The Ruth Marcus Obsession with the Social Security Crisis that Does not Exist

Ruth Marcus of the Washington Post is at it again, trying to portray Social Security as a system in need of immediate fixing. But, as these responses by Dean Baker, Kevin Drum, and Paul Krugman make clear, Marcus is doing her best to elevate a second-tier problem (if it's even that) to the crisis, first-tier level. It appears that having taken a position on Social Security that is wrong, i.e. that it is a system headed for "crisis," she is incapable of admitting her errors and instead continues to defend the indefensible. She says it's irresponsible not to attack the problem now in her guise as one of the "Very Serious People," but the irresponsibility is coming from those, like herself, who are promoting a crisis that doesn't exist.

Here's Dean Baker:

More Social Securty UFOs at the Post, by Dean Baker: Ruth Marcus is on the warpath again arguing that those who don't want to jump in line on the SS crisis train are being irresponsible. Read it and weep.

A couple of quick points are in order.

To claim unanimity of forecasts agree with SS trustees is simply false. The trustees assume that productivity growth will be markedly slower over the longterm horizon than its post-war average. They also assume that immigration will slow sharply from its rate over the last decade. Both assumptions make the projections for the program look considerably worse. One need only step over to the non-partisan Congressional Budget Office's website to find more positive projections on these variables.

The second key point to keep in mind is that the idea that taking steps earlier rather than later makes things easier means that it is better to either raise taxes on a cohort that has seen 30 years of wage stagnation or to cut their retirement benefits, even though most have accumulated little for retirement other than their SS. Even the trustees project that the typical worker will have a wage that is about 35 percent higher in 2040 than what workers earn today. Only the Post would argue that it's better to raise taxes and/or cut benefits on much poorer workers today than to risk the possibility that we may have to raise taxes or cut benefits on the much wealthier workers of the future in order to cover the greater cost of their own retirement (they are projected to live longer also -- that's the real problem. We're so cruel to our children.)

Kevin Drum next:

Social Security Again, by Kevin Drum: Why are Ruth Marcus and the Washington Post so obsessed with demanding that we all address Social Security's long-term problems right this instant? It's a mystery. Truly a mystery.

Here's what they need to think about. The most common solutions to Social Security's eventual shortfall are (a) a small tax increase, (b) a small reduction in the rate of growth of benefits, and (c) a small increase in the retirement age. Question: are there any advantages to implementing any of these solutions right now, rather than, say, ten years from now?

I'd say no. The advantage to waiting is obvious: projections of Social Security's solvency are uncertain, and waiting gives us more data. Why try to project 40 years in the future if you don't have to? Better to wait and see what direction the economy actually heads.

Balanced against that, there really aren't any advantages to acting sooner. Social Security is currently running a surplus, so increasing payroll taxes today does nothing except increase the size of the trust fund a meaningless exercise at best, and a positively harmful one at worst. We might need to raise taxes in the future once Social Security starts running a deficit, but raising them now does nothing at all to change either Social Security's future obligations or the source of its future funding.

As for ideas (b) and (c), what's the point of locking ourselves into them now? If we wait ten years, not only will we know more about the real shape of the future funding problem, but we'll still have 25 years or more to gradually introduce any changes we think we need. Do we really need to give beneficiaries more than 25 years notice that they might have to retire one year later than they think? Or that after they retire their benefits are going to increase at a slightly slower rate than the law currently requires? I don't see the point. 25 years is plenty of warning for changes as small as the ones we're talking about.

Bottom line: 2017 is a better time to deal with Social Security than 2007. Raising taxes now doesn't accomplish anything, and if it turns out that we need to reduce benefits we can do it in 2017 just as well as we can do it today. For now, we should put Social Security on the back burner and instead spend time worrying about healthcare costs, nuclear proliferation, and global warming. Those are problems that really do need to be addressed right away.

Krugman's turn:

The Social Security obsession, again, by Paul Krugman: By any reasonable standard, Social Security is at most a second-tier policy issue.

There are various ways to make this point. One is to compare the fiscal problems of Social Security, such as they are, with those of the rest of the federal government. The Social Security trustees estimate the 75-year financial shortfall of the program at 0.7% of GDP. That compares with a general fund deficit – the federal deficit outside of Social Security – of 3.3% of GDP last year (that is, not even taking into account future demands on Medicare and Medicaid.) Social Security, in other words, is in much better financial shape than the rest of the government.

Another illuminating comparison is to look at the sources of projected growth in entitlements spending. The last Congressional Budget Office long-term budget projection had Social Security spending rising from 4.2 percent of GDP now to 6.4 percent by 2050, a 2.2 percentage point increase – and Social Security, remember, is currently running a surplus to prepare for that eventuality. Meanwhile, Medicare and Medicaid spending are projected to rise from 4.5 percent of GDP to 12.6 percent, three times the Social Security increase – with negligible pre-funding.

As a result, Social Security fades to insignificance in any realistic discussion of entitlements problems. Medicare’s unfunded liabilities, as estimated in the trustees’ reports, are seven times those of Social Security. The unfunded liabilities of Medicare Part D alone are twice those of Social Security.

If you’re seriously worried about America’s long-run fiscal prospects, then, you should talk a lot about the general fund deficit and the problem of rising health care costs, and hardly at all about Social Security. But that’s not how it works in DC these days.

How obsessed are Beltway types with what is really a minor problem? Here are two snapshots:

First, from commenter “Low-Tech Cyclist” at Brad DeLong’s place:

The WaPo has a subset of its unsigned editorials where it comments on what it calls “the ideas primary.”

Five of the last seven Ideas Primary editorials have been on the Social Security ‘crisis.’ There have been 15 editorials in this series. One has been on global warming - the greatest crisis of our era - and two have been on our greatest domestic crisis, the lack of universal health care and the upcoming crisis in the Medicare trust fund.

