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The Gospel According to Matthew

The Social Security fight is, so far, going well for the good guys. Nevertheless, some good guys seem determined to snatch defeat from the jaws of victory. Today, on several separate occassions, several smart people who I respect seemed to be edging toward the "Democrats need an alternative plan" kool-aid. It is vital that people refrain from drinking said beverage and instead taste the sweet, sweet dogma that I will lay out herein.

Consider the following possible alternatives:

  • Solvency Through Pre-Funding: This generates a replay of the 1983 Greenspan bait-and-switch.
  • Add-on Accounts: "Everyone's for private accounts, but Democrats also want to raise taxes."
  • An Decent Compromise that Can Pass The Senate: All worthy elements junked in conference, moderate Republicans vote for the conference report.
  • A Good Bill With Poison Pill So Senate Republicans Won't Pass It: Replay of Homeland Security, GOP counters with similar proposal containing an anti-Democrat poison pill.
No good choices. The only alternative: No alternative. Keep in mind that Bush has not put forward a plan, Democrats are under no obligation to put forward an alternative to nothing. What's more, the Republicans do not -- and will not, provided the Democrats stay united -- have the votes to pass anything. The math of privatization requires some combination of higher taxes (à la Lindsay Graham), massive debt (à la Paul Ryan), or miserly accounts (à la White House background briefing). Any of these options will alienate some Republican legislators. You can try to find a balance between the various factors, but the GOP majorities simply aren't large enough to finesse this dilemma. With Democratic cover -- and the knowledge that with Democratic collaboration a bill will pass -- you can put together enough Republican votes to pass something. Without cover, nothing will pass. Importantly, Democratic opposition need not be the key story here. The GOP has a majority -- united they can pass what they want. If privatization fails, it will fail because of disagreements inside the Republican caucus.

The Bushian plan (and the Fainthearted Fear) at the moment is to convince a large majority of people that there is, if not a crisis, then at least a large problem. This, then, is supposed to frighten Representatives and Senators into voting for something. This is a plan that will (provided the Democrats stay united) backfire on the GOP. The people will be convinced that this is the most important issue and that "something" must be done, but the Republicans won't have the votes to do anything. The Democrats are in the minority. They have no power. They have no obligation to solve the nation's problems, simply because they have no ability to solve problems. If large problems go unsolved, that's the fault of the people -- i.e., Republicans -- governing the country. Democratic leaders must look themselves in the mirror every morning and say to themselves, "I have no power."

But mustn't Democrats stand for something other than "just say no?" Yes. Democrats must have a positive agenda for the country. But they must think about this straight. Suppose we had President Kerry, Speaker Pelosi, and Majority Leader Reid and were, therefore, in a position to implement a positive agenda for the country. Would this agenda involve resolving hypothetical financial problems with the single most secure element of the federal budget? Clearly, no. The Democratic agenda should be the Democratic agenda, not some ghostly mirror of the GOP agenda. The Social Security debate involves two kinds of issues -- fiscal issues, and retirement security issues. As long as Bush is talking Social Security, it's natural for Democrats to lay out those portions of their agenda that relate to these topics, rather than the portions of the agenda that relate to, say, education or crime control or environmental regulations. Some topics Democrats could outline a positive vision on:

  • Bringing the general fund budget into balance.
  • Reducing Medicare expenditures by eliminating some of the pointless corporate subsidies in the 2003 Medicare Reform Act.
  • Replacing tax deductions for saving with tax credits for saving to broaden access to existing private account-esque devices like IRAs and 401 (k) plans.
  • Reform of the private pension system.
  • Spitzer-esque Wall Street and corporate governance proposals.
  • Making the point that current fiscal policy implies an interest rate hike that will wipe out large portions of most families savings by depressing home sale values.
Smart people who can gin up alternative Social Security plans could probably think of more things along these lines and would be well-advised to do so. It isn't that hard. The bullet points above should be wrapped in some kind of language about the information economy, responding to the challenges of the 21st century, the changing structure of the workforce, and perhaps some slogan about "every man a capitalist" or something that sounds better but means something similar.

The truth will set you free: There is no crisis, and the President has no plan.

