Matthew Yglesias: A Thousand Times No

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A Thousand Times No

A thoughtful and intelligence libertarian of my acquaintance emailed today to ask what I thought of the Cato Institute's official Social Security privatization plan which, as he noted, has a good deal in common with what I said I would do for retirement security if I got to rebuild the system from the ground up. And he's right, Michael Tanner's paper makes the case for a system I'd be pretty happy with, though not exactly the system I would design. In a better world, this would be followed up by dozens and dozens of further wonky discussions of these issues, tweaks, problems, questions, etc. But we don't live in a world like that. Early reports make it clear that Bush will put forth something that exists somewhere on a spectrum between crazy and criminal, and that orders have gone out from the conintern that even though Bush hasn't actually proposed anything yet, all good 'wingers everywhere must pre-endorse Bush's plan and say everyone who doesn't like it is a commie.

Today's conservative movement (from which I really do exempt the good people at Cato, who have the misfortune of being honest, empirically oriented rightwingers in an era of fanaticism and kleptocracy) aren't interested in a reasonable discussion, and the liberal movement in America has very little power to influence the course of events and must, therefore, be crude in order to have any moderating impact on the lunacy that governs the White House.

The current Social Security system is not something I would have designed or something that I would propose another country adopt. To my way of thinking, it's basically wasteful -- shifting around far more money than is actually needed for the purposes of ensuring that all Americans retire in dignity. Nevertheless, it does accomplish that purpose, and it isn't in crisis, and the country does have dozens of other more pressing problems, so even though the status quo isn't ideal, I'm fine if we stick with it and I have major, major, major fears that Bush is going to make things much, much worse.

So no nuanced discussion, no "one the one hand," no "well, if it were more like this," instead, just "no." No. I'll spare people a discussion of the metaphysics of the trust fund and just say that even if you can at things the way the trust fund naysayers do, there's not even a problem for over ten years (and if the trust fund isn't real, then the declining "social security surplus" isn't a social security problem, it's a General Fund problem -- you can't have it both ways) and even that problem doesn't rise to the scale of a crisis. So -- no. A thousand times no.

December 13, 2004 | Permalink

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Comments

"The current Social Security system is not something I would have designed or something that I would propose another country adopt. To my way of thinking, it's basically wasteful -- shifting around far more money than is actually needed for the purposes of ensuring that all Americans retire in dignity."

What, in principle, is wrong with the working generation paying for the elderly generation's retirement?

How, in principle, is that concept wasteful?

Posted by: Petey | Dec 13, 2004 8:03:38 PM

Umm, some of us IE users have a habit of always saying no to downloading bullshit programs and applets and whatever for fear of spyware, and resent just a little being sent to links that very aggressively refuse to let us escape. "You must say YES to this download. You must say Yes!"

On the other hand, a very good post. I am seeing a lot of this lately. The rank-and-file are getting very very pissed off at the establishment, from the lack of an organized defense of (for-fucking-Christ's-sake-this-is-social-security-the-assholes-are-trying-to-kill)
popular liberal programs to Schumer and Clinton snuggling up to an adulterous mafia functionary for the sake of a little pork.

I am about ready to kill the Democratic party in the sheer spirit of creative destruction.

Posted by: bob mcmanus | Dec 13, 2004 8:14:10 PM

Can I take that as a "maybe"?

Posted by: Al | Dec 13, 2004 8:16:40 PM

it isn't in crisis, and the country does have dozens of other more pressing problems

Please. Everything else is small potatoes, except terrorism.

Posted by: Al | Dec 13, 2004 8:19:23 PM

You might not design such a system now, but what would you have done in 1935?

The first workers who contributed for their entire working lives retired in about 1980, very close to when you appeared on this earth. It would have been a tough sell in 1935 that folks would have to contribute for 45 years into the stock market for their retirement... And the impoverished elderly would be SOL.

Posted by: Nat | Dec 13, 2004 8:23:52 PM

It's wasteful simply because it winds up sending a huge quantity of money to people who don't really need public assistance and who really wouldn't have needed public assistance if they hadn't been paying such high payroll taxes all these years. If I had an ideological detestation of government spending per se I would be very upset about this. Since I don't, I'm not, I just find it mildly unwise and would change it judiciously if I could. But since judicious change isn't in the offing, I'll stick with what we've got which is, really, fine even though imperfect.

Posted by: Matthew Yglesias | Dec 13, 2004 8:30:06 PM

There are simply too many influential people within the GOP that are hostile in principle to any form of social insurance whatsoever. As such, one can never be certain that, in the guise of reforming this or that social problem, they aren't trying to destroy it outright.

A social contract that exactly coincides with, and is inseparable from, the era of America's greatness is at stake. Total intransigence is the only acceptable response.

Posted by: son volt | Dec 13, 2004 8:30:17 PM

Bush's purported plan amounts to borrowing $1 trillion to $2 trillion (by his estimates...and we know how good his estimates are)to gamble it in the stock markets. No ERISA-like protections for our funds. And absolutely no accounting as to where and whom this $2 trillion goes. (As a longtime former "Big Eight" CPA/auditor...let me give you the answer. Securities attorneys, acountants, high-priced consultants, investment bankers and ilk. THE BASE! Bush's corporate donors and supporters.)

