so for anyone else. It is obviously not the silver bullet to render the entire tax structure cosmically progressive, but that isnt the issue here.

Well it should be the issue. If you regard Social Security as just another government program then yes its financing looks regressive. If you examine it as an insurance plan it is not regressive at all. As Lee points out the cap provides political cover for Social Security. It is the only thing that is keeping people like Huckleberry Fred who call for huge benefit cuts from insisting on a seat at the table. Sorry Fred, it is not your money. Social Security does not need a new influx of money, what the typical worker needs right now is health care for his kids and a better education system. That is where Obama should be focussing.

Moreover you ignored my point that a cap increase gives the ultra-wealthy a free pass, their income would not be covered not being derived from wages to start with. What you are doing here is putting a huge increase in taxes on the professional class while giving the investment class a get of out taxes card. Bad policy and bad politics.

"Why is that a problem? We will end up with a SS system that will not enter the red after 2041. It would be sustainable indefinitly.

Tano. First of all 2041 is not cast in stone. The date of depletion has been moving out at a rate of more than and year per year for a decade now. There is a reason why that happened and a little analysis of the numbers suggest that the movement will continue. Most of the problem with Social Security is not financial at all, under very reasonable assumptions a combination of trend growth and the current level of taxation keep it funded forever, the problem is one of perception and the cure for that is education and not taxation that does nothing.

Lets pose a hypothetical. Lets say Obama's tax increase entirely backfilled the difference between Income excluding Interest and Cost. Would that be a good thing? Well no it would be an effective abrogation of the Trust Fund. Money lent would never be paid back. Okay lets say that Obama's tax increase combined with actual payment of Interest from the General Fund produced sustainability. Well that is at least a little more fair, but it leaves future generations piggy packing on my lifetime contributions. In the end it simply sets up a new intergenerational conflict with young workers paying taxes to fund interest payments on a Trust Fund the then current recipients never contributed to.

At this point Baby Boomers have paid their way, mortality tables suggest that half of us will be dead by 2041 and almost all of us gone by 2055. Given current growth trends the odds are better than even that Depletion will be pushed back beyond that point meaning we picked up our entire tab. So what Obama is doing is addressing a problem that probably won't ever happen by taxing p