Second, from Jon Chait:

One of the oddities of the entitlement hysterics is that they are far more obsessed with the minor problems of Social Security than with the massive problems of Medicare. Indeed, if you look closely at their dire proclamations, they inevitably follow the same pattern: They begin with an ominous summation about entitlements–thus lumping together Medicare with Social Security–then swiftly proceed to demand that Social Security be shored up forthwith.

Russert’s recent harangue at the Democratic presidential debate was a classic example. He began by warning of the crisis faced by “Social Security and Medicare” but proceeded to ask no fewer than 14 questions about Social Security, and zero about Medicare. It’s as if he began fulminating against crime in the greater New York area and then immediately began demanding a large new police deployment in Chappaqua.

Look, I know this is very embarrassing to those who have been walking around thinking that hyping the Social Security issue makes them Very Serious People. But the facts are the facts – and the Beltway obsession with Social Security reflects ideology and fashion, not the real problems facing America.

Update: Brad DeLong comments:

This morning Ruth Marcus writes:

Social Security: Five Myths and a Slur: [The claim that] "Social Security is only a big deal to people who hate the program and want to see it destroyed -- or to their ignorant dupes"... is worse than a myth. It's a slur -- on responsible people, Democrats and Republicans, who may differ about the Social Security cure but agree on the diagnosis and on the need for treatment.

This reads like a lame reply to what Clive Crook wrote last week at the Atlantic:

On an important point, [Democrats] are right: no great fiscal crisis lies in wait for social security... tweaks will be enough to deal with it.... A fiscal crisis is indeed looming over the next few decades – but its cause is Medicare, not social security. For the US, the real fiscal enemy is not the ageing of the population, but the relentless rise in healthcare costs.... [Any exclusive] focus on social security reform [is] both ill-conceived and, no doubt, deliberately misleading...

Indeed, today Ruth Marcus gives a lot of ground, no longer hiding from her readers the fact that:

The [Social Security] shortfall is small, and it's a lot smaller than the Medicare shortfall.... Social Security isn't the biggest budgetary challenge...

Indeed, by my count Social Security needs to take a number and get in line, being only the fifth-most serious budgetary shortfall, behind:

• Medicare hospitalization
• Medicaid
• Medicare drug benefit
• The Bush 2001 and 2003 tax cuts

But ... Ruth Marcus lacks the ovaries to state that Social Security is only fifth in magnitude of our budgetary shortfalls...

Comments

[Bruce Webb]

Well I don't expect Ms. Marcus will have time to get to the rather lengthy response from me that hit her in box just now. re Social Security: Five Myths and a Slur. But it can't hurt to point out that the first four myths aren't myths at all, and while the fifth is mythical mostly used by critics of Social Security, and the slur in the context of the plans actually published not much of a slur at all.

You get very serious people like Obama's advisor Jeffrey Liebman throwing an entirely worker financed 5.2% fix at a problem sized 1.95% LMS: Liebman-MacGuineas-Samwick Non Partisan Social Security Reform Plan and disguising that to some degree by deploying Infinite Future projections (3.5% payroll gap to heat death of the Sun if the future grows at about half the rate of the past), well lets just say it is difficult to conclude these people are acting in good faith in the interests of wage worker retirement.

Ms. Marcus has seemingly ignored the first rule of Discourse: if you find yourself in a hole then quit digging. Although it maybe that she doesn't realize how big a hole she is in. Odd though how much more familiar she was in citing data tables today than yesterday, almost like she had some help. Maybe Deputy SSA Commissioner Andy Biggs (formerly of Cato's SS Privatization team) called over with some story tips.

[anne]

Social Security as such is irrelevant to these bashers and smashers. There are 2 objects, first the need to destroy the sense that Franklin Roosevelt left us with that we are really able to control our economic well-being, second the need to divert attention from how the economy is currently structured.

The attacks on Social Security are always attacks on the New Deal legacy, attacks on the sense that the New Deal began the building of middle class America. Couple that with the insistence that an economy increasingly dominated by military spending is actually dominated by social spending that threatens to cripple American initiative.

There is no cost to military spending and war is actually profitable, but the health of a needy child is beyond affordable when even allowe to be considered.

The bashers and slashers are not fools, they are determined liars with a cause.

[anne]

As we focus repeatedly on a fantasy problem only 30 to 40 years away, we have forgotten that the President has actually cut health care programs for needy disabled children and adults, cut health care insurnace for children, is working to cut food stamp benefits, is working to cut nutrition assistance to pregnant women, infants and children, and is working to cut housing assistance.

[Lee A. Arnold]

Has a very tiny group of policy wonks at the top of the Democratic Party decided to take the nation over a cliff? They are basing this on incomplete reasoning. They are not applying their intellects to the big problem, healthcare. They are afraid the under-30 cohort can't learn economics. And they ARE going to get taken to the cleaners by the Republicans... It's sort of like "David Halberstam's 'The Best and the Brightest' Now Try to Fix Domestic Policy." Once the WGA strike is over, maybe we can sell it to Hollywood and get a sitcom out of it.

[Arne (not anne)]

Does Ruth Marcus understand that the fact that the depletion date is farther away now than it was 10 years ago is proof that the trustees projections are systematically pessimistic?

Does she understand that the flip side of "There is a greater than 99 percent probability that total outlays over 100 years will exceed total revenues," (even with pessimistic projections) is that there is a 1 percent chance that we would never even touch the trust fund, much less the interest? Since that would require a fix in the opposite direction, it would be stupid to make a change until there is more assurance that it is needed.

Drum hits it about right. Let's see where we are 10 years from now.

[bakho]

The "Distrcation" is critical to the magician. They don't want the public to focus on the Bush attempt to end SS as we know it. In 2008 Dems should be beating the GOP over the head with "They tried to kill SS". The SS is broke meme is an attempt to shift the focus from the bad position Bush has placed his party. Don't argue that SS is NOT broke. Argue that the GOP tried to kill it in 2005, but the Dems stopped them.

[ken melvin]

There's an underlying why do the Post's Hiatt, Downie, Marcus, ... so want to abet this addministration?