March 23, 2005 | Permalink

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» Social Security Linguistics from Political Animal
SOCIAL SECURITY LINGUISTICS....This is sort of fascinating. Earlier today, after the 2005 Social Security report was released, the LA Times headline was (approximately) "Social Security Broke by 2041." The Washington Post headline was (again approximat... [Read More]

Tracked on Mar 24, 2005 12:41:10 AM

» Social Security Linguistics from Political Animal
SOCIAL SECURITY LINGUISTICS....This is sort of fascinating. Earlier today, after the 2005 Social Security report was released, the LA Times headline was (approximately) "Social Security Broke by 2041." The Washington Post headline was (again approximat... [Read More]

Tracked on Mar 24, 2005 11:33:05 AM

» Social Security Trustees Report from Deinonychus antirrhopus
Basically I'm with Victor on this one. There just isn't much new here. The basic conclusion is pretty much the same (a one year shift in either direction is not a big deal despite what either the Republicans or Democrats say). Victor notes that the ult... [Read More]

Tracked on Mar 24, 2005 12:06:24 PM

» Matthew Yglesias's Positive Vision Thingy from Deinonychus antirrhopus
In his post on how there is no crisis in Social Security and that the Democrats should do nothing in regards to Social Security, he does conclude that the Democrats should do something. That something is to put forward a positive vision thingy. Bringin... [Read More]

Tracked on Mar 24, 2005 12:46:18 PM

» Matthew Yglesias's Positive Vision Thingy from Deinonychus antirrhopus
In his post on how there is no crisis in Social Security and that the Democrats should do nothing in regards to Social Security, he does conclude that the Democrats should do something. That something is to put forward a positive vision thingy. Bringin... [Read More]

Tracked on Mar 24, 2005 12:51:49 PM

» Bush II; Day 141: What a difference a year makes from Issues Forum
Apparently the trustees of Social Security have come out to say that the system starts to put out more money than it takes in one year earlier than previously thought. The sky is falling! The sky is falling! Seriously, I... [Read More]

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» Bush II; Day 141: What a difference a year makes from Issues Forum
Apparently the trustees of Social Security have come out to say that the system starts to put out more money than it takes in one year earlier than previously thought. The sky is falling! The sky is falling! Seriously, I... [Read More]

Tracked on Mar 24, 2005 5:06:15 PM

» More Matt from The Ethical Werewolf
Matt's also been up to some earnest wonkery about the Social Security trustees report. He points out that after the system "goes broke" in 2041, you'll still be receiving higher benefits than you will if Bush "fixes" it by implementing price indexing... [Read More]

Tracked on Mar 25, 2005 2:20:30 AM

» Long-Term Deficit vs. Long-Term Deficit from The One-Handed Economist
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Tracked on Mar 31, 2005 11:26:43 PM

Comments

"instead taste the sweet, sweet dogma"


hmmmmmmmm ... dogma

Posted by: Michael Farris | Mar 24, 2005 12:10:44 AM

Not to mention the fact that the there's some piratization group running a "the Democrats have no plan and no ideas to save Social Security...none" ad on my local cable's CNN.

Clearly the aim here is to goad the good guys into making a mistake by putting a big target onto the field of play when none is needed. Basic cable understands this, and it doens't even have HBO. This is not rocketry. Any Democratic plan is nothing more than a lifesaver cast at a thrashing Bush when the proverbial anvil tossed in the same direction will do much better.

Posted by: SamAm | Mar 24, 2005 12:13:45 AM

That's a good positive vision list.

I continue to wonder when the Medicare hearings will take center stage. That is where the action should be.

Posted by: Movie Guy | Mar 24, 2005 12:40:18 AM

No Social Security legislation in the corrupt 109th Congress!

Posted by: Petey | Mar 24, 2005 12:56:43 AM

How an we propose an alternative plan? There is no original plan. Let bush lay down his plan and his cards...of course!

Posted by: Deborah White | Mar 24, 2005 1:58:12 AM

The real action is in Medicare.

Check this out.

Medicare May Raise Seniors' Premiums 12% Next Year, Report Says

http://www.bloomberg.com/apps/news?pid=10000103&sid=aFDyUoqmfIv0&refer=us

March 24 article excerpts:

The increase would push premiums for doctor visits deducted from Social Security checks up 49 percent over three years to $87.70 a month, the health-insurance program's trustees said in an annual report yesterday. Medicare, which covers more than 41 million elderly and disabled people, annually adjusts patient premiums and deductibles for hospital care.

The program's out-of-pocket costs have been rising faster than pension benefits under the government's Social Security program. While Medicare premiums rose 13.5 percent last year and 17.4 percent in 2005, Social Security checks increased by 2.7 percent in 2004 and 2 percent this year. The retirement program's trustees projected a 2.2 percent raise for next year.

Past premium increases resulted from a 2003 law reversing cuts in Medicare payments to doctors. Patients bear 25 percent of physician costs, and Medicare pays the rest.

"Correcting this situation would require a 12 percent increase in the 2006 premium," wrote the trustees, which include Treasury Secretary John Snow and Health and Human Services Secretary Michael Leavitt, in the report. "This increase would need to be larger" if Congress raises payments to physicians for next year.

Patients' out-of-pocket spending on hospitalization would rise 4.8 percent to $956 a year, according to the trustees' estimates. Deductibles for those who stay overnight in hospitals rose 4.1 percent this year and 4.3 percent last year.

