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May 02, 2005

Comments

Well said.

Bush is trying to split off those with a minimalist social conscience, those entirely focused on personal gain, color me unsurprised since the tactic has proven electoraly successfull for the GOP on taxes and social issues.

He is attempting to re-focus the debate on SS toward the ideaology of generating retirement income not the economics. The fact that this also serves to obscure and distract from the federal deficit problem and the looming medicare crisis, helping to preserve the climate for tax cuts and proflegate spending, is a bonus for conservatives.

spoken like a true streetfighter :)

Edward: will you marry me?

Well, these are gonna be pretty damn interesting days at ObWi, given that Sebastian has been championing means testing from the start and I favor means testing as part of a plan that includes private accounts. Maybe we can set it up so that we're, as much as possible, responding to each other's arguments (with internal link backs and the like).

von: there's one thing I don't get about your position on this (and that not meant in a snarky way; it's genuine.) You are, as far as I can tell, generally a deficit hawk. We have horrible deficits, obviously, which we have to do something about. Personal accounts will, by their nature, require several trillion dollars in transition costs, and will do nothing to help the solvency of Social Security. So: do you favor personal accounts in a general way (as distinct from favoring them here and now), or do you think they're the best policy in our present circumstances? And if the latter, what about them makes them worth adding several trillion dollars to our deficits, with all the attendant costs to economic growth and so forth?

There were no WMDs. There isn't a SS Trust Fund crisis. The Pozen Plan doesn't fix what it aims to fix.

Well said indeed, Edward.

And let's hope that the mill pension fund is adequately funded and no one comes up with a clever scheme to raid it.

Maybe we can set it up so that we're, as much as possible, responding to each other's arguments (with internal link backs and the like).

Are you thinking of restructuring the site or developing a better mode for the debate?

I agree that there are certainly issues on which civilized debate must take place and the debate must remain civil, von.

But if Will, Stephanopoulos, and Krugman are correct in their assessment of what's really happening here, it's going to get very ugly, and not just on ObWi.

When my father, in good faith, paid his SS taxes all those years, he was doing so with the understanding that there would be no stigma attached to collecting that money back when he retired. I'll work night and day against any politician who intends to shame him now that's he's retired. That simply will not happen.

oh, it'll happen. just as AARP members became anti-soldier, pro-SSM devils, and tens of millions of ordinary Americans became pro-Saddam, America-hating traitors, and Federal judges became worse than both the KKK and al-Q, SS recipients will become welfare queens and parasites on the noble hard-working dumbasses who fall for such demagoguery.

I don't see what long-term phased-in means testing has to do with your father. The whole reason I want to start NOW is so that we can phase it in over a long enough period of time that it won't hurt the people who have actually spent their whole lives relying on it. That is why the constant chorus of "there is no crisis [now]" is so damaging.

cleek,

Exactly right. Many other examples can be supplied upon request.

How long is "long-termed" Sebastian? And if it's heading in that direction anyway, how is the stigma not going to attach itself to my father?

Well, the marriage of plutocratic fiscal policies with populist moralizing and jingo sabre-rattling that has kept the GOP a cohesive political power over the past 25 years or so is starting to have serious internal conflict. I wonder whether the base will recognize the problems presented in the policy outlined by the party, or whether they will keep drinking the kool aid...?

That is why the constant chorus of "there is no crisis [now]" is so damaging.

heh. the people who are trying to prevent SS from being knee-capped by the libertarian-fantasy-land crowd are the same people who are damaging it. that's funny.

There isn't a SS Trust Fund crisis.

As I read it, Max is saying that there's no problem with SS; all we have to do is increase taxes. Which is pretty much the same as what Bush is saying: we'll have to raise taxes.

If we are to believe President Bush that the problem is all these IOUs, one has to ask (as Paul Krugman so aptly points out), what about the many-times-larger stack of IOUs we're handing out in Medicare and the budget overall?

Complaining about the SS crisis just demonstrates innumeracy.

Sebastian:

Here. The slippery slope of means testing from today's Krugman that you are going to have to convince the other 99.99% of us here is guaranteed a myth:

It’s an adage that programs for the poor always turn into poor programs. That is, once a program is defined as welfare, it becomes a target for budget cuts.

