Centerfield

Michael Kinsley had a column last week about SS.

http://www.latimes.com/news/opinion/commentary/la-oe-kinsley18mar18,0,5631834.column?coll=la-news-comment-opinions

It isn't about the "trust fund". It's about the contradictory nature of the message coming from Bush. Essentially, he says private accounts are going to save the system because of their higher rate of growth while at the same time claiming the system is going to run short of funds based on economic projections of historically lower growth. Kinsley says you can't have it both ways.

Another interesting article is from John Margolis of The American Prospect. Yes, a very left-leaning publication, but his column has some centrist substance. His theme is that the GOP is fine with the goal of equality as long as it isn't economic equality. It can be found here:

http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=9374

A particularly interesting quote from the article:

"None of which proves that lower taxes, deregulation, and privatization are always a bad idea. Economic equity is hardly the only value in life, and in some cases a little more inequity is a cheap price to pay for innovation and efficiency.

Still, by now you would think someone would have noticed the pattern, and asked the obvious question: If this redistribution upward is always the result, is it not the intention?

No, that contention cannot be proven. Only a leftist conspiracy theorist would assert it as incontrovertible truth. But only a doofus could dismiss it out of hand. If greater inequality is not the whole point, why is it the common outcome?"

Personally I have thought all along that elitism is what motivates many in our government at all levels from local to federal. There are those who are convinced an elite segment of society is unavoidable, and a good thing. Maybe it is. I'm certainly not the smartest person in my own house, let alone on this blog, so I don't expect many perks in life. The problem for me is the willingness to cut services and support from those most in need in order to pad an already thick portfolio for economically advantaged.

No, actually, it IS about the trust fund. This thread, I mean.

I didn't start the thread to talk about the philosophical underpinnings of the republican party. Your points may well be arguable. I think you are on target in suggesting that integrating investment into social security is not a magic bullet. It may be the case that some form of doing this might help a little. But solving the larger problem of the coming gap between dollars collected and promises made can't be bridged by this method alone.

What I care about is the government collecting enough money to finance social security, and that there be some congruence between what we've been promised and what can actually be delivered. To do so, hard choices will be required, and the sooner, the better.

If I am going to get $850 per month starting at age 67 instead of $110 a month starting at age 62, I 'd rather know now.

So to me, yeah, it very much IS, IS, IS about the trust fund in large part. Because the government's financing problem starts to get growingly serious in 12 years. The trust fund does nothing to help the government finance SS because it doesn't hold real assets.

There's little hope for reforming SS in a timely fashion unless more people acknowledge this.

You couldn't be more right, bk. There's a time a place to talk about Republican hypocrisy and an equal amount could be devoted to the D's, but right here, right now, Social Security is the issue.

Bush sees this as his shot at a legacy. While I'm not sure if I'm ready to embrace all aspects of his plan...AT LEAST THE MAN BROUGHT THE ISSUE UP. It seems that too many want it just to go away.

The trust fund is filled with IOU's. In the not-so-f_ _king-distant future, the outflows will exceed the inflows, and those IOU's will have to be liquidated. At that point, we will very likely have a crisis on our hands, but as most politicians are figuring now...THEY'LL BE DEAD. I see some massive tax hikes in our future if we don't address this now.

Brian;
OK so its a little worse than we thought a month ago. We need to do something but please, please don't call it a crisis. That will cause all discussion to stop.

Tim;
I would take your point and turn it around. The government has taken our SS taxes and then produced a payout that shows very little growth in those dollars. And who can be surprised. It was never "invested" just spent. Any growth in payout was based on legislative and regulatory change. So we've all been "squeezed" by our governments management. As long as its a pay as you go program that will continue to be true and get worse. Frankly, if we continue in that manner it will become a welfare program masking as a pension program. Private accounts do two things 1) They allow true investment so that the dollars can actually grow and because the dollars can actually grow 2) the accounts could IN THE LONG RUN decrease the governments needed outlay. So is that "stealing" from the less well of? The answer is yes if its a welfare program and no if its a pension program.

I didn't call it a crisis. I've been trying hard to not use words that give people an excuse to split hairs instead of facing the known facts.

