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Only Try To See The Truth:
There is no crisis. This is an image you'll see joining the sidebar near my collection of Social Security resources. I think a lot of people have been known to over-hype the potential significance of blogs, but this is an issue where there's a potential to make a real difference. For one thing, the interlinked nature of blogs has already caused a great deal of new information to come to various people's attention (including my own) and, I think, enhanced everyone's understanding of the issue. For another thing, bad as much of the press coverage of this issue continues to be, if you compare it to the press' handling, say, 18 months ago we're seeing lightyear's worth of improvement. I've got to believe that the internet-based heckling campaign has played a role there. Perhaps most importantly, this is an excellent way to communicate with younger voters, who are really the ones who need to hear the "no crisis" message. Demagogic complaints about benefit cuts are all well and good, but when it comes to younger people they first need to be convinced that the system will still be fine when they (or should I say "we") retire as long as George W. Bush doesn't mess it up.
January 19, 2005 | Permalink
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» "There Is No Crisis" ... So What from Chicago Report
"There is no crisis" ... so what. Matt Yglesias is the latest member of a group of bloggers dedicated to stopping social security reform. The mantra is "THERE IS NO CRISIS". Regardless of whether this is true or not ...... [Read More]
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» There is No Crisis from different strings
Social Security: There Is No Crisis - FOR IMMEDIATE RELEASE Submitted by Bob Brigham on Wed, 2005-01-19 07:34. The Blog Political Action Committee has launched a major online offensive exposing the manufactured Social Security "crisis". BlogPAC, a coll... [Read More]
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Comments
Fuck yeah.
Posted by: Brad Plumer | Jan 19, 2005 1:18:07 AM
I think the "there is no crisis" mantra is all well and good, but for those people who are not performing research on social security I believe historical examples from other countries, most significantly Chile and Britain, are much more useful in getting the message across. Even if the "there is no crisis" idea catches on, the question "Well, what if there really is one" will linger on in many people's minds. Look at some academic research on Chile, dive past the surface and you'll get some good stuff. Particularly relevant is how the Chilean government used the private accounts to railroad money to special corporate interests. Even more important is how much the size of the government needed to increase to accomodate the changes. Delve deeper, and pound harder.
Good work.
Posted by: B.F. Jackson | Jan 19, 2005 1:28:39 AM
I think it is also important to educate young people on just how important SS is to them. For many, many (most?) Americans, SS is the cornerstone of their nest egg in the twilight years. Without it, the picture begins to get really grim for a significant portion of the population, and unpleasant for many of the rest.
Without SS, when it comes time for you to be of retirement age, you WILL know people eating cat food and forgoing medication because they are too old to find work and have no income.
It might be you. People, especially young people, love to believe in their own invincibility. Which is why private accounts seem so attractive to so many people -- they only hear the positive. "Of course, for *me* it will all be roses. It will be some other schmuck that ends up destitute," the thinking seems to go.
Don't count on it. I worked at a company during the dot-com crash where huge portions of the workforce were readying their exit from the company after 20-30 years of service. I watched their lifelong retirement plans evaporate over the course of a year or so. It can and will happen again. If Bush gets his way, it just might happen to you.
Posted by: Timothy Klein | Jan 19, 2005 1:44:47 AM
The old fuddy duddies seem to think this is a losing strategy because the Reps are trying to paint the battle as the New, Dynamic Ownership Society as Relief from Fear vs. the Same Old Boring Crap That Takes Forever and a Day to Explain. What say you?
Posted by: Sven | Jan 19, 2005 2:37:10 AM
"What say you?"
What Plumer said.
Posted by: bob mcmanus | Jan 19, 2005 4:34:13 AM
I've been getting some traction with young folk pointing out that a "pay as you go" system can't actually go bankrupt (though the people I'm talking to generally understand already that the president is more likely than not to be lying).
Posted by: bad Jim | Jan 19, 2005 4:52:42 AM
There is a crisis; perception of crisis is a crisis, self-fulfilling prophesy.
The American people will get what they deserve and that's fair.
Posted by: abb1 | Jan 19, 2005 5:17:30 AM
MY - comments on the picture.
1) It is disturbingly like a Big Brother/They Live brainwashing sign. "This is your God." "Stay Asleep" "There is No Crisis"
2) Combine that with the fact that the baby looks like its about to be drowned, and
3) The old lady looks like she wants to drown the baby
And I'd say that the interpretation from anyone who is scared/disturbed/worried by the SS mess won't find it reassuring at all.
Posted by: john brothers | Jan 19, 2005 8:35:34 AM
I'm going to put it to you bluntly. We (my partner and I) don't have any kids, and won't have any. Our only interest in educating the next and subsequent generations is in the expectation that they will help finance our retirement through SS. If they don't want to do that, I'll be damned if I'm going to pay to help finance their education.