You can see this happening right now to Medicaid, the nation’s most important means-tested program. Last week Congress agreed on a budget that cuts funds for Medicaid (and food stamps), even while extending tax cuts on dividends and capital gains. States are cutting back, denying health insurance to hundreds of thousands of people with low incomes. Missouri is poised to eliminate Medicaid completely by 2008.

If the Bush scheme goes through, the same thing will eventually happen to Social Security. As Mr. Furman points out, the Bush plan wouldn’t just cut benefits. Workers would be encouraged to divert a large fraction of their payroll taxes into private accounts - but this would in effect amount to borrowing against their future benefits, which would be reduced accordingly.

As a result, Social Security as we know it would be phased out for the middle class.

“For millions of workers,” Mr. Furman writes, “the amount of the monthly Social Security check would be at or near zero.”

So only the poor would receive Social Security checks - and regardless of what today’s politicians say, future politicians would be tempted to reduce the size of those checks.

The important thing to understand is that the attempt to turn Social Security into nothing but a program for the poor isn’t driven by concerns about the future budget burden of benefit payments. After all, if Mr. Bush was worried about the budget, he would be reconsidering his tax cuts.

No, this is about ideology: Mr. Bush comes to bury Social Security, not to save it. His goal is to turn F.D.R.’s most durable achievement into an unpopular welfare program, so some future president will be able to attack it with tall tales about Social Security queens driving Cadillacs.

Paul Krugman in the NY Times

http://www.nytimes.com/2005/05/02/opinion/02krugman.html?ex=1272686400&en=186d761171ee5754&ei=5090&partner=rssuserland&emc=rss

So, was Welfare Reform a bad idea? Discuss.

That is why the constant chorus of "there is no crisis [now]" is so damaging.

But there may not ever be a crisis, Sebastian, if obligations are met.

Bush's Social Security plan is a classic "starve the beast" maneuver. Pass irresponsible tax cuts to create a fiscal crisis, then blame the crisis on Social Security, so you can cut benefits.

The current system already is skewed toward those with the lowest income, but it also gives people of moderate incomes an opportunity to retire in a reasonable way with a pension and some other savings. The President's newest proposal will make it much harder, once again rewarding the malefactors of great wealth at a cost to the middle class.

"Do nothing" is the best option on the table today. If the President offers to collect seven trillion dollars from the wealthy to pay for the long term cost of privatization, I will consider privatization. Until then, I will assume that he is continuing his wastrel ways, spending money he doesn't have and whining about how high taxes are on the rich. I see no reason to support any proposal he makes. Nothing he has done so far has been in the national interest. I will assume that everything he proposes in the future will also be contrary to the national interest. I doubt that I will have the opportunity to apologize for my cynicism.

Slarti,
"Which is pretty much the same as what Bush is saying: we'll have to raise taxes."

Please provide a cite for this, as opposed to Bush proposing a plan which provides we'll have to cut benefits.

The slippery slope of means testing from today's Krugman

Slippery-slope arguments are generally held in low regard.

How is it a crisis that the Social Security system might start paying out more than it takes in some decades from now, but it's not a crisis that the whole rest of the federal government is paying out more than it takes in right now and has been for some decades, and the numbers are much larger?

"The important thing to understand is that the attempt to turn Social Security into nothing but a program for the poor isn’t driven by concerns about the future budget burden of benefit payments. After all, if Mr. Bush was worried about the budget, he would be reconsidering his tax cuts."

We're talking not just about the burden on "the budget", but the burden on the taxpayers that have to cough up all this cash to pay ever-increasing benefits to ever-increasing numbers of beneficiaries. "Reconsidering the tax cuts" doesn't do much for the burden of the people, although it might ease the burden on lawmakers and the recipients of their largesse.

The burden on the taxpayers will grow rather heavy unless we stop promising benefits growing right along with the taxpayers paychecks to beneficiaries growing rapidly in number. Is this burden not worth considering? These are our kids and grandkids you're talking about.

"How long is "long-termed" Sebastian? And if it's heading in that direction anyway, how is the stigma not going to attach itself to my father?"