Medicare will expand coverage of prescription medicines next year. The premium for the optional coverage will be $37.37 a month on top of the doctor-visit premiums, the trustees estimated.

"The average increase that seniors will perceive will be 60 percent, and that's a phenomenal number," said the American Enterprise Institute's Antos. "What this almost certainly means is that in the fall, when this is revealed for the second time, there will be a political uproar."

Posted by: Movie Guy | Mar 24, 2005 2:22:29 AM

Oh, yeah. Don't overlook this:

$1 TRILLION projected loss of revenue to Medicare

MaxSpeak - March 23, 2005
STOP ME BEFORE I KILL AGAIN

http://maxspeak.org/mt/archives/001256.html

CBPP explains the Bunning amendment which strips out a 1993 provision of Social Security legislation.

$1 Trillion stripped from Medicare over the next 75 years and the issue can't be filibustered!

Imagine that...

"The Bunning amendment envisions repeal of the 1993 provision. Doing so is estimated to cause a revenue loss of $64 billion over five years. The Bunning amendment accorded this $64 billion in added tax cuts special “reconciliation” protection, making the measure easier to pass and protecting it from filibuster.

The $64 billion in lost revenues would result in $7 billion in added interest payments on the debt, bringing the amendment’s total cost to $71 billion over five years."

"The revenue losses that the Bunning proposal would cause Medicare to bear would mount over time. Over the next 75 years, the customary period for measuring Medicare and Social Security solvency, the proposal would cause the Medicare Hospital Insurance Program to lose $1 trillion in revenue (measured in present value terms). This would increase the shortfall in the program by 12.3 percent, or about one-eighth.

Looked at another way, the loss from the Bunning proposal would be equivalent to more than one-quarter of the 75-year shortfall in Social Security."

It can't be filibustered as a stand alone budget measure because of its special “reconciliation” protection.

CBPP link:

WITH BUNNING AMENDMENT, SENATE BUDGET WOULD MOVE UP MEDICARE INSOLVENCY BY FOUR YEARS AND INCREASE DEFICITS BY MORE THAN $200 BILLION

http://www.cbpp.org/3-18-05bud.htm

Posted by: Movie Guy | Mar 24, 2005 2:26:26 AM

Mr. Yglesias: I can't help noticing that, of your proposed Democratic visions, 3 are related to retirement funding; 2 are vague calls for budget balance; and the last is an homage to The Great Extortionist.

Posted by: sammler | Mar 24, 2005 6:10:28 AM

So? You guys run the government - you come up with worthwhile plans.

Posted by: Barry | Mar 24, 2005 8:44:25 AM

So? You guys run the government - you come up with worthwhile plans.

Posted by: Barry | Mar 24, 2005 8:44:25 AM

The real action is not Medicare, it's healthcare, period.

Hang tough, Dems, and Bush becomes a lame duck in 2006.

Posted by: epistemology | Mar 24, 2005 8:53:54 AM

I think the Democrats need to constantly hammer home how Social Security is in much better shape than the Federal budget. If someone brings up that Social Security will bring in less than it spends in 2017, say, "Who cares? The Federal budget has been doing that ever since Bush was elected. Let's fix that first, then we can worry about something that might happen in 15 years." If they bring up the size of the Social Security deficit, compare it to the increase in the size of the federal deficit since Bush was elected. Hold the bastards accountable.

Posted by: Dennis | Mar 24, 2005 9:05:27 AM

To some extent, though, Democrats should try to keep this issue alive for as long as possible.

How about proposing that the top income bracket be adjusted by law for actuarial balance (buttressing the payroll tax with the extra income).

Posted by: theCoach | Mar 24, 2005 9:20:20 AM

I think the dems should offer a proposal to remove the income cap on ss taxes and private accounts as an add-on.

They can claim they have a simple plan that works and gives the Republicans what they want.

When the Republicans refuse to go along with the plan blame them for doing nothing.

Posted by: spencer | Mar 24, 2005 9:27:59 AM

What I think is happening here is the fact that after ten years in power the Republicans still haven't gotten over being the opposition party. For all their talk about "positive ideas" and such they are still most comfortable in attack mode. Tear down the other guy's proposals and whatever you offer in lieu thereof will look OK. If the Dems can avoid that trap, proposing their alternative plan before the Republicans have actually proposed a plan of their own, they win.

The Republicans know that they can't come up with anything that will be acceptable to a majority of voters, so the best they can hope for now is to be seen as coming to the rescue of the poor voters when the Democrats try to "tax and spend" them to death again. And what will their solution be? "Borrow and spend." If people think those are the choices they will opt for borrow and spend. After all they won't actually have to pay any of it back - will they?

Posted by: Majun | Mar 24, 2005 11:06:16 AM

An alternative plan?