[Bruce Webb]

Arne there are not particular signs that Marcus has thought this through at all. First she makes two claims that are a little crazy in context.

One she claims there is no fundamental difference between Social Security being 32 years from depletion in 1997 and 34 years out in 2007. This is simply to ignore the demographics. The challenge to Social Security is generally posed as a question of managing Boomer Retirement. Well 1997 plus 32 gives 2029 and Boomers ranging in age from 65 to 83 and almost all drawing benefits. Bad time as a country to run short. But 2007 plus 34 gives 2041 and Boomers ranging in age from 77 to 96. If we use the CBO 2046 number the range is 83 to 101. The mortality tables suggest that any strain from Boomers is almost precisely 50% less in 2046 than in 2029 and will be expected to shrink rapidly over time. It is not the relatively small difference between 32 and 34 years that matter here, it is all about the actual timing.

Second Ruth makes a very odd conceptual leap. Since the cost of a payroll fix is measured over a standard 75 year actuarial period, she somehow manages to conclude that that adds up to some problem in year 76. This is of course nutty, there is no mechanism that would necessarily sunset any payroll tax increase in any given year, if a 14.35% rate fully funds Social Security in 2083, it will continue to fully fund it in 2084. (Within some fairly tight statistical limits).

She is presenting herself as serious and the victim of a slur, when in reality she is revealing herself as deeply unserious. I mean there is a long-standing cottage industry in place attacking Krugman for expressing opinions on areas outside his training (there being a rather bizarre assumption that J-School prepares you to opine on everything under the sun, while having a PhD is somehow disqualifying) but to attack Krugman at his core competency and implying openly that he is intellectually dishonest is reckless at best. Because in the end academic credibility boils down to having people believe that you do believe what you say you do. Academics can survive being wrong, they don't do well after being proven liars. Marcus apparently believes that Paul Krugman is simply willing to trash his economic reputation for political purposes. Well we have seen quite a bit of that from the other side, some big economic names simply rolling over for Bush, but it really helps to have actually done your homework before trying to deliver the fatal shot.

Ruth thinks she has all the answers but in fact shows no signs of being able to show her work. Not the best path if you expect good grades on the final exam.

[calmo]

bakho, always so sobering...not like me facing the mouse in the trap who had the audacity to be only wounded and was prepared to do battle despite its hind quarters being more than "flesh wounds" in the trap.
Twas Ruth, the mouse, people...trust me, I am making progress with the Tibetan Buddhist...and really seeing how things are.
So this bit, you mouse lovers:The "Distrcation" is critical to the magician. is just so distractingly good (You figure I should put out more traps or deploy The Mouse Terminator --the cat from previous household?). The magician needs a platform, lights, sound, and promotion...that entails that we don't get this technical support: the elevation to hear the likes of bakho and hoot these fiesty little mice off the stage. [Ok, it was several glancing blows from the handle end of the kitchen knife on its little beano...not pleasant.]
So you figure if I do the dishes more than once a week, my mouse problem will disappear?

[Not a seriious commentator]

Anyone who presents themselves in the public eye as a serious commentator should expect to have their background examined, right? I would be wary of anything she has to say after April 8, 2004.

Ruth A. Marcus - married to Bush's FTC commissioner who rides both sides of the political isle?

"Bush nominated Leibowitz on April 8, 2004,"

http://sourcewatch.org/index.php?title=Jonathan_D._Leibowitz

"I’m married to a wonderful man named John Leibowitz, who I met covering the Clarence Thomas hearings when he was working for the Senate Judiciary Committee – it might be gues[sed] for a Democrat.

And we didn’t start dating until after the hearings. I want all the ethics folks out there to know. And he is now a commissioner at the Federal Trade Commission. He’s a Democratic appointee to the FTC. "

http://www.q-and-a.org/Transcript/?ProgramID=1082

[Bob]

Lift the cap and you have no problem.

Anne i think what most cons want today is to pretend that any solution that involves taxing the rich will somehow fail.

REgardless of the fact that the greatest middle-class economy in the history of the nation took place from approx the mid 40's to the mid 70's when tax rates onthem were as high as 90%.

HIGH TAXES ON THE RICH ARE GOOD FOR THE ECONOMY.

[James Killus]

HIGH TAXES ON THE RICH ARE GOOD FOR THE ECONOMY.

But not nearly as much fun as compulsory re-education camps.

Joking, really. I'm such a kidder.

[calmo]

Need a supplemental or something 'not a serious commentator'.
Iz your point that she is politically biased in marrying a man with Dem connections (that did not trouble Bush in making this appointment) or that she is unable to draw that distinction between "Democratic appointee" and "Bush appointee of a candidate with affiliations to the Democratic Party"?
The FTC makes an effort to be "bipartisan", I suppose, so his appointment is for that appearance? I agree that the background check is worthwhile and thanks for digging this out, but (don't mind my blindspot(s)), whatizit again?

[Bob]

>> But not nearly as much fun as compulsory re-education camps.

Well that probably would be a serious answer for a lot of the ditto heads out there today.

And thats what i find so objectional about them.

The way they will take a PROVEN mainstream american economic idea and claim that it's far left communist brainwashing foisted on the public by a non-existant liberal media.

[Ken]

Why is it we here more noise from these right wing anti regulation corporatist hacks? Considering that the crisis in commercial paper and the morgage fiasco was a result of poor regualtion and outright greed. It seems to me they concentrated wealth and commerce into a few hands pumped up a huge bubble and collapsed it all on their own. without an help from any regulators preventing them from

AND WITH TAX CUTS paid for by the surplus in social security. OK lets get rid of it and double the cap gains rate, go back to taxing dividends and create a luxury tax to balance the budget. What about the drug benefit that was such a windfall for drug and insurance companies. Im sure ruth would shake her portfolio in anger at the mere mention of a tax hike.

Krugman is right. This is at best a tier 2 issue. We are on the brink of having to directly or indirectly bail out the largest bank in the country for sheer stupidity who by the way is lifting their skirt for anyone with a spare dollar in the middle east terrorist ties or not and we are debating a program that is keeping the federal govt solvent? WHY?

