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Pro Or Con

I said liberals need to drive home the message that "There Is No Social Security Crisis." Chris Bowers, aiming for a more positive approach, thinks "Social Security Is Healthy And Successful," which has some merit too. I think the crisis mentality sort of needs to be addressed head on, but I like the positive approach and the reminder that Social Security is a good thing (successful!) and not just some program we happen to have. Fortunately, people do get to speak in multiple sentences, even on talking head television segments (I know, I've been there, you don't get to say much, but you do get more than one sentence).

Social Security is healthy and successful. There is no crisis. The president and the Republicans in congress are trying to scare the American people to destroy the most successful program in American history -- a program presidents from Roosevelt to Truman to Nixon to Reagan to Clinton have been committed to preserving. President Bush wants to break Social Security's bipartisan promise to the American people and he's making up stories to try and convince the voters to go along with it. Even if we make no changes and the president's pessimistic assumptions come true, future benefits will be even higher than benefits are today. We need to focus on the real crisis in the rest of the budget created by the president's tax cuts for people making over $100,000 a year.

Donothing_1

Source: CEPR, SSA, CBO.

December 17, 2004 | Permalink

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Comments

"And all of you know to a greater or lesser degree of specificity, every one of you know that the Social Security system is not sound for the long-term, so that all of these achievements -- the economic achievements, our increasing social coherence and cohesion, our increasing efforts to reduce poverty among our youngest children [of the Clinton era] -- all of them are threatened by the looming fiscal crisis in Social Security." -- President Bill Clinton, February 9, 1998 (emphasis added)

http://www.ssa.gov/history/clntstmts.html

Luckily, the Social Security Administration has a helpful compilation of quotations from Bill Clinton on Social Security. I'm sure I can go back there TIME AFTER TIME for another quotation on the "looming fiscal crisis" in Social Security. Well, at least as long as Matthew and the rest persist in this business that everything in SS is A-OK!

Posted by: Al | Dec 17, 2004 6:13:51 PM

On CNN a couple days ago (Lou Dobbs program, I think) , Roger Altman, former undersecretary of the Treasury under Clinton, said that rolling back the tax cuts Bush gave to the very wealthy would pay for the longterm social security shorfall. Don't you love the way he linked the two, thus giving Bush responsibiity for and a responsible way out of this manufactured "crisis?"

Also, Matt, be sure to read the Dec 16, 2004 joint release by Harry Reid and Nancy Pelosi, from Harry Reid's office, entitled" President's Social Security Proposal Must Strengthen, Not Raid, This Incomparable Program." In 4 well-written paragraphs, they frame it well.

Posted by: Deborah White | Dec 17, 2004 6:25:16 PM

Stop with the everything is fine for 40 years crap. Current levels of taxation are insufficient to pay current benefits long before that, then you start redeeming bonds that you have to pay interest on. Who is paying that interest? Oh, the same people who are paying the payroll tax. Good thing everything is fine 'without changing anything'.

A financial plannner talking to a 30 year old in 2004, who instructed them to count on social security for over $15,000 annually in retirement income would almost certainly lose his job and could probably be sued for negligence.

Posted by: Jason Ligon | Dec 17, 2004 6:27:38 PM

It's all about constructing, molding, and "driving home the message", isn't it? Fascinating.

Two and only two words come to mind in response: REALITY. BASED.

Posted by: Blixa | Dec 17, 2004 7:20:07 PM

"Constructing, molding, and 'driving home the message'"is a reality-based way to behave if your message is based on reality. Look at the chart. Those are solid numbers based on pessimistic predictions. More pessimistic, in fact, than the predictions used to justify the high returns we're supposed to be getting from the stock market with our private accounts. There is no crisis. Social security is healthy and successful.

Posted by: Matthew Yglesias | Dec 17, 2004 7:41:04 PM

Luckily, the Social Security Administration has a helpful compilation of quotations from Bill Clinton on Social Security. I'm sure I can go back there TIME AFTER TIME for another quotation on the "looming fiscal crisis" in Social Security.

But Al, I thought Clinton was Wrong About Everything, Always. That's been the Republican message for a dozen years or more, hasn't it?

Posted by: Hamilton Lovecraft | Dec 17, 2004 8:16:10 PM

"Stop with the everything is fine for 40 years crap. Current levels of taxation are insufficient to pay current benefits long before that, then you start redeeming bonds that you have to pay interest on. Who is paying that interest? Oh, the same people who are paying the payroll tax. Good thing everything is fine 'without changing anything"

For close to 20 years, and continuing today, the low and middle income taxpayers have been paying excess FICA withholdings into the general fund, where it has excused the unfair tax cuts for the wealthy. Now that the bill is coming due, when the wealthy income taxpayers are honor bound to repay those loans, they want to renege on the deal. If we had an honest President or an honest Congress, they would raise the top tax brackets enough to repay the FICA windfall they have enjoyed for so long, and stop the crap about Social Security being in crisis. Lets see any of you try to pull this stuff on your local bank.

