Social Security Suicide
Relatively recent writings on Social Security, both to reform and not reform, convince me of two things. One is that we should be looking for maximum skepticism in our sources on this subject. And the second is that anybody who starts with dismissive, condescending and absolutist views isn't worth reading or listening to on this subject. So that leaves out politicians.
There's a lot of fake objectivity out there, too. I personally think the Bush proposal for privatizing Social Security is loony, radical and unnecessary, but that's not an argument, it's a conclusion. It's the people who aren't willing to make the case that you have to watch out for.
Also, beware hidden assumptions – as in, "Everybody knows Social Security is (a) in trouble, (b) bankrupt or (c) will expire next week." In fact, "everybody knows" very little on this subject because the arguments about the system's future are built on complex, long-term economic models that can easily be thrown off by a single year. And if there's one thing the economy does with some regularity, it is confound expert predictions. Demographic changes, population growth and many other variables also influence how the models are drawn.
A second problem is that reporters of all kinds and stripes are notoriously weak on math. The Nation's Calvin Trillin says his trouble stems from his failure to convince his math teachers that many of his answers were meant in an ironic sense. I sometimes have to call John Pope of the New Orleans Times-Picayune just to make sure that going from 40 percent to 60 percent is still an improvement of 20 percentage points, and also a 50 percent improvement.
This debate is landmined with Phony Fun Facts. One notorious scare tactic is to note that when Social Security began, there were 42 workers for each retiree. Now, there are three workers per retiree. And in 25 years, there will be only two. Ergo, we're doomed. Actually, at the "frightening" current rate of three workers per retiree, the system is producing a surplus and being skimmed to finance the rest of the federal budget. Alas, Al Gore's famous "lockbox" got lost along with a lot of hanging chads in Florida.
Q: Can we at least agree that we have a problem? A: No.
The argument in favor of "no" has two parts. One involves the incredible shrinking doom date. As Kevin Drum of Washington Monthly points out, the Social Security trustees, always operating on a properly gloomy forecast, have been predicting disaster for the system for years, but the projected point at which it will go bust keeps moving.
In 1994, the system was supposed to go bust in 2029, a mere 35 years from the date of prediction. Now, it's supposed to go bust in 2042, 38 years down the road.
According to the Congressional Budget Office, using a more realistic model, the trust fund will run out in 2052, and even then it will cover 81 percent of the promised benefits. To fully fund this shortfall would require additional revenue of 0.54 percent of GDP, less than we are currently spending in Iraq. Or, as Paul Krugman noted in The New York Times, about one quarter of the revenue lost each year by President Bush's tax cuts, "roughly equal to the fraction of those cuts that goes to people with incomes of $500,000 a year."
The second argument involves the motives of those who are arguing for privatization. If there is a problem with Social Security, the obvious solution would be to raise taxes, cut benefits or some combination of both. Of course, I'm in favor of cutting benefits to the wealthy – Ross Perot doesn't need the payout, and he's such a patriot, he's probably giving it back already.
Or, we could have a peppy discussion of how to raise what kind of taxes, if necessary – especially since the tax as it is structured is a terrible burden on the poor and middle class. It actually cuts OFF at $87,900 a year.
But that's not the Bush scheme here. The Bushies don't want to mend it, they want to end it – and they are quite upfront about it.
This is not some leftist conspiracy theory: Grover Norquist of The Club for Growth has been open about it for years. What we have here is a happy convergence of ideology (the Market Can Solve All Problems) and greed. The greed is from the financial industry, which stands to pick up an incalculable sum in profits – and, of course, the financial industry contributes generously to Guess Who. Just the Bush plan of partial privatization would cost about $1.5 trillion in transition costs over 10 years, and Bush wants to borrow that money.
Next week, the White House will launch a giant public relations campaign, just as it did with the campaign to sell us on the Iraq war, with a lot of phony information to convince us all this lunacy is good for us. Social Security is of particular concern to women, since we live longer and have fewer earnings to rely on in retirement.
It's kind of hard not to be stunned by the irresponsibility of this scheme. To just blithely borrow the money to destroy a successful social program is, well, loony, bizarre and irresponsible.