Someone check ruthy's meds. she shopping the same docs as rush!

[anne]

Remember, what is important is to always use malicious sexist metaphors to make a point for sexism is important to show just who we really are.

[Robinia]

Of course, any longterm projection is only as good as the assumptions one uses. Arne points out that it is easy to see the trustees' projections as systematically pessimistic... but, only pessimistic about things like the growth of productivity. Some real pessimismistic assumptions could make SS needs 30 or 40 years from now significantly less than projected-- thus requiring less funds. Like, how about assuming that we WON'T live longer, because increasing obesity, increasing sedentary lifestyles, and poorer healthcare due to bad insurance/no insurance for more people result in the erosion of gains in average lifespan (to go with the recent increases in infant mortality in the US...)? How about assuming that there are fewer retirees 30-40 years out due to increasing hurricane and wildfire activity as a result of global climate change, with more direct loss of life and more serious injuries and diseases thereafter leading to earlier demise? Or, the loss of entire US cities' worth of population, the result of a bumper crop of terrorists being produced by prolonged occupation and mayhem in Iraq and Iran? How about more US deaths among those with compromised immune systems (including many elderly), due to increased food poisoning from the increasing likelihood of food being manufactured in countries with poorer sanitation?

Why just be pessimistic about the productivity variable? With all the real problems we are ignoring, we have plenty else to build pessimistic projections around. Or, we could just optimistically assume that, as a civilized people, we will do what SS needs when and if it needs it, and attend (with vigor!) to the obesity crisis, global climate change, and the military adventurism and arrogance that breeds terrorism.

[Dickeylee]

Wow, Ken, just wow! Sexist comments or not, Citicorp "raising it's skirts" for middle-east(terrorist) money is a priceless comment. I will steal it at first chance! Markets up two days in a row, so a little whoring is good for Citicorp, and must be good for America, right?

[LJM]

Fred Thompson wouldn't give it up during the debate tonight. He kept going on about SS and privatizing. Dick Cheney's daughter works for his campaign. Maybe Ruth Marcus has a direct line to the VP's office the way Novak has with Rove.

[Cyrille]

anne, Political Correctness is also a major disease that plagues most of the US. Please don't help spread it.

[calmo]

From Robinia, the panoramic view:[with rejoinders like this]Why just be pessimistic about the productivity variable? [truly devastating irony here: these stumbling clowns having doubts about productivity]
With all the real problems we [excluding these clowns of course who are unable to distinguish any real problems] are ignoring, we have plenty else to build pessimistic projections around.[another juicy irony]
Or, we could just optimistically assume [sorta like hoping, but less prayful] that, as a civilized people, we will do what SS needs when and if it needs it, [as per recent history with Greenspan...one of their's!] and attend (with vigor!) to the obesity crisis, global climate change, and the military adventurism and arrogance that breeds terrorism.
SSTF taking the stage when true loyalists might draw attention to the Israeli/Palestinian development and see some real hope for w.
Does WaPo build the diplomatic accomplishments of The President (perhaps in another article?) or quietly put that possibility out of mind? (Any GOP candidates clamoring after w's endorsement yet?) It does look like the old guard is reasserting itself and the current President is a lost cause.

[reason]

Kevin Drum is a very good writer. Why isn't he writing for a big mainstream newspaper?

[Bob]

>> anne, Political Correctness is also a major disease that plagues most of the US.

And so is Tennesee Williams style economic denial based on nothing more than highly exaggerated anecdotes (if not outright lies)

[bakho]

Ken- you could replace the comment about 'lifting the skirts' to "taking a 'wide stance' in the money stalls of the Middle East"?

[anne]

Bob,

Please explain the interesting reference to Tennessee Williams "economic denial" based on anecdotes. What do you have in mind?

[anne]

There are all sorts of ways to use language sharply while not resorting to stereotypes or images that have long been hurtful. Not that using a stereotype of women is even meant to portray women negatively, but that such a stereotype does so and for the point at hand covers over the reason for the complaint. The portrayal of women as such is less important than simply a portrayal to a disagreeable traditional group image.

[anne]

Traditional stereotyping does matter....

http://www.nytimes.com/books/00/12/31/specials/williams-protest.html

February 3, 1947

Protest by Tennessee Williams
By NEW YORK TIMES

While the battle against racial discrimination in Washington's National Theatre continues, Tennessee Williams sends word from Key West, Fla., of his displeasure at having his play, "The Glass Menagerie," performed in the nation's capital where it starts an engagement of two weeks tonight.

Asserted the playwright: "I want to state that I have protested bringing 'The Glass Menagerie' into Washington, but have no legal power to prevent it. I can only express my humiliation that a play of mine should be denied to Negroes in the nation's capital. Any future contract I make will contain a clause to keep the show out of Washington while this undemocratic practice continues."

Apprised of Mr. Williams's statement, Louis J. Singer, co-producer of the play with Eddie Dowling, said last night that he regarded the situation as "unfortunate."

"I feel badly about it myself, but the contracts were signed nine months ago and there is nothing one can do now," he declared.

[ken melvin]

For me, give me details on haircuts and a good social security scare anytime. What diff the details of GW's or Giuliani's past.

[Denis Drew]

Today, Social Security retirement costs 4% of GDP. By around 2050 that should grow to 6-7% of GDP and remain there ad infinitum -- at which point average income should have doubled.

IOW, if you make $50,000 a year, your equivalently employed grandchild should make $100,000 in 2050. You now pay 12.6% FICA (divided w/employer); your grandchild may have to pay 20% FICA (w/employer): leaving you with $44,000 to pay for everything else; leaving your grandchild with $80,000 to pay for everything else (adjusted for inflation -- which adjustment wont, for good reasons, even take into account 3DTV for the same $600 price tag). Sound like a monumental crisis?