I obviously was misunderstood. I meant to say Kinsley's column was not about the trust fund, not that the trust fund wasn't the issue. Sorry for the confusion.

However, I also thought the thread was about the general issue of solvency based on your initial link, that's why I posted here instead of your later thread.

If you are going to discuss the future of SS, then I think now is precisely the time to discuss motivation. Instead of blaming the democrats for wanting to "do nothing" or for not making a proposal, it makes more sense to wait until the party in power gets around to offering something concrete to debate.

Until then, I think it is very germaine to ask what exactly is the motivation for this, particularly when medicare is much more at near term risk. I don't consider myself a liberal conspiracy theorist, but Margolis makes a valid point. The dereg and privatization legislation of the last generation has coincided with increased risk for those at the lowest income while redistributing the percentage of assets in the direction of the already well off. Those are facts. All you have to do is look at graphs that show wealth concentration over the last 3 decades or so to see that. Margolis goes out of his way to say that may be okay, but you can't ignore it and it isn't paranoia to question why we want to keep going down this road with SS.

And Kinsley finishes his article by stating that we're great at differences of opinion, but not so good at disagreeing on articles of fact. This is pretty good example.

If you are going to discuss the future of SS, then I think now is precisely the time to discuss motivation. Instead of blaming the democrats for wanting to "do nothing" or for not making a proposal, it makes more sense to wait until the party in power gets around to offering something concrete to debate.

Motivation? My motivation is that we reform it before it gets really expensive. And it gets more expensive every year. But motivation is pretty freakin' irrelevant. But hey, I'm with you on the second half of your second statement. Let's see some real reform proposals, not half-a-loaf bits & pieces!

The dereg and privatization legislation of the last generation has coincided with increased risk for those at the lowest income while redistributing the percentage of assets in the direction of the already well off. Those are facts.

There's so many sweeping undefined and indeterminate implications in there ("increased risk") that I'm afraid I'd want more than an amorphous statement to work with. In any case, coincidence is NOT causation. Beware the post hoc fallacy. The fall of the Berlin Wall coincided with the San Francisco earthquake, but that doesn't mean they're related.

PS--Kinsley is a columnist, educated in law. Not an economist. His assumptions are utterly wrong, and his statements of "fact" are also incorrect. For once the Heritage people get something right--Kinsley doesn't understand finance.

But he does have one lovely and timeless statement in his column:

In academia, a study is an occasion for thinking and discussion. In politics, a study means you can stop thinking and cut off discussion.

That's so true they oughta carve it in stone somewhere.

I never said degregulation caused the concentration of wealth. I said they happened at the same time. That's essentially the case Margolis makes. He just feels it's fair to ask why this seems to frequently occur. I agree with him. Since the discussion is to privatize or partially deregulate SS I think it's a fair point.

The top 1% of share of U.S. income including capital gains increased from 9.3% in 1981 to 15.8% in 1997. That comes from Kevin Philip's book, Wealth and Democracy. Sorry I don't have time to pull up anything more recent.

If you can't show that they're causally related, why bring it up at all? Asking "why?" is a shuck if you don't at least go looking for the connection. It's implying there is one without being able to show it. Like me pointing out that the Berlin Wall fell at the same time as the SF Earthquake. If there's no link, it's pointless to mention them together. Cool by me if you wanna look for links. There probably are some--and it's probably not simple at all, and there are probably a whole host of other determinate factors. But to associate them when you can't show a link, just to imply one, is bogus.

Absolutely, it is fair to ask why such coinciding of phenomena occur. That identifies it as a potential area for inquiry. But that's the sort of noticing that really requires the asker to do the investigating, as Tully points out.

You might be right about all this stuff, about how GOP policy is driving income accumulation into the top brackets and so on. But IMO, that doesn't change much what we need to do to reform SS promises to be in line with what we collect.

I think it's a given that some sort of progressive sliding scale on payouts will occur. Like recently I linked to a story on a plan to continue to index lower income earners' eventual SS payouts to inflation and slowly transition over to indexing at slower rate as your payout increases. In other words, the more you are eligible to collect from SS initially, the slower your monthly payout increases over time.

But their are intrinsic limits on how much can be done there. Because there are SO, SO, SO many more low amd middle income earners than there are high income earners.