BTW, that includes "financing" by way of tax breaks that have been given to private institutions like Harvard, MIT, Wellesley College and Babson (both are in the town in which we reside), and the myriad of other "educational" institutions that have popped up.
And, yes, I include the "churches" in that.
Posted by: raj | Jan 19, 2005 9:17:32 AM
I see, Raj, so you are perfectly happy to step over old people begging in the streets as long as your own retirement is provided for?
How noble of you.
Posted by: Hektor Bim | Jan 19, 2005 9:38:35 AM
I'm not endorsing the sentiment - when someone proposes chopping your perfectly healthy sacred cow into 300 million cowlets to "save it" the natural thing to do is scream bloody murder.
But I agree with Mark Schmitt's analysis that it's behind a lot of the congressional Dems' hesitation. They think the Reps aren't interested in changing SS as much as in using it to permanently brand the Dems as reactionary cow huggers.
Posted by: Sven | Jan 19, 2005 9:42:48 AM
Hektor Bim | January 19, 2005 09:38 AM
You must really be dumb if you got that out of what I posted.
Which private school did you go to?
Posted by: raj | Jan 19, 2005 10:10:18 AM
The main reason we need to be sure Congress keeps their hands off Social Security is the fact that once any Social Security legislation is passed, if it is passed in any form in both houses, a conference committee then gets to gut the legislation and insert Bush's "Kill Social Security Act" in its place, giving Congress only a day or two to read it and pass it. This administration is unethical enough to do this, and do it over and over again on any issue that attracts their attention.
Posted by: Vaughn Hopkins | Jan 19, 2005 10:24:39 AM
Oh, this is one of the days when I wish I was more savvy that a simple commenter, so that I could start a website entitled: "Clinton Said There Was A 'Looming Fiscal Crisis in Social Security'". Then I'd buy a blogad an put it on Matthew site right above his new proposal.
Unfortunately, since the extent of my know-how is to comment, I'll have to satisfy myself by commenting as follows:
Clinton Said There Was A 'Looming Fiscal Crisis in Social Security'!
Posted by: Al | Jan 19, 2005 10:37:57 AM
And Clinton isn't president in 2005! And Al still doesn't understand!
Posted by: Rob | Jan 19, 2005 10:47:13 AM
Hi -
Take a look at the state of the German social security system to see the future for the pay-as-you-go system.
Sure, there's no crisis NOW. But the transition from a income transfer system that is, in the long term, unsustainable - I don't think anyone is denying that! - to a capital-based system takes time.
Willfully saying "there is no crisis" reminds me of Norbert Blum, the employment and social services minister in Germany in the 1980s, who said "social security is fundamentally sound". Right now, as we speak, the German social security system is bankrupt and is only being kept from catastrophic failure by the use of gasoline taxes that are actually earmarked for road work. This was obvious back then, it was obvious ten years ago, it was obvious last year, but in Germany this is a sacred cow that can't be dealt with, even though the cow is dead and stinking up the commons.
Wishing it wasn't so won't change the fundamentals of the system: any system that purports a generational contract without ensuring that a) the contractees understand what the deal is and b) the system shows long-term (and long-term here means two generations) financial health.
Social security, as it is currently formulated, is a Ponzi scheme where people now paying into the system do not finance their own retirement (as many believe), but rather finance their parents' retirement. Fundamentally a bad idea, but one that is easy to implement.
John
Posted by: John F. Opie | Jan 19, 2005 10:51:30 AM
Al | January 19, 2005 10:37 AM
>Clinton Said There Was A 'Looming Fiscal Crisis in Social Security'!
Snort. I know that you're a troll, but this can't go without comment. The current SS regime--with the "trust fund"--was the result of a suggestion from the Greenspan Commission early in the Reagan administration, which bloviated that their suggestion would shore up SS ad infinitum. Greenspan apparently lied. Reagan lied. The Republicans lied. If you want to believe Greenspan, Reagan and the Republicans then.
Beware of Republicans. They lie. Either they lied then, or they're lying now.
Posted by: raj | Jan 19, 2005 11:07:28 AM
John F. Opie:
Social security, as it is currently formulated, is a Ponzi scheme.
Of all the right wing silliness on earth, this is one of my favorite examples.
"Social Security is a Ponzi scheme! It can only pay benefits as long as it brings in new suckers!"
They never seem to understand what they're actually saying, which is: "Social Security can only continue to pay benefits as long as humans continue to have children!"
Of course, this is true. But it's also true that if humanity stopped reproducing in 2005, your 401(k) similarly won't be doing that great in 2050.