Today, we use excess FICA inflow to pay for "government owned" bonds that go into a so-called "Trust Fund" which supposedly insures Social Security when today's (arbitrarily frozen-for-all-time?) FICA tax is no longer enough to cover the multiplying baby boomers -- on or around 2017. At which 2017 point we are to gradually raise the income tax -- instead -- to cash the otherwise meaningless Trust Fund bonds. Without such "advance planning" for our retirees futures we would be forced to raise the FICA tax a whole 1/10 of 1% a year -- as average income rises 1 1/2% a year -- an unexplained taboo.

Actually, in the vicinity of 2017, we wont be forced to raise the income tax to cash the bonds, after all -- we could, instead, run up the national debt by selling bonds to cash Trust fund bonds instead (only if politicians are less than responsible): raising the specter of our great-great-great-great grandchildren paying for the retirement benefits of their long-long dead grandparents.

Today we pay for on budget items (army, farm subsidies) through a combination of short falling income tax and excess FICA receipts. By 2047, or whenever the Trust Fund bonds run out, we will no longer pay out Social Security with a combination of excess income tax (or bond sales?) and short falling (25% short) FICA.

At which whenever point we are scheduled to begin paying for Social Security retirement exclusively through FICA (after a big one-jump increase) -- and begin paying for on budget items exclusively through income tax (after a proportionate cut). What a unique in all the world retirement system -- could only have been hacked out by some easily confused politicians.

[bob]

>> Bob,

>> Please explain the interesting reference to Tennessee Williams "economic denial" based on anecdotes. What do you have in mind?

One of Williams main themes was the way people need to block out those portions of reality that they can't handle. A lot of todays cons and fans of business cannot handle the fact that the american version of capitalism is failing.

As for the anecdotes remark that goes back to my posts on the dying first world software industry. I posted some pretty good articles about this syndrome which cyrill followed with "stories" about how his company was hiring one junior programmer a week and would hire more if they only could.

Now if this is true, which i don't believe, it would merely be anecdotal evidence meaning evidence free of information content. It means nothing .

But the real clue as to it's false nature is "they would hire more if they only could".

If you need junior programmers you have no problem getting all you need these days. Just call the job placement office of any college. In spite of the fall off in computer science we still produce way more grads than are needed.

[bob]

Speaking of articles about the dying first world software industry...

The Death Of Software

From the article -

have been in the software development biz since the mid-1980s, and to tell you the truth, I'd have been better off weaving baskets. My little shop has at times done well; at other times it's done rather poorly -- especially during the Bush II recession that seems to never quite go away. The past four years have been ghastly. And not just been ghastly for me and mine; I have seen enough colleagues to populate a midsize city tossed out of their jobs with unseemly haste so some characters from India, China, or some other benighted country can get the work.

From what I have seen since the year 2000, I would tell any youngster who sought my council that he or she would have to be as crazy as a bedbug to get into the software business today.

[...]

So the potential computer science student comes to the only conclusion possible: Software is a dead-end road. It is another industry going the way of textiles, watches, and TVs. Chairman Bill is showing today’s kids that software can be done cheaper elsewhere. Maybe not as good, but cheaper, and that is all that counts.

Young people might think differently about computer science degrees if Gates and the other nabobs had kept faith with their people -- done what they could to keep as many of them working as possible through the Tech Wreck and hired back those who got laid off ASAP. But they didn't. Instead, Gates and company broke their arms and legs exporting American jobs to foreign countries, hollowing out another American industry.

Bottom line: There is simply no worthwhile future in American software. Most kids today know it, and that is why computer science degrees are down by 60 percent. Frankly, I am surprised they are not down by even more.

Tom LaBelle is a software developer who lives and works in Snohomish, Wash.

*************************************************

I can't remember the routine for posting links here so I'll do what i did before. I was told this worked. Paste these 2 link fragments together in your browser address box. There should be no space between ".com/" and "article"

1) http://www.infoworld.com/

2) article/05/09/23/39OPguest-software_1.html

[anne]

http://www.nytimes.com/books/00/12/31/specials/williams-cat.html

March 25, 1955

Tennessee Williams's 'Cat'
By BROOKS ATKINSON

For Tennessee Williams and for the rest of us, the news could hardly be better this morning. For "Cat on a Hot Tin Roof," which opened at the Morosco last evening, is a stunning drama.

Again Mr. Williams is discussing some people of the Mississippi Delta, which he knows well. And again the people are not saints and heroes. But this time, Mr. Williams has broken free from the formula or the suspicion of formula that has hovered around the edges of his plays.

"Cat on a Hot Tin Roof" is the work of a mature observer of men and women and a gifted craftsman. To say that it is the drama of people who refuse to face the truth of life is to suggest a whole school of problem dramatists. But one of the great achievements is the honesty and simplicity of the craftsmanship. It seems not to have been written. It is the quintessence of life. It is the basic truth. Always a seeker after honesty in his writing, Mr. Williams has not only found a solid part of the truth but found the way to say it with complete honesty. It is not only part of the truth of life: it is the absolute truth of the theatre.

In a plantation house, the members of the family are celebrating the sixty-fifth birthday of the Big Daddy, as they sentimentally dub him. The tone is gay. But the mood is somber. For a number of old evils poison the gaiety - sins of the past, greedy hopes for the future, a desperate eagerness not to believe in the truths that surround them. Most of them are living lives as uncomfortable and insecure as the proverbial "cat on a hot tin roof."

Nothing eventful happens in the course of the evening, for Mr. Williams has now left the formulas of the theatre far to the rear. He is interested solely in exploring minds. "Cat on a Hot Tin Roof" is a delicately wrought exercise in human communication. His characters try to escape from the loneliness of their private lives into some form of understanding. The truth invariably terrifies them. That is the one thing they cannot face or speak.

They can find comfort in each other only by falling back on lies - social lies, lies about health, lies about the past, lies about the future. Not vicious lies, for the most part. The central characters want to be kind to each other. But lies are the only refuge they have from the ugly truths that possess their minds....

[Ken]

"Fred Thompson wouldn't give it up during the debate tonight. He kept going on about SS and privatizing. Dick Cheney's daughter works for his campaign. Maybe Ruth Marcus has a direct line to the VP's office the way Novak has with Rove."