From today's Wash Post:

http://www.washingtonpost.com/wp-dyn/articles/A59227-2005Mar23.html?referrer=email

"Republican Thomas R. Saving and Democrat John L. Palmer said Social Security's condition has changed little since they joined the Social Security and Medicare Boards of Trustees in 2000. But in the trustees' report released yesterday, they wrote that Medicare's prospects have "deteriorated dramatically" with rising medical costs and the addition in 2003 of a prescription drug benefit.

"The financial outlook for Social Security has improved marginally since 2000," wrote Saving and Palmer. "In sharp contrast, Medicare's financial outlook has deteriorated dramatically over the past five years and is now much worse that Social Security's."

"...........In so doing, they joined a chorus of policymakers worried that the political attention being lavished on Social Security may have found the wrong target."

"The question in my mind is why are we talking about saving Social Security?" said Bruce Bartlett, a conservative commentator with the National Center for Policy Analysis."

I could go on but this discussion obviously isn't going anywhere. At least it shows if I'm totally wrong, I'm in some pretty diverse company.

And Tully, the only thing that's bogus is to use examples such as an earthquake in SF and fall of the Berlin wall. It's at least a reasonable question to ask whether increasing deregulation and wealth concentration are related. And it's reasonable to ask what motivates politicians and the interest groups that are behind them.

It's a very reasonable question, tim, it's just not a reasonable comparison unless you have some answers as to the link. That's the missing element. I have shown no link (other than time coincidence) between the SF earthquake and the Wall. You have shown no link between your data either (other than time coincidence). The examples are precisely analogous in that respect. And yes, you did state as a fact that dereg and privatization legislation redistributed assets to the well off. You may not have meant to, but that's how it reads. Phrasing counts. "Z has/X/while Y."

My example is actually a firmer one, as there is no doubt about either event I cite actually occuring, whereas your citation includes un-demonstrated and undefined events. To wit:

The dereg and privatization legislation of the last generation has / coincided with increased risk for those at the lowest income / while redistributing the percentage of assets in the direction of the already well off. Those are facts.

Required for these statements to NOT be sheer fluff, as my earthquake/wall example is: Show the specific "dereg and privatization legislation" [A], show how it has led to "redistributing the percentage of assets in the direction of the already well off," [B] and then define and demonstrate "increased risk" (a very vague term) for low income earners [C] that coincides with AB. THEN we finally get to the question of if AB is causally related to C.

Understand that I'm trying to demonstrate the
required chain of proof--this doesn't mean your statements are wrong, just unsupported. I happen to think there's substantial merit to all three statements, I just wanna find the links, and the inevitable other factors involved. The difference between inquiry and argument. They contain implications of fact that are unsupported allegations. Making them and then saying you didn't mean to imply an actual causal connection, while still claiming a factual basis and causal connection, is bogus. I'm arguing against bad arguments!

I can offer MHO why we're looking at SS and not Medicare, though. Fewer toes stepped on, easier solution. Doesn't require the complete reform and restructuring of 1/5th of the economy. Doesn't carry the gaping wounds and political baggage of the Clinton Health Care fiasco. Never let it be said that our Imperious Leaders did not try to avoid the hard and painful work if there was a less painful job handy that also needed doing.

Fair enough. If I can find an hour of time when I'm not at work, walking the dog, helping my kids with homework etc. I'll pull a few books off my shelf and attempt to substantiate my view.

I predict you'll be able to manage AB pretty well, at least to some extent. Gonna do some digging myself. It's certainly what the intention of some of that legislation was--to make the economy grow faster--the trick now is getting the extra money to flow down the pyramid. Never was a supply-sider. Showing C will take more work, especially on an absolute/relative basis. Whenever the politicians start throwing stats aound, they're guaranteed to use whichever context fits their spiel.

Income inequality has definitely increased. A quick review of the figures doesn't show me that the poor and lower-middle have gotten poorer, so much as the upper middle class and upper class have gained much faster than everyone else, leaving the others behind. One small upside of the wealth increase--while the income of the top 1% has gone up 70% in that period, their corresponding federal tax burden has increased even faster, by 110%.

Yeah, I'm down with a major chest/sinus cold which is giving me more blog time than normal. Makes me cantankerous, too.