Posted by: Vaughn Hopkins | Dec 17, 2004 8:31:08 PM

Jeebus says there's a social security crisis and that's good enough for me.

- John Q. 51% of the Public

Posted by: grytpype | Dec 17, 2004 8:38:31 PM

"For close to 20 years, and continuing today, the low and middle income taxpayers have been paying excess FICA withholdings into the general fund, where it has excused the unfair tax cuts for the wealthy. Now that the bill is coming due, when the wealthy income taxpayers are honor bound to repay those loans, they want to renege on the deal."

The FICA windfall who has enjoyed - the wealthy? It takes a commited leftist to argue that historical Social Security arrangements are some sort of benefit program for the wealthy. Everyone, including the wealthy, has been paying 'excess' FICA into the program. The payout of benefits, taken in total, is progressive. Other taxes are very progressive, even after all those apparently unfair cuts.

What is this deal they were reneging on? This is an entitlement, an amazing wonder of a human right, for chrissakes. The deal is that you pay in and get a benefit to be determined based on what is politically expedient. That's the whole deal.

Posted by: Jason Ligon | Dec 17, 2004 9:27:58 PM

Thanks Matthew.

Posted by: anne | Dec 17, 2004 9:34:31 PM

"Look at the chart. Those are solid numbers based on pessimistic predictions."

Not misleading at all? Who is paying on the bonds that are currently sitting in the trust fund? This is a fine example of that compartmentalizing the reality based community is so fond of when reality doesn't jibe with ideology.

Why are the same reality based community types who get indigestion at the fiscal unbalance of the rest of the government so comfortable with a known $10 trillion dollar shortfall? Why is it bad for the government to issue bonds without matching tax hikes, saying that defecits don't matter, when the current argument from the left regarding social security is precisely that defecits don't matter?

I can make that graph look even better. Lets reissue the bonds in the trust fund with ones that pay 100% interest. We will not only be solvent, we'll all be rich!

Posted by: Jason Ligon | Dec 17, 2004 9:34:55 PM

In the late 1980's Greenspan chaired a committee that recommended raising the FICA rate above what would be needed for current SS payments. That rate hike was passed and since then the excess of FICA payments has gone to the general fund in exchange for Treasury Bonds. Since the wealthy, those with incomes above $88,000 (today, but much less in the 1980's) paid no FICA on the excess over the FICA limit, they were not the ones making the excess FICA payments to the general fund. The effect of this was to eliminate the progressiveness of income taxes. Now that the need for SS payments is catching up to the high FICA rates, and in about 2018, will exceed them, it is time for those Treasuries to be repaid, with interest. It is the high bracket tax payers who need to repay them.

Posted by: Vaughn Hopkins | Dec 17, 2004 9:53:08 PM

Jason, did Jeebus tell you all that? Because if he did, he is absolutely right.

Posted by: grytpype | Dec 17, 2004 9:53:46 PM

My message?

"Social Security crisis, meet WMDs in Iraq. Once a liar, always a liar."

Repeat ad nauseam.

Posted by: wcw | Dec 17, 2004 10:12:03 PM

Matthew Yglesias, in your Reality Based thinking, what is going on exactly at around the point of the steep dropoff (either graph)?

But please do keep intoning "there is no problem". If people think there is a problem, they just need to be told there isn't in ever-more clever and catchy ways. The more people that think there is, the more you should repeat it.

I think it's, above all, the *repetition* involved in this whole deal which is what makes you sound so Reality-Based. Kudos!

Posted by: Blixa | Dec 17, 2004 11:17:44 PM

Even if we make no changes and the president's pessimistic assumptions come true, future benefits will be even higher than benefits are today.

Right. Or to put it another way, Social Security's share of GDP is set to increase by 50% over the next four decades. What a rousing success! (actually, given the inaccuracy of past projections, I'm reasonably confident Social Security's piece of the economy will actually not increase by a mere 50%, but something more along the lines of 80%. Yipee!! Eurosclerosis here we come!!).

Posted by: P.B. Almeida | Dec 17, 2004 11:53:48 PM

Now that the need for SS payments is catching up to the high FICA rates, and in about 2018, will exceed them, it is time for those Treasuries to be repaid, with interest. It is the high bracket tax payers who need to repay them.

Vaughn Hopkins: Excellent observation, and one, I might add, that could be used to justify supporting the president's approach. Why? Because privatization's long-term transition costs to the budget (the increase in interest expense) will be paid out of general revenue, which is mostly comprised of income tax receipts. But without such an overhaul of the system, the pressure will mount to raise payroll taxes, lest the rest of the budget be canibalized beyond all recognition. Maybe such an increase in payroll taxes would be effectuated via raising or eliminating the income cap, but I wouldn't bet my house on it. If past precedent is any guide, you can be sure the FICA rate on the paychecks of working stiffs will be jacked up, too.

Posted by: P.B. Almeida | Dec 18, 2004 12:02:45 AM

Bush is not proposing that anyone living today pay the transition costs to his private account system. In fact his approach is the "head in the sand" approach - just ignore the cost.