Well, it's not like he had a choice. If he votes against allowing his children to reduce the eventual burden they represent on his grandchildren and great grandchildren, however, I'll be glad to criticize him for that.

"And let's hope that the mill pension fund is adequately funded and no one comes up with a clever scheme to raid it. "

Too bad that mill didn't pay in cash instead of holding some back and substituting an IOU. At least nowadays most companies are letting you hold on to the money, even if it's in a separate restricted account, instead of holding it and promising to give it to you later.

Slarti, the low regard for slippery slope arguments is http://www1.law.ucla.edu/~volokh/slippery.htm>far from universal, especially when the argument includes a specific mechanism for the slippage.

If he votes against allowing his children to reduce the eventual burden they represent on his grandchildren and great grandchildren, however, I'll be glad to criticize him for that.

This is comedy right? Are you equally willing to criticize Bush for the burden he's passing on to my father's grandchildren and great grandchildren by running a historic deficit, while continuously cutting taxes that really only benefit millionaires, and sending hundreds of billions over to pay for a war he ensured us would pay for itself?

And yet you're willing to suggest my father's generation are the greedy ones here or responsible for this mess. How much would reinstating the estate tax do toward relieving my father's heirs of this burden? My Dad lived up to his end of the bargain. He deserves to live out his life with dignity and pride.

What's the mechanism proposed here, Blar? Other than an assumption of evilness, I mean?

So, Ken, is Social Security "welfare" or not?

Ironic, given that it was the stigma against welfare in the first place that undoubtedly contributed to SS being turned into a permanent entitlement, rather than simply putting seniors who were ruined by the Depression on welfare to keep them from starving and paying for it out of general revenues. Now if we try to fix the problems inherent in the system, we're going to provoke tantrums from whoever's ox is gored in the process. It's a shame that FDR didn't have enough spine to stand up to those seniors back then to say, "We'll take care of you, but let's be honest, it's welfare."

Slarti:
According to your link, such arguments are held in low regard because "there is no reason to believe that one event must inevitably follow from another without an argument for such a claim." (emphasis mine.) In this case, fast pete (and Krugman) have produced an argument for their claim, citing the campaigns against welfare and medicare as evidence for their arguments. The onus is upon those who disagree to explain, if they can, why those examples don't apply. Simply waving a hand in disdain at "slippery slope arguments" is not really a response to the argument on offer.

Oh, and as for your welfare reform red herring, whether it was a good thing or not, the lying and racist demagoguery that accompanied the campaign against welfare was not a good thing, at all, and cannot be excused by any positive results of the welfare reform act (presuming such positive results exist). It is that ugly legacy that we are talking about here. If you want to privilege ends above means, that kind of ends the discussion.

"You don't f*ck with my father."

Nah, we'll just keep f*cking with your paycheck.

It's a shame that FDR didn't have enough spine to stand up to those seniors back then to say, "We'll take care of you, but let's be honest, it's welfare."

That's not realistic, M. Scott...As Kevin Drum noted:

when his aides presented him with their initial Social Security proposals 70 years ago, FDR balked: "No dole," he said, "mustn't have a dole" — because he knew instinctively that welfare programs are both fundamentally unpopular as well as corrosive to the human spirit. Conservatives understand this better than liberals, and know perfectly well that the best way to kill something is to convince the public that it's actually a welfare program.

The best way to ensure the nation has a safety net (and keeps that safety in place when times get tough) is for everyone to participate, for it not to be seen as charity, and for creative solutions to be applied with sincerity (rather than disengenous attempts to dismantle it) when tweaks are necessary, as they inevitably will.

given what has happened to the United Airlines pension holders, and given this country's long-standing commitment to free mobility of labor, and given the immigration policies of both parties which have kept entry-level wages low, the conservatives REALLY need to argue from first principles as to why a public pension, with a disability component, is a bad idea.

People don't save; people haven't saved. Those who do can afford to be somewhat speculative in their investments in reliance on the soc sec backstop.

Eliminating an enormously successful public pension seems, to me, to be yet another component of a long-term republican strategy to create a social darwinian society where risk is placed on those least able to bear it. The political consequences of creating such a society are left for another post.