What is the problem with actors and why do they become radical rightwing economic hacks? Hey lets pump more money into the bubble and see how big we can get it before it pops. We dont need no stinkin economic fundamentals we need to put more money in the stock market. Yea! thats the ticket.

Regardless of what we do with SS the last thing should be to create individual accounts. I envision masses of flying monkey investment salesmen circling the carcass of SS while thousands of working class people scurry for cover. meanwhile the ponzi scheme in the commercial paper market is bailed out by the Federal Reserve and the investment banks are pimping out Dorothy and Toto. Hell we dont need terrorists to drive planes into the financial markets to destroy us, all we need are these drooling ideologues running for the GOP ticket. a bomb from the inside always destroys more than a bomb on the outside.

Im sorry. pimping is a little strong. maybe escorting or consulting would be better

[calmo]

ken, responding maybe to anne's requests for some civility, tells us he's sorry...but not sorry enough to do some deleting. Have you tried strikingfixing it with a 2nd draft? a preview? [Do you think we are all prudes in need of emancipation?]
I think Fred is impossible to caricature: so old, so late in the game, so desperate for a leading role. There is The Terminator, Arnold (possibly in Fred's mind: Fred) and then there is the terminated, fred...in everyone's mind except Fred.

[bakho]

Al Hubbard and SS

Is there a link between the SS rhetoric and throwing the guy who couldn't get it done off the train?

"Hubbard, a friend of Bush's from their days at Harvard Business School in the 1970s, leaves the job with few major achievements. He helped lead efforts to introduce private Social Security accounts at the beginning of Bush's second term, a proposal that went nowhere on Capitol Hill. He also developed a plan to make changes to how health-insurance plans are taxed that was aimed to make health care more affordable, which also stalled.

"My frustration is that we haven't gotten as many things passed through Congress as I would have hoped," Hubbard said in an interview yesterday. "I know we advanced the ball, and hopefully we've made it easier for the next president to deal with them in a productive way."

Hubbard said he is leaving the White House to spend more time with his family."

Clearly some in the GOP see impending doom in 2008 and their chance at either killing SS or allowing the financial geniuses who brought us the wonders of subprime loans to get their greedy paws on the SSTF. Fortunately for us, the Bush incompetence extended to his ability to kill SS.

[bakho]

Lest we forget the font of misinformation that was Al Hubbard:

By Bill Ruthhart
bill.ruthhart@indystar.com
March 29, 2005
(annotated version)

Indianapolis businessman Al Hubbard, chairman of the National Economic Council and assistant to the president for economic policy, spoke and answered questions before about 200 people at Noblesville High School at a meeting hosted by Rep. Dan Burton, R-Ind.

Hubbard used the 90-minute session to stress the urgency of fixing the Social Security system, which he said is projected to go into the red in 2017. (really??)

"There is nothing small that can be done to fix this problem," Hubbard said. "The longer we wait, the more expensive it's going to be." (???)
Hubbard said the president is confident Congress will approve a solution this year. (He was confident that Iraq would be a cakewalk.)

"The president has made it clear that the personal retirement accounts won't solve the problem -- they are a part of the solution," Hubbard said. "The rest of the solution lies in making other changes."
Hubbard said Bush is willing to work with Congress to determine what those other changes may be. Options, he said, include increasing the retirement age and tying cost-of-living adjustments in benefits to prices, not wages.
Those issues aside, Hubbard said Bush's plan would yield a Social Security nest egg of $250,000 for a worker who invests 4 percent of a $35,000 salary into a personal account over 30 years. (And that translates to how much per month???)
Hubbard also countered what he said were misconceptions created by opponents to Bush's plan. He said the personal retirement accounts would not be required and that the investment options would not be risky. (Maybe they could have invested in subprime mortgages?)

[calmo]

Ah, would this read better?:Fortunately for us, the Bush incompetence extended to his inability to kill SS.
Don't mind me...I reserve the right to override anything that seems inconsistent with previous (damn near immaculate, people) bakho posts.
Looking back at this failure to privatize SS, one (so formal...it B me) might examine the role that the media played in its defeat. Izit possible that the media was not tight enough in controlling the dissent? I'm sure that GOP members may have this attitude and that a few years down the road, the media coverage will be even more "fair and balanced".

[Bruce Webb]

Ken, I don't know of a plan out there that would actually turn day to day control over PRAs (Personal Retirement Accounts) over to the individual taxpayer, the administrative costs would crush the returns on the smaller accounts like a bug hitting a windshield. The actual plans that hit the light of day like Posen and LMS are more like your typical Defined Contribution plan, at best you will get a choice akin to the one federal workers get through the Thrift Savings Plan, giving you the choice to direct more or less to the seven or so funds. That is you can weight your plan towards stocks and accept more risk, or weight it towards Treasuries and take less risk. I don't think anyone realistically envisions the power to pick individual stocks. Moreover there doesn't seem to be much of an Ownership Society component. Under Posen most workers and under LMS all workers are required to annuitize your accounts at retirement, at the end of the day what you end up with is a monthly government check, which may or may not be indexed for inflation, and no inheritance rights at all. Which is to say Social Security with an added layer of risk.
_________________________

And while Denis D is on the right track, statements like this do more harm than good.
Today, Social Security retirement costs 4% of GDP. By around 2050 that should grow to 6-7% of GDP and remain there ad infinitum -- at which point average income should have doubled. Without diving into the deeper details of the grammar of modals we can say that in this context 'should' translates to 'probably will'. The whole comment is shot through with language that leans towards prediction and away from contingency. Will Social Security is fact be 6% of GDP? Well that depends entirely on your projections of GDP. In effect Denis has built Intermediate Cost growth assumptions into the core of his argument, whereas in fact there is substantial doubts about that particular model.

If you assume Real GDP will settle out at a permanent level of 2.0% in 2020 you get one result in 2050, if you assume it settles out at 2.6% you get a much different result. I think we are all aware of the importance of compounding when it comes to savings, or for that matter credit card balances. But it is equally true in relation to Social Security.