Posted by: A Tiny | Jan 19, 2005 11:54:15 AM
Someday i'll dig up the actual Clinton quote that Al and his fellow travellers seem to put so much stock in (amazing, isn't it? the right wing suddenly loves Clinton: Clinton said Iraq was a problem; Clinton said there was a "looming crisis;" ergo, these must be permanently true statements because Bill Clinton said so), but it would improve our opinion of Al if he demonstrated any awareness that improved productivity has made a big change in social security projections.
Is that too hard a concept to grasp, Al?
If Al bothered to read the Lowenstein piece in the Sunday NY Times mag, he'll discover something else important: that historically, the most accurate Social Security trustee projections are the ones labelled "optimistic." If "optimistic" continues to be the most accurate projection, then there will never be a social security crisis of any sort.
Never - out to infinity.
The fiscal crisis is the general fund imbalance, a complete creation of bush, delay, and their fellow travellers and enablers (like Al).
The next most important fiscal crisis is medicare, which bush, delay, and their fellow travellers and enablers (like al) made considerably worse with the awful prescription drug benefit, a trifecta of good judgement: it's unaffordable; it's poorly designed; and it's not liked by its target audience.
To borrow an analogy from prof delong, the engine is blowing because there's no oil; the tie rods just broke and we're heading off the road; and the problem to george bush and al and all of their fellow travellers is that the air pressure might be a little low in the tires.
Posted by: howard | Jan 19, 2005 11:59:39 AM
improved productivity has made a big change in social security projections
Yeah. When Clinton said there was a "looming fiscal crisis in Social Security," the bankruptcy of SS was 34 years away. Now, the bankrputcy of SS is 38 years away. My, what a big change! *snicker*
Posted by: Al | Jan 19, 2005 12:02:45 PM
Hope no one is bothered too much by an overlong comment...
One of the mantras of the social security crisis promoters is that there is something fundamentally unsound about a pay-as-you-go social security system. Witness John Opie above, who says that an "income transfer system is ... in the long term, unsustainable" and that Social Security is "a Ponzi scheme where people now paying into the system ... finance their parents' retirement."
Social Security is not, of course, a Ponzi Scheme. A Ponzi Scheme is an investment fraud which relies on a rapidly growing number of new investors to pay bogus, outrageously large gains to existing investors. Social Security is different: it does *not* pay outrageous gains, and it does *not* rely on a rapidly growing (and therefore time-limited) investment pool.
Instead, Social Security relies on a relatively stable or slowly growing number of workers to pay benefits which are in line with wages at the current time. There will, of course, be "short term" (30 year) fluctations in the worker-to-retiree ratio -- that is why *some* fraction of revenues in periods where that worker-to-retiree ratio is high should be invested in a trust fund that can be drawn down during the period when the worker-to-retiree ratio is low. (But there's no reason that putting the trust fund in US Gov't bonds is particularly bad. Social Security is insurance, after all.)
There may also be long-term trends in worker-to-retiree ratio that reduce the number of workers around to support each retiree. But if we ignore the whole concept of "money" for a moment and just think about what a reduction in workers-per-retiree means, it's clear that this is just as much a problem for a "savings" system as it is for a pay-as-you-go system: a given number of workers with a given productivity only produce so many goods and services, and those goods and services must support everybody. In the pay-as-you-go system, this will be solved by adjusting the payments up and/or the benefits down until there is a match. It becomes a public policy choice: how well do we wish to support our retirees in the changing world. In a savings-based system, there is no choice: inflation will erode the values of wages and savings accounts so that the amount of goods and services produced match the amount of goods and services consumed. If the workers of tomorrow manage to keep their wages up, the retirees will take the hit, while if the savings accounts do better at keeping up with inflation than wages do, the workers will take the hit. But there is no magic gain that comes from switching to a savings-based system.(*)
The ideological question is simple: do we accept the magic of the marketplace to decide how well we support our retirees, or do we allow the people to decide via the political system? I'm pretty happy with letting the market decide how much of our resources we devote to manufacturing cars as compared to making video games, but I just don't see how the market can possibly decide how much of our resources we devote to supporting our non-working senior citizens. (I'm also getting less and less confident in the ability of politics to make moral decisions of this kind, but it's still got to be better than the market...)
(*) Footnote: Social Security privatization/phase-out advocates will often contest this point, saying that there *is* a free lunch, because switching to private accounts will increase invested capital, which leads to increased productivity as compared to the pay-as-you-go system. But this ignores the transition costs: if invested capital is to increase, somebody is going to have to make do with less today -- either the retirees, or the existing workers. If the Government borrows additional money from the capital markets to fund the transition costs, then to the extent that that money would have been invested elsewhere, there is no increase in capital at all...
Posted by: Alex R | Jan 19, 2005 12:10:31 PM
John - Who says the system is unsustainable? My sources might be claimed as biased, but it seems that a small revenue increase would solidify SS through the 75 year window.