Oh, and as for your welfare reform red herring, whether it was a good thing or not, the lying and racist demagoguery that accompanied the campaign against welfare was not a good thing, at all, and cannot be excused by any positive results of the welfare reform act (presuming such positive results exist).

Red herring? It was a simple question. The angst it evoked as a response is interesting, though, if irrelevant.

Nah, we'll just keep f*cking with your paycheck.

Two points for parallelism, but minus five for irrelevance and minus 30 for not understanding that I'm not kidding. If anyone thinks they're gonna dismantle SS by painting my father as a leech on society, they're gonna have a war.

There must be ways to fix SS, but this lazy-ass classist avenue toward dismantling it can't be among them.

Hmmm...Bush is painting your father as a leech on society? Do tell.

It's a shame the Democrats don't have the spine to call Bush's budget-busting tax cuts what they are--Park Avenue Welfare. Say what you will about Paris Hilton, at least she dances for her welfare checks. If the rest of Bush's moneyed "base" would go out and put their arms up a cow's rear on TV, they'd almost be worth they money I paid for them.

Slarti - Max is saying there's a General Fund problem (honoring the IOUs) up through 2041, not a Trust Fund problem. After 2041, Max says, assuming there's a shortfall, the same general fund will keep funding SS (unless we're planning on reneging on T-Bills/finishing the job of raiding the pension plan to pay for ongoing operations). According to many observers, there won't be a shortfall in the Trust Fund after 2041. These observers rely on the SS Actuaries Low Cost projection and point out that of the three projections, the assumptions about productivity and economic growth in the Low Cost projection are closest to historical norms.

Ken - productivity increases still mitigate the problem of "too few workers supporting too many retirees" even with wage-indexed benefits because wage indexing sets benefits for retirees at the time of retirement. It's not used to re-jigger benefits for every participant year after year (periodic COLAs are used for that. COLAs are CPI based, not wage based.).

Bush is painting your father as a leech on society? Do tell.

Slarti, you'll have to convince pundits as disparate as George Will and Paul Krugman that isn't his intention down the road.

Errr, the parenthetical in the first graf needs to be bumped up a sentence.

I have four separate filings today, so I can't respond in depth. But, to Hilzoy:

So: do you favor personal accounts in a general way (as distinct from favoring them here and now), or do you think they're the best policy in our present circumstances?

"In a general way." Indeed, I've criticized Bush for using SS's looming fiscal crisis as an "argument" for personal accounts. (For more on my views, see this post: http://obsidianwings.blogs.com/obsidian_wings/2004/12/security_social.html).

Edward: I don't mean restructing the site, only coordinating behind the scenes and responding to each other arguments in a respectful way on the front page (rather than just in comments).

Whoops, the post got cut off. Google: "security social and otherwise"; the relevant post was the first link when I did it. (Add "von" and "obsidian wings" to the search if it results in too much chaff).

I don't mean restructing the site, only coordinating behind the scenes and responding to each other arguments in a respectful way on the front page (rather than just in comments).

This may not be what you mean here, but I wasn't sure after the first comment and am even less so now, but this is not directed at personal accounts or even means testing, per se, but rather at the insidious attempt to reframe SS as "welfare" while Americans who worked their whole life believing they could count on it are collecting checks. I don't imagine for a moment either you or Sebastian support that approach.

Too bad that mill didn't pay in cash instead of holding some back and substituting an IOU. At least nowadays most companies are letting you hold on to the money, even if it's in a separate restricted account, instead of holding it and promising to give it to you later.

So this frees them of their obligations?

I find it interesting that so many conservatives regard credit card debts as sacred obligations, to be honored no matter how disastrous the debtor's circumstances, while they consider pension obligations, including Social Security, are simply "IOU'S," and often "worthless" ones at that.

This may turn out to be an amazing thread;thank you, Edward. Not just your father, there are generations of workers after your father whose quality of life and dignity depend on SS.

Getting to brass tacks and bedrock here; this GOP is serious and radical.

There are very good and serious economic arguments for a middle class safety net and entitlement system that have been forgotten for too long in this era of the "entrepeneur society". Among those are mobility of a skilled workforce and risk-taking personal investment strategies. Maybe now we start talking.