We need to permanently separate the "private accounts" from Social Security. "Private Accounts"=IRAs and 401k programs. Social Security is another thing entirely.

The "crisis" in Social Security is the election of Bush to a second term. It is not a financial crisis as such. The most that should be done today is to remove the income cap on FICA, and perhaps make all Social Security income subject to income taxes. Those two changes alone may be overkill for the possible tax shorfall in SS which is now thought to be only moderately probable about 4 decades from now.

Posted by: Vaughn Hopkins | Dec 18, 2004 12:32:14 AM

Bush is not proposing that anyone living today pay the transition costs to his private account system. In fact his approach is the "head in the sand" approach - just ignore the cost.

Vaughn: what are you talking about? The FICA surplus money hitherto used to fund general government operations will be diverted into private accounts. That money must be made up somehwere, and it will be, via borrowing, and so the national debt will immediately commence growing more than it would sans privatization. The increased interest expense will thus immediately begin to make itself felt. I don't know about you, but I plan on being alive "today", which means I, and anybody else alive with me, will indeed be paying the transtion costs from day one.

It is not a financial crisis as such. The most that should be done today is to remove the income cap on FICA, and perhaps make all Social Security income subject to income taxes.

I might well agree with you on the inaccuracy of the word "crisis". But Social Security's share of the economy is growing rather lustily, and is set to expand by at least half over the next 40 years. I know a mighty expansion in an entitlement program's share of GDP is usually considered a desireable occurance by liberals, or at worst an inevitability. But I certainly don't view such an explosion of the programs's take of the pie a welcome event, nor do I see anything inevitable about growth on that scale -- provided the political will exists to head it off at the pass.

Posted by: P.B. Almeida | Dec 18, 2004 1:02:08 AM

P.B.: What about growth in the government program called "interest on the debt"? Debt is already at 62% of GDP. If the "reform" plan really costs 10 billion dollars over 10 years, that'll push it to something like 150% of GDP in 2014.

Posted by: Walt Pohl | Dec 18, 2004 3:43:08 AM

Well, I just hope that when P.B does his 'triumph of the will' act he won't wear a one piece bathing suit and thrust his chest out like Leni did. There are limits to what the human mind can bear.

And I can tell you there is no refuge from the Bushies in reading history. Trying to escape, I picked up A.J. Taylor's Origins of WW II, and found myself reading about how Hitler had manipulated the 'national minority' question to splinter Austria, Chechoslovakia, and Poland. So I switched to his Struggle for Mastery in Europe, and there was Napolean III, with his gang of neo-con-men, proclaiming their faith in self-determination while they made under-the-table deals with their supposed enemies.

So, I tried the late middle ages in England, but alas, there is no refuge. Even there we find tales of intrigue, kings trying to find financing that Parliament doesn't know about, and the relentless urge to shift the costs of government onto the poorest citizens.

Apparently Bush is one of the great figures of history, and will rank in the rogue's pantheon for some time to come. He could throw us into total confusion by telling the truth or acting decently, but that's an even more distant threat than the failure of Social Security.

Posted by: serial catowner | Dec 18, 2004 10:24:19 AM

Well, I just hope that when P.B does his 'triumph of the will' act he won't wear a one piece bathing suit and thrust his chest out like Leni did. There are limits to what the human mind can bear.

Huh? I'm a Nazi 'cause I favor a modest reduction in Social Security's growth? That's all we're talking about here, folks: a modest reduction. People will still get 3/4 of the government-guaranteed portion of their old age checks, or a 25% reduction in exchange for those points of their paycheck deductions that get put into index funds.

It's really not that radical, and is certainly (much to the dismay of my fellow righties) far short of what's available to Chileans.

Apparently not agreeing that a 50-80 % increase in an entitlement program's share of GDP is a good think makes one a Nazi filmaker. What do I get called if I want to get rid of farm subsidies, Pol Pot? Sheesh.

Posted by: P.B. Almeida | Dec 18, 2004 10:53:23 AM

Vaughn: your argument ignores the fact that the wealthy taxpayers of 2018 will not be the same, or anywhere near the same, as the taxpayers of 1984. I'm not "honor bound" to stick to a "deal" made when I had no say on the question, and which I would have immediately, vehemently rejected had I had such a say.

Posted by: Nicholas Weininger | Dec 18, 2004 1:00:35 PM

I'm not "honor bound" to stick to a "deal" made when I had no say on the question, and which I would have immediately, vehemently rejected had I had such a say.

Using that argument, I'm going to stop paying my income taxes altogether. And I'm going to start diddling underage goats.

Posted by: Hamilton Lovecraft | Dec 18, 2004 1:08:22 PM

Compare the "Social security crisis" (solution->dismantle social security) to the "human-caused climate change (aka global warming) crisis" (solution->study the situation) to vividly see the stark intellectual dishonesty on the part of the Bush adminstration and their lackeys.

Posted by: Bill Arnold | Dec 18, 2004 1:59:46 PM

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