Some people like to brush this away by 'explaining' that because benefits at retirement increase with real wages that this all is a wash. Well this ignores two factors. First there is no guarantee that real wages will in fact capture a proportionate share of future GDP, we only have a bazillion threads on 'Increasing Income Inequality' to demonstrate that, the economy can and in recent years has expanded at a rate that exceeds wage growth. And while the net effect of that ultimately works against the interest of current workers and future retirees, it does have the effect of lowering Social Security expenditures going forward as a percentage of GDP.

Second this formulation ignores the lag between work and retirement. At any given time the Cost of Social Security is fixed by the demographics combined with inflation. Suppose we have three cohorts, one nearing retirement (57 to 67), one a ways out (47 to 57) and a third quite a ways out (37 to 47). Now in each case the current population number is fixed, God not making more 37 year olds from scratch. What happens if you have a ten year period of 3.4% Real GDP growth with a CPI of 1.8% as compared to a ten year period at 2.6% with a CPI of 2.8%? Well in the former case the overall size of the economy grows relatively faster than the rate of increase in benefits (which adjust for CPI), in the latter case the total economy grows slower while the benefits owed relatively increase. For your 37 to 47 cohort that period of higher growth means funding the 57 to 67's retirement is that much cheaper. Sure it is at the same time increasing the benefit for the 47 to 57 folk and ultimately your own, still on balance an increase in growth coupled with a lower level of CPI is a win/win.

Now I suspect there is a lose/lose scenario out there for the 37 to 47 folk. If you combine ten years of high growth and high CPI you get a period of ever increasing current benefits as the 57 to 67 people retire plus a future increase in benefits for the 47 to 57 people as they start retiring at the end of that ten year period. Which is why we should not be reducing this debate to simplistic dualisms. When I say that 2.8% Real GDP saves the day I mean 'combined with a subset of associated demographic and economic assumptions' and so am guilt of the crime of Simplification. When Marcus asserts that growth is simply offset by increased cost she is guilt of the crime of Innumeracy. While I may not be the sharpest marble in the box, at least I know how to add and multiply, other things being equal more economic growth makes financing Social Security easier.

The current year ratio always remains percentage of current payroll vs current benefits. Looking 10, 20, 40 years down the road is important but far more important from a policy perspective is what happens in the next 3 to 15 months. If GDP comes in ahead of projections then the effects of compounding will give you a much different picture of GDP share of Social Security in 2050. Yet this element of contingency is rarely if ever addressed in current discussion, everything is set out in terms of 'will' and 'shall' and not in terms of 'may' and 'might'. Somewhere the English Professor who taught me the grammar of modals is shaking his head (hopefully here, since Prof. B would be getting a little old by now).

[Cyrille]

Bob, if you knew me at all, you would know that my story was true. Of course, we won't hire ANY programer just because he is a programer. We want someone who knows which end of a job interview to handle. Because when we will need him to convince a customer that they should have him for their 6 months mission, he'd better be good. Still, we would like to hire a lot more than we do (OK, we're a growing company).

But then, if you knew me at all (or if you had read my immediately following post), you would know that this is in France. So if USA create lots of programers, well, it won't help us all that much.

Maybe we are not first world. But that's how it is here (and, admittedly, we are not talking about a median starting salary of 60k$ - no training will get you that over here).

[Bruce Webb]

Bob, while Microsoft may be guilty of manipulating the H1-B visa system to import foreign workers cheap it simply is not true that everything is going overseas. They are in the process of opening a large campus in Seattle, and have committed to leasing two 40 story towers now going up in Bellevue opening in 2009 (immediately across Lake Washington) as well as rapidly expanding their Redmond main campus and are in a hot and furious struggle with Google for engineers. I don't know how the tech corridor around Boston is doing or what conditions are like in the Research Triangle in NC, and I do know what the general situation is in Silicon Valley (not so good), software engineering like real estate is largely a matter of location. The culture of youth endemic to the software industry may work against current engineers but there is no reason to tell younger students that the future is not there for them.

Does this mean that someone my age (50) should be jumping to take courses at a Tech Institute? Hell no, they are not hiring fogies. But if you are still young and have talent there are still opportunities out there, or at least here in NW Washington State. (Which doesn't mean just showing up, send your resume ahead. This place is beautiful but it is not cheap.)

[bob]

>> Because when we will need him to convince a customer that they should have him for their 6 months mission, he'd better be good.

Cyrille - Your a head hunter. Or at least it sounds an awful lot like your a headhunter.

I've had lots of experience with headhunters. Most technical have.

Do you know what their reputation is.

[Cyrille]

I'm not.
I am a consultant.

Still, I'm not too sure why, if I had been a "headhunter", that would have justified such insinuations. No, I don't know of their reputation. And even if I knew, well reputations don't make a fact, so I guess I'd just assume that I am what I am rather than what the reputation of a job I don't even hold happens to be.

[Denis Drew]

Bruce ("Chicken Little") Webb, (just kidding)

We are not targeting missiles here, we are figuring out whether we can afford Social Security. Being off by 50% in CPE (circular probable error) is fatal. Even if all my estimates are off 50%, compounded we will still have more money to spend on everything else after paying Social Security tax (or taxes, depending on which income/payroll hybrid we are on at any moment) than we do now -- assuming that average income continues to grow four (4!) times as fast as population.

Assuming:
barring a mini-ice age, small nuclear war (followed by a mini-ice age), multiple plagues or economic depressions.

Also barring something we have been suffering since the early 70s: the RACE TO THE BOTTOM. You may be right, after all! :-) Save Social Security; help get American labor organized, now!

[bob]

>> The culture of youth endemic to the software industry may work against current engineers but there is no reason to tell younger students that the future is not there for them.

I wonder how much time you've spent looking for a programming job. I spent a lot. I know a lot of people that have spent a lot of time looking (I'm near NYC).