And after the $2 trillion "transtion fees," then comes the permanent and perpetual income stream of fees for management and maintenance of these "privitized" accounts. The NYTimes had an excellent article yesterday entitled "How Consultants Can Retire on Your Pension." The fees for privitized social security accounts will be even more lucrative for financial services providers.

This is a clever ruse...scaring people about the asset side, so that they feel terrified and irrational enough to accept any astronomical, unaffordable amount for the cost/liabiity side. And never even ask if they can afford it or rationally analyze if they need it THAT badly.
This is greedy financial fearmongering at its finest...designed to frightened and motivate. Not educate.

Here's a solution. If we truly need this fix anytime soon.... take, say, 25% to 33% of Bush's one-time transitional cost of $1 trillion...and just use it to "fix" the existing system. The system that has served American families admirably and reliably for about 60 years.

True, the base won't be receiving their return on investment (ROI) for backing Bush's reelection. but what is really the purpose of this whole wacky proposal?

To aid American families with their own FICA money that they have paid in from decades of hard work....or to put $2 trillion into the pockets of Bush's base? Plus a permanent income stream of fees.

Think Halliburton and Iraq. And then think a whole lot bigger take for the Friends of George in this deal.

This is robbery for something we may not need.

Posted by: Debi | Dec 13, 2004 8:36:13 PM

"What, in principle, is wrong with the working generation paying for the elderly generation's retirement?

How, in principle, is that concept wasteful?"

In principle there's nothing particularly wrong with it, and in neither principle nor in practice is there anything particularly wasteful about it.

The problem with it, and really the problem with medicare as well, is the problem of demography. There are 77 million baby boomers, who have reaped the benefits of Reagan, Clinton, and Bush tax cuts (some of course more than others.) There are between 18 and 42 million generation xers (those born in the 60s and 70s) who will soon be entering middle age, and their peak spending and saving years. They will bear the bulk of the burden of the boomers' entitlement costs.

Of course, no one is really talking about privatizing social security for the boomers, but the point here is that a much smaller, much less well off, much more indebted generation will see massive, permanent tax increases in order that the boomers (who have had one of the lowest tax burdens in generations, and one of the better economic and investment environments) can have a reasonably comfortable retirement (the Bush, Clinton, and Reagan tax cuts are unlikely to be repealed until after the boomers have started retiring en masse.)

I'm not shilling for privatization here, by the way. Generation x gets screwed no matter what happens. If social security is privatized for younger workers, gen xers will pay for a) the boomers' retirement (the deficits, including medicare, are projected to be more than 70 trillion) b) the multi-trillion dollar cost of privatizing social security and c) the potentially multi-trillion dollar cost of the so-called war on terror. If social security isn't privatized, and benefits aren't cut, xers will still likely see permanent triple digit tax increases, while if social security isn't privatized, and benefits are cut, xers will still end up having to bear the costs of taking care of the boomers one way or the other.

The boomers get away without paying for shit. Its criminal.

Posted by: Green Dem | Dec 13, 2004 8:41:26 PM

No one has yet contributed a large percentage of their income in FICA taxes, since that tax rate only became significant about 20 years ago. The reason current workers have to pay for today's retirees SS checks is that inflation destroyed any savings that those workers could have accumulated while working. Unless we control inflation, keeping it below 1% or so, this will always be true.

Posted by: Vaughn Hopkins | Dec 13, 2004 8:49:31 PM

"The boomers get away without paying for shit. Its criminal."

As a boomer, I would say you have a right to complain.

In defense, you may overestimate to political power of the boomers in the 60s-70s-80s, this was the "Greatest Generation" (AARP) voting themselves increased benefits, and since I suspect wealth and high-income are in the older age brackets, voting themselves tax cuts in the 80s. Not so true after 1995, say. Boomers now rule.

I also don't remember Democrats consistently screaming for tax cuts, tho they went along. I myself have never seen a particular tax cut I liked, accompanied with fiscal discipline.

But boomers are too often caricatured as pot-smoking draft-dodgers. Ralph Reed, Norquist, Gingrich, DeLay are boomers, and the right half (and it was at least half) of the 60s radical crowd have been the driving force for tax-cuts-over-the-cliff since the mid-seventies. You have a partisan complaint.

Posted by: bob mcmanus | Dec 13, 2004 9:06:06 PM

Green Dem

You forgot about the increase in the federal debt from the Treasury having to borrow the cash to redeem the bonds in the trust fund. That'll be another $2-4 trillion hickey that will have to be paid out of income taxes for, oh, 3 generations or so. (Did you know the trust fund liability is not a component of the $7 trillion national debt? I guess it's one of those "off the books" kind of things...)

Posted by: deona | Dec 13, 2004 9:10:22 PM

"In defense, you may overestimate to political power of the boomers in the 60s-70s-80s, this was the "Greatest Generation" (AARP) voting themselves increased benefits, and since I suspect wealth and high-income are in the older age brackets, voting themselves tax cuts in the 80s. Not so true after 1995, say. Boomers now rule."