How about, "If it ain't broke don't fix it."

Posted by: Bernard Yomtov | Mar 24, 2005 11:16:25 AM

Matthew is right on the money with his comments (which, as it happens, equal my comments!), so just a couple of fine points.

The first is that, for the sake of both good governance and fiscal probity, i think dems should call for the repeal of the bush prescription drug plan, which all by itself is making the medicare problem much, much worse despite the fact that most seniors don't like what they've heard about the drug plan.

The second is that Goldman Sachs recently concluded that a one-point rise in long rates would amount to an 8% drop in the fair-value of homes. However, the rise and fall of fair values for homes doesn't actually mean that house values will fall (although it does increase the likelihood of them falling).

Posted by: howard | Mar 24, 2005 11:26:54 AM

Matt,

You seem to be confusing "plan" with "bill". A good plan can be developed and would be a good central component of election efforts in 2006. There is no reason it needs to be introduced in the form of a bill without a more favorable landscape in Congress. And, while Social Security is far better off than the piratization faction portrays it, it could be made more secure and more effective with reforms that are completely different than piratization (and, heck, even the pirate-in-chief has acknowledged that piratization doesn't fix the alleged problem).

Posted by: cmdicely | Mar 24, 2005 12:01:46 PM

Magic. Kristol, Brooks et al advise the dems that they need an alternative and the dems believe it.

Posted by: ken melvin | Mar 24, 2005 12:30:40 PM

Barry says: "So? You guys run the government - you come up with worthwhile plans."

But Spencer says: "When the Republicans refuse to go along with the plan blame them for doing nothing."

Well, which is it? Will either party pay a price for "doing nothing" or not?

The Republicans love that Democrats have no alternative plan or theory, no matter what they say. If they fail they can blame Democrats for being obstructionists - it worked in 2002, why wouldn't it work in 2006 or 2008?


Posted by: Alan | Mar 24, 2005 1:11:03 PM

Alan, while anything can happen in an election, there is nothing in the polling data to suggest there is any price to be paid for not having a "plan" on social security. This is not exactly parallel to the use by the republicans of the homeland security department and the war to push through in 2002.

My guess is that the public has taken george bush's advice to heart: "fool me once, shame on you, fool me twice...won't get fooled again."

Posted by: howard | Mar 24, 2005 1:21:41 PM

"The real action is not Medicare, it's healthcare, period."

That's a good point, but it's unlikely that this Congressional majority will take any meaningful actions on the whole of healthcare.

But they can't ignore Medicare and all of the other governmental programs for which they have oversight responsibilities.

And I would put Medicare cost containment at the top of the governmental list.

Posted by: Movie Guy | Mar 24, 2005 1:43:58 PM

This social security brouhaha has been a smokescreen for dismantling Medicare all along. It's a Sun Tzu sort of thing - create a diversion from where the real attack will occur.

It's been a guerilla action the entire time.

Posted by: matt | Mar 24, 2005 2:13:29 PM

howard,

I see your point, & I agree there's nothing in the polls yet. But are both sides not "building a narrative" for the election? I have a theory (which may be garbage) that voting occurs not only because of the ecomomy, or the war, or the key issues, but "the reputation" of the party. I can just see Republicans saying "we are the party of new ideas: we tried to reform this, we tried to reform that, and were blocked every time". Never mind the reality - the "narrative" will tell a story.

Posted by: Alan | Mar 24, 2005 2:16:01 PM

Like a lot of the general ideas in this post, especially in re: Democrats need a proactive philosophy of real stuff we want to do going forward.

But, as cmdicely notes, there are plans and then there are PLANS. (By which I mean general ideas about how an issue ought to be addressed as opposed to detailed roadmaps, blueprints, bills, etc. The former might be a good thing for dems to put together, the latter assuredly not.)

On the same note, there are "problems" and then there are PROBLEMS. Social security, as currently being discussed, is a "problem"--as far as I can tell basically an accounting issue and hardly the crises of which our president speaks.

But that this so-called crisis has any meager resonance at all is because people are intuitively aware that there is a real demographic PROBLEM coming at us down the pike as the baby boom ages, a problem with economic, accounting, health and social consequences we've only begun to grasp and that will require outside the box solutions. Now, talking about and focusing on this PROBLEM is probably an advantage for democrats, because the issues it involves (like health) are those where we have a natural advantage, not to mention that Republicans simply aren't capable of talking or even thinking about the kind of proactive investments we need to make now to mitigate the challenges of the future. Not to mention that focusing on the real PROBLEM only clarifies how Bush's social security plan accomplishes absolutely nothing to address it and is simply an exercising in accounting gimickry with some redistributive effects shifting money from the have-nots and have-somes to the have-a-lots.

Posted by: flip | Mar 24, 2005 2:26:51 PM

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