Ed, no one's reframing SS as "welfare," except George Will. What I'm saying is that it makes no sense to raise payroll taxes on everyone (or reduce the benefits paid to everyone) if the SS gap can be closed by giving folks like me* a smaller check come retirement time.

von

*I should add: I hope to be included in "folks like me."

Slarti, you'll have to convince pundits as disparate as George Will and Paul Krugman that isn't his intention down the road.

What the opinions of George Will and George Bush have to do with each other is a little beyond me, Edward. But I do find it interesting that you've bought into the whole welfare=bad mindset.

And, this:

Responding to WH inaccuracy with inaccuracy of your own sort of takes the moral-high-ground element away, don't you think, Edward?

in the same vein as my prior post and BY, Tim Sandefur (who claims to be a righteous libertarian who finds that Lochner was wrongly decided) cites with approval a post by one SlitheryD who approves(!) of United's pensioners getting hosed.

(no links; i recently dislocated my pinky and typing is a huge chore.)

now wait a minute. if unions have too much power, so private (and public -- see San Diego) pensions are too generous, and so its appropriate to renege on that contract, then contract power really is for the corporate interests only and pensioners need the SS safety net more than ever.

The best way to ensure the nation has a safety net (and keeps that safety in place when times get tough) is for everyone to participate, for it not to be seen as charity, and for creative solutions to be applied with sincerity (rather than disengenous attempts to dismantle it) when tweaks are necessary, as they inevitably will.

[my emphasis added]

So in other words, pretend it isn't welfare for the first recipients, and stick the others with an entitlement that is inferior to what they probably could have gotten in the private sector all along.

FDR showed a lot of determination in many areas of his Presidency, but this wasn't one of them.


In other words, BRGORD, some guy said something stupid, and someone else agreed with him.

Acknowledged. Happens all the time. Doesn't necessarily mean anything, though.

Bob is right...it's time to start talking.

What the opinions of George Will and George Bush have to do with each other is a little beyond me, Edward.

Will, Krugman, Stephanopoulos...it's across the board speculation, Slarti...not just one opinion. It looked like a duck back before last week...it began to quack like a duck when Bush offered more details...it doesn't require too much projection to see this bird has a name.

But I do find it interesting that you've bought into the whole welfare=bad mindset.

With all due respect, that is not your best work Slarti. Welfare, as a temporary hand-up when crisis strikes, is a very good thing. It should IMO come with a tinge of stigma to prevent people from abusing it though. The goal to that stigma is to help push them back into the workforce.

Retirement, however, is permanent (or at least one hopes so)...so to call SS checks "welfare" with that same stigma attached is to shame seniors who shouldn't have to bear the Scarlet A (or W, or whatever) on their chests. They lived up to their end of the bargain and deserve to enjoy retirement with dignity.

Oh, and my objective is to be also included in the group of "folks like me[von]". My current plan is for SS to be the least of my retirement assets. I'd plan for it not to be there at all, but my financial planner is more meticulous than that.

So in other words, pretend it isn't welfare for the first recipients, and stick the others with an entitlement that is inferior to what they probably could have gotten in the private sector all along.

You're leaving out the key element of the program though M Scott...here's a hint...it's in the name.

Oh, and my objective is to be also included in the group of "folks like me[von]". My current plan is for SS to be the least of my retirement assets. I'd plan for it not to be there at all, but my financial planner is more meticulous than that.

You realize, of course, that's a luxury that was never an option for millions of Americans, right?

There must be ways to fix SS, but this lazy-ass classist avenue toward dismantling it can't be among them.

Oh, Bush wants to fix Social Security alright. [/snark]

It's a power struggle, and one side is fighting to benefit rich white straight men at the expense of, well, everyone else. And if you're supporting them and you're not a rich white straight man, stop kidding yourself that they're on your side.

(And if you are a rich white straight man, consider the fact that a) you may not be rich forever, and 2)you may actually care about someone on the other side)

I share Edward's surprise at Slartibartfast's opportunistic poke about welfare--"I do find it interesting that you've bought into the whole welfare=bad mindset". I have come to count on the ObWi gang as holding itself to a higher standard than that.