People trying to destroy SS always like to say that current benefits are paid by current workers. This is true. They are trying to imply that it is an unfair "Ponzi" scheme. It doesn't seem unfair to me if I get paid benefits when I retire. SS payments aren't income transfers, they are investments in the fiscal/social health of the nation.
Private investments increase risk for individuals by forcing individuals into important decisions that require a lot of informtation the people probably won't have. With SS your 'investment' is the US economy as a whole. Why doesn't Bush believe in the US economy? Why does Bush hate America?
Posted by: Rambuncle | Jan 19, 2005 12:16:28 PM
"I've been getting some traction with young folk pointing out that a "pay as you go" system can't actually go bankrupt (though the people I'm talking to generally understand already that the president is more likely than not to be lying)."
I think you don't understand the concept of 'bankrupt'. In a corporation, bankruptcy occurs when income or other funds coming in is regularly exceeded by contracted or other mandatory outgoing funds. Bankruptcy does not occur because there are no funds available, bankruptcy occurs because the available funds cannot regularly cover the outlays. For the short term this is typically (in corporations and governments) covered by debt. But if you design a system with outlays which always exceed income, debt can't cover it forever.
Posted by: Sebastian Holsclaw | Jan 19, 2005 12:25:17 PM
The old fuddy duddies seem to think this is a losing strategy because the Reps are trying to paint the battle as the New, Dynamic Ownership Society as Relief from Fear vs. the Same Old Boring Crap That Takes Forever and a Day to Explain. What say you?
It doesn't take a day to say "Bush is crying wolf, just like he always does." This is a simple message. Saying it loud and often will keep Bush on the defensive, making it difficult to yammer on about the "ownership society" (which is going be the foreclosure society when the bills come in) or to railroad another radical policy shift through congress.
But more importantly, it provides an opportunity to paint Bush as the president who routinely manufactures crises. There is already a sizeable minority that views Bush this way--because it's true, and they've been paying attention. With a little cultivation, this will be the message that sticks with the majority. The core group of Americans who share the ideological vision of a Norquist-style "utopia" of minimal tax and minimal service is large but not a majority. Maybe 35% think this way, and the ones who aren't rich only have that luxury because they take what's left of the safety net for granted. Most Americans are more pragmatic and have no problem with government programs that appear to be working in their favor.
People will of course trot out the criticism that Democrats are just naysaying instead of proposing solutions. Usually I would agree, but in this particular case, there is no major problem to be solved, and there is no hope of performing minor repairs when Bush is the one framing the problem. The main crisis is Bush's "If it ain't broke, break it." approach to everything he touches. Let's address that before we look at anything else.
I'm not convinced this approach will work. But I am convinced that any approach involving "bipartisan cooperation" is going to fail to protect Social Security as envisioned in the New Deal. Republicans view any compromise as capitulation. It's as if Democrats have been playing "Prisoner's Dilemma" against a player who always defects and we're just hoping he'll be nice next time. He won't be, so let's break the cycle. Undermining the Bush presidency is probably not sufficient to restore Democrats to power, but it's clearly a necessary first step. And Republicans have pretty much bet everything on Bush's power, so this leaves them vulnerable.
At this point, it may be too late to correct past mistakes. The Bush phenomenon is like a cancer that might have been excised easily back when a Democratic near-majority when along with tax cuts, and then might have been treated with radical surgery back when Democrats bought into Bush's phony war intelligence. In November 2004, it metastasized. The only options left are going to cause a lot of harm before we can see any good come out of them--and they might not work at all.
Posted by: Paul Callahan | Jan 19, 2005 12:30:13 PM
very poor response in every respect, Al.
First, my recollection is that the "crisis point" (more on terminology in a moment) was 29 years away, based either on the pessimistic or middle of the road projection (can't recall, and as usual, Al, we'd be more impressed if you would provide some actual cites)), but even if it's 34 years, this means that thanks to a very few years of productivity improvements, we've had a 10% improvement in social security prospects, so "snicker you."
Second of all, every year of improved productivity pays off further down the road, which is why it's such a significant factor in thinking about social security.
And most important, "bankruptcy" is a meaningless term in this context, although typical of the quality of your argument. The correct terminology would be "the ability to pay for benefits at currently projected levels." That is to say, as long as there is a payroll tax, there is an ability to pay out social security. Using a term like "bankruptcy" demonstrates insufficient knowledge of the social security system to participate in any discussion of changing it, although that won't stop Al.
And since it won't, let's try again, Al: the car's engine is melting down (general fund crisis); the tie rods just went (medicare funding crisis); and you're worrying about the air pressure in the tires. Why is that? Because that's the official orders to the propaganda robots, and you'd hate to refuse an order from Propaganda Central?
Posted by: howard | Jan 19, 2005 12:39:30 PM