Absolutely. The "greatest generation" transferred a great deal of wealth to themselves, both by increasing government benefits, and cutting taxes. And of course many of the boomers who supported this agenda were the ones that benefited from it least. However, the boomers need to recognize that they will likely leave a legacy of economic collapse, and a massive fiscal burden on a generation that can't afford it.

Posted by: Green Dem | Dec 13, 2004 9:16:35 PM

In the spirit of Lakoff, lets inspect the framing Bush uses when talking about his yet-to be-proposed Social Security privatization plan:
From his weekly radio address: "A crisis in Social Security can be averted, if we in government take our responsibilities seriously, and work together today. I came to Washington to solve problems, not to pass them on to future Presidents and future generations. I campaigned on a promise to reform and preserve Social Security, and I intend to keep that promise. "

Here, Bush elicits fear-- the same tool used to whip the population into a frenzy for the Iraqi war.

And he is painting himself as the savior, (in Lakoff's terms), a strong leader, the strict father who can lead the nation out of its "crisis," the omniscient father figure.

The fact that the crisis is fabricated is irrelevant; the language he uses urges change, it overtly identifies a crisis. And in a crisis, something must be done!

The framework: Bush is showing strength in a time of crisis!
Translation: How can you not support this brave and heroic president! He is willing to stand up to the problem.

As long as Democrats work in this framework they will loose the Social Security debate.

Progressives should frame social security in terms of responsibility to our elderly. Democrats are the party of responsibility. The Republicans/Reactionaries/Conservatives are the party of weakness: they are weakening the financial security of senior citizens.

more thoughts here:www.politicalthought.net

Posted by: Igor | Dec 13, 2004 9:22:59 PM

"As a boomer, I would say you have a right to complain."

Thanks, by the way. I wasn't as gracious as I might have been in my response, and you deserve thanks for acknowledging the situation. In fact, aside from repealing the Bush, Clinton, Reagan, and probably Kennedy tax cuts immediately (which is an unlikely prospect) I'm really not sure that anything can realistically be done that doesn't involve generation x getting soaked in taxes, and screwed economically.

Posted by: Green Dem | Dec 13, 2004 9:24:00 PM

So no nuanced discussion, no "one the one hand," no "well, if it were more like this," instead, just "no."

Well reasoned, good sir!

Once you learn that this principle is generalizable to 95% of the proposals that the modern GOP produces, you're really getting somewhere.

Posted by: bobo brooks | Dec 13, 2004 9:36:14 PM

The return of the Marcusian negation couldn't be more timely.

Posted by: Irfo | Dec 13, 2004 10:35:37 PM

Glad you finally caught on, Matthew.

Posted by: tristero | Dec 13, 2004 10:40:31 PM

The people at CATO are nuts.

Posted by: Bob Brigham | Dec 13, 2004 10:41:15 PM

But occasionally they can see that. Other right-wingers never can.

Posted by: Mimiru | Dec 13, 2004 11:44:02 PM

Cato is nuts on principle. Other right wingers are nuts with lability.

Posted by: bob mcmanus | Dec 14, 2004 12:37:25 AM

I like all these one line responses. When they do it in Greek tragedy I think there's a name for it.

Posted by: Snarkasaurus Rex | Dec 14, 2004 1:09:53 AM

Green Dem does the collectitve boomers an injustice. We've been paying huge surpluses into the social security trust fund since Greenspan's increase in FICA taxes in the early 80's. Clinton in the late 90's had us on a surplus path that would have turned over to the Gen X crowd a debt-free country that could easily afford to redeem the trust fund bonds. Bush and his cronies, the bad boomers, are to blame. His tax cuts aren't for boomers in general, but for the rich in particular. Old, Boomer, Gen X. and all the rest.

Posted by: Common Sense | Dec 14, 2004 1:18:12 AM

What's all this boomer bashing & tax cut gibberish?

We are at a minimum of 6 years from the first boomer full retirement. The last of the boomers will retire in 2029. Most boomers will not get to retire with full benefits at 65 as current recipients do. (I can retire at 66.) In 2042, when one of the models indicates the start of a shortfall, the boomers will range in age from 76 to 94. Other models indicate a shortfall in 2052 when the boomers are 86 to 104.

I thought we were supposed to be the ones who took a big tax raise in '83 to pre-pay for our bloated numbers? (As did everyone who who was working.) Greenspan led that effort, and as recently as last year said everything was hunky-dory. Bushco tax cuts and Medicare drug bennies/big pharma giveaway: no deficit problemo! What a complete liar.

Now the word is out that the new HHS commissioner is going to slash Medicaid (general revenue) and Medicare (dedicated fund.) So, how is that local public sector hospital going to look in the not so distant future? This is passing the buck in the worst possible way. Check out your property tax bill after this comes to pass.

I have coughed up an extra 50 grand or so over the last 20 years in extra FICA & match. I expect BushCo will loot the treasury and destroy our health care system. The current retirees will get the last of the deals. Boomers and GenX and beyond are all in this mess together... Anyone poor enough to actually have to work, that is.

Posted by: nat | Dec 14, 2004 1:22:47 AM