The reason why it is strategically insidious of Bush to attempt to recast SS as a welfare plan for the indigent is because this will doom it to political impotence. As Krugman noted, programs for the poor become poor programs, because they have no effective (i.e. voting and contributing) base of support.

So the Bush plan for phasing out SS is to first marginalize it as a welfare plan, and then when only the poor have any stake in it, it will be easy to kill it altogether.

So the reason that Edward (and I) resist treating SS as a welfare plan is not because "welfare=bad", but because welfare is and always will be politically tenuous and lacking in strong and self-interested support by a broad majority of the population.

Social Security enjoys strong and self-interested support by a broad majority of the population. Because Bush knows he would lose any honest debate about phasing it out, he is instead providing a series of dishonest attempts to phase it out covertly. They will fail.

Paul from Pimco,

Social security is a welfare program, not a retirement program. Always has been and always will be. It is a social contract between generations, with the young funding on a pay-as-you-go basis an honorable duty to protect the old from a destitute journey into life’s sunset. As a matter of financial architecture, Social Security is not anything like the ERISA-grounded retirement plans for which PIMCO manages huge portfolios.

President Roosevelt “sold” Social Security as a retirement plan simply because it could not be politically sold as a welfare program, even though that is what it is: old people didn’t/don’t want to admit that they take “welfare” from their children, but rather want to believe that they are “getting a return” on what they “paid in.”

it doesn't require too much projection to see this bird has a name.

Well, at least one thing is clear, here: that it's nothing but guesswork.

With all due respect, that is not your best work Slarti.

Actually, this is your work, Edward. But I agree, low quality. You're arguing from emotion, here.

so to call SS checks "welfare" with that same stigma attached

Anyone in charge doing that? What's being proposed is an optional shift to self-managed accounts. I'm not arguing that this is actually possible or desirable, I'm questioning whether the angst is justified. So far, it looks like it isn't.

"so to call SS checks "welfare" with that same stigma attached"

It doesn't matter what they call it;if it is only a program for the poor it is welfare and guarenteed to be attacked and killed.

Note the addition (or whatever, a horrible bill) of drug benefits to Medicare and the slashing of Medicaid as an example of the strategy.

Slashing of Medicaid and ending the inheritance tax. Amazing country in amazing times.

You realize, of course, that's a luxury that was never an option for millions of Americans, right?

Objection, irrelevant.

I have come to count on the ObWi gang as holding itself to a higher standard than that.

Higher than what? What, exactly, do you find objectionable?

M. Scott,

"The best way to ensure the nation has a safety net (and keeps that safety in place when times get tough) is for everyone to participate, for it not to be seen as charity, and for creative solutions to be applied with sincerity (rather than disengenous attempts to dismantle it) when tweaks are necessary, as they inevitably will.

[my emphasis added]

So in other words, pretend it isn't welfare for the first recipients, and stick the others with an entitlement that is inferior to what they probably could have gotten in the private sector all along."

Or alternatively, to avoid it being incorrectly viewed as charity due to a campaign of misinformation.

. . . f the SS gap can be closed by giving folks like me* a smaller check come retirement time.

You're always free to send it back, you know. Even subtracting out the administrative costs of having calculated the amount and sent you the check, I guess the rest of America would still come out pretty much ahead. I can't imagine offhand that the administrative costs of means-testing SS based wealth would be much lower than the administrative costs of sending the checks to everyone who's paid in and letting them send them back if they really don't need them.

Slarti, But I do find it interesting that you've bought into the whole welfare=bad mindset.

He hasn't. But the people at whom the rhetoric which Edward is declaiming is going to be targeted have, which is the point.

As Krugman noted, programs for the poor become poor programs, because they have no effective (i.e. voting and contributing) base of support.

If we accept this "everyone hates welfare" premise, I think that ignores that younger people are probably not particularly enthusiastic about the idea of it being an "entitlement" either.

Given that this entitlement eats up about 12.5% of your pay, for a pretty lousy return, I'd much rather see SS be welfare and significantly lower payroll taxes.

Why don't we redefine it as "insurance" instead of "welfare" if thats such a big deal? As in you are insured against having no money when you retire? Everyone participates, only some wind up collecting. Makes sense to me.