If your trying to say that the market for software labor is not terrible your wrong. I posted the articles with the stats (real information) that back up my assertion and my anecdotal evidence. I'm not posting anecdotal evidence that contradicts the stats.

[bob]

>> No, I don't know of their reputation.

Something don't smell right. You talk EXACTLY like a head hunter. Any programmer would back me up on that.

Then you say your a consultant but you don't know anything about the reputation of headhunters.

In america almost every programmer knows what the reputation of headhunters is.

[pgl]

Once again greg Mankiw links to some batshit rightwing nonsense without a word. Does he think her stuff is worth reading? Seriously!

[bakho]

Even IF there were a pending SS problem, collecting even more extra payroll taxes today would not help. SS payments in 2050 have to come from the Federal Government in 2050. If money were needed to transfer from the general fund directly to SS recipients or IF general fund were transferred to SSTF and the bills paid from the SSTF, the total budget in 2050 would not change.

[Patricia Shannon]

I hate to continue off topic, but this is an issue I am personally concerned with.

Even if it were true that young people with a new Computer Science degree could easily get a job, why should they invest years of study, and take on a lot of debt, for a job which becomes unstable when they reach middle age? What is happening to middle-aged CS people now is very relevent to whether a young person should choose CS as a career. After all, they won't be young forever.

[Sonia]

Snide remarks regarding gender or sexual orientation make me wonder if the author has anything new to say or is simply piling on.

[Ken]

Bruce,

I am familiar with that proposal. From my understanding of it taxpayers would have a choise of group plans with a reduced management fee. It is also my understanding that lobbies destroyed the idea once the management fees were out of the picture.

Its a nice concept. empower the working class through capital formation of SS. That in turn would make corporate america more labor friendly to attract capital.

There still has to be a foundation for the influx of investment. What about transition? The liability to capitalize. Right now that is relatively inexpensive but not for very long considering the current atrocities. Going to the government debt markets is going to push the bottom up on the commercial market.

Before we can have a discussion on group or individual accounts we have to address other priorities. That wont be fixed overnight. Its going to take alot more then Fed Repos to fix that mess. That means a more permament move in the secondary debt markets

[DILBERT DOGBERT]

Patricia,
I think your comments are spot on but can be generalized to any occupation requiring years of study and hard work to master. There has been a lot of study and comment on just this subject of the loss of secure employment. It is gone and will not return.

[Cyrille]

Well, I think these ad hominem insinuations should end.

I am not the lying kind, not about what is happening to my company, not about my job, not about anything. That may not smell right in your world but that's how it is. Thank you very much for directly, immediately assuming that I am lying. Why would I?
Now, I am amazed by your suggestion that in a few lines (one of which is saying that I do NOT hold that job), you could recognise my job just by the style of writing. Anyone confirming that? Apparently, "ANY programmer would".

"Then you say your a consultant but you don't know anything about the reputation of headhunters."

Your point being? That anyone not interested in or unaware of unfair generalisations about a job must hold that job?

"In america almost every programmer knows what the reputation of headhunters is.

Ah, that's very nice for them. Now, since I already made clear that I am not a programmer and that I am a Frenchman working in France, I am not sure how this is all that relevant.

Besides, even if it were, it would still be an uncalled for ad hominem.

[bob]

>> Ah, that's very nice for them. Now, since I already made clear that I am not a programmer

No you didn't make it clear.

As a matter of fact some of the stuff you wrote had a strong implicit message that you were a programmer.

Excuse me for not being a mind reader.

You have written some very suspect posts here.

Maybe your being 100% truthful but to say that what you've written should be accepted without question is foolish.

We're debating on a medium thats very well set up for lying.

[Cyrille]

Well, I did say I was a consultant didn't I?

What exactly was suspect in what I said?

I am open to questioning, but you immediately stated I was lying and I take issue with that. My impression is that the suspect behaviour is rather in that immediate assumption.
And again, what was suspect and how would you know? Are you so well aware of everything happening 4000 miles away from you? If someone told me that his company in Houston was giving basic health insurance and I immediately stated he was a liar because it is not common practice in Paris, would he really be the suspect poster? Would you call me a suspect poster and a liar if I wrote that we pay 8$ for a gallon of gasoline?

There is a world outside USA, you know. It IS tough to hire IT graduates in France at the moment (I have a friend whom we are trying to recruit. She is not back from Australia where she was finishing her studies yet, but 12 companies have already stated a strong interest in her). Maybe you should consider applying for an EU work visa...

[Peter Schaeffer]

All,

I have read the Ruth Marcus article and I don't get the intensity of the hostile reaction to it. She is using the same numbers I see posted here with some frequency (typically from the SSTR). She has followed Keynes dictum "you are entitled to your own opinions but not your own facts”. She recognizes that the problems are years out (33-34) and appears to advocate gradual, modest steps to address them.

She may or may not right in her suggestions. However, her ideas are anything but extreme. Why the ferocious attacks?

[Denis Drew]

Schaeffer,
(Why doesn't everybody catch on to the concept of economic growth?)

The "problem" could be covered by a 1/10 of 1% increase in FICA (if we were not programmed to cash Trust Fund bonds with income tax -- or selling bonds -- instead) all the while average income should grow at least 1 1/2% a year.

Economic output -- per person -- grows 4 times as fast as the population.
**************
For perspective, lets consider health costs which grow 5 times as fast as our ability to pay for it (i.e., 5 times as fast as -- per person -- economic output). That means by 2087, when -- per person -- output has grown 4 times, medical cost look to grow 20 times!

20 X 15% (the proportion of today's GDP devoted to medical costs) = 300%. But of course we hope to have 400% of today's GDP -- per person -- to pay for it with by then. Big move here could be Medicare for everyone to get that down to 200%. :-)

We -- er, our descendants -- should enjoy magical medical care (old people sprouting propellers? -- I expect to have sprouted wings by then; just not on this orb) with still twice the money left over to spend on everything else (not even counting surround-3DTV with "Smellivision*" (*trademark) for the same $600.