Or alternatively, to avoid it being incorrectly viewed as charity due to a campaign of misinformation.

Except that wasn't what happened. FDR effectively decided that "calling this X will be unpopular, so I'll call it Y." Problem was, calling it Y didn't make it not-X.

"It's a power struggle, and one side is fighting to benefit rich white straight men at the expense of, well, everyone else."

This is precisely why I can't do this debate anymore. The liberal approach is one big circular argument. Means testing is cutting off the benefits to well off people in order to make the whole program less costly by not wasting billions of dollars paying people who are already well off. The fact that this can be seriously portrayed as attacking the poor to benefit the rich only shows how ridiculous the debate is.

Then we get back to the pension argument, suggesting that conservatives can't dare attack a pension system because of well whatever reason. But if I dare to analyze Social Security as a pension, I get piled on. So then I try to analyze it as insurance against being poor when you are old. But that of course sounds like welfare. Which brings it back to a pension, which it only is when it helps your argument.

Jonas,

"As in you are insured against having no money when you retire?"

That creates an awful moral hazard problem. One would be encouraged to make risky investments, with heads I win on the investment and tails I don't lose because I'd get social "insurance".

Social Security is either an insurance program or a pension program with societal benefits, grimmy, but it's definitely not a welfare program. I think it's more like insurance...you pay in knowing that you're guaranteed a return if do live long enough to need it.* In addition, you're guaranteed that you're not bothered by the hordes of old people sifting through your garbage looking for food in the morning. I know there are some people for whom that's not a problem, but for others of us, it sort of throws a wet blanket over this whole "greatest nation on earth" thing we're kind of fond of here.

*All this talk about hoping not to need it misses one important aspect of what it's designed to be there in case of, financial catastrophe that falls AFTER one retires. The best planned portfolios or most "secure" nest eggs can disappear...and then what?

President Roosevelt “sold” Social Security as a retirement plan simply because it could not be politically sold as a welfare program,

My understanding has always been that the program was sold as retirement insurance, which is decidedly different from "a retirement plan." Can you point to something which shows that FDR sold the program as "a retirement plan?"

M. Scott,

"Except that wasn't what happened. FDR effectively decided that "calling this X will be unpopular, so I'll call it Y." Problem was, calling it Y didn't make it not-X."

Please read the post again if you think the campaign of misinformation isn't what's being done today by the Republicans.

Sebastian,

"Means testing is cutting off the benefits to well off people in order to make the whole program less costly by not wasting billions of dollars paying people who are already well off. The fact that this can be seriously portrayed as attacking the poor to benefit the rich only shows how ridiculous the debate is."

No, as George Stephanopolous said, it's properly viewed as cracking the code of the Republican gameplan.

Dantheman,

That creates an awful moral hazard problem. One would be encouraged to make risky investments, with heads I win on the investment and tails I don't lose because I'd get social "insurance".

You are quite right, but I believe that this moral hazard would be quite small, reflecting the diminuitive nature of Social Security benefits. SS simply does not provide a comfortable enough retirement for everyone to feel comfortable playing roulette with their 401Ks.

Meanwhile, some moral hazard must already exist because of the mandatory nature of Social Security as it stands.

"If we accept this "everyone hates welfare" premise"

then welfare doesn't exist. Given the broad appeal of welfare programs throughout the world and in the US, I think it's safe to say humans in general like welfare programs. Perhaps they draw some measure of pride from living in a society that takes care of its own.

Please see:
http://www.pimco.com/LeftNav/Late+Breaking+Commentary/FF/2004/FF_December_2004.htm

Social Security is a welfare program, a real-time income transfer program between generations, not a retirement plan or an investment plan. It pays out on a progressive basis, (lower replacement ratios at higher covered income levels, known as the “bend points”), and taxes on a regressive basis (higher tax rate on aggregate income for lower income levels, which are all covered income, with no social security taxes at all – only Medicare payroll taxes, as imposed by law signed by President Clinton in 1993 – on income above the covered ceiling, presently $90,000).

I submit that Social Security is the most successful social program ever conceived, as a welfare program. Unlike the case with my grandparents, Jonnie’s grandparents don’t have to worry about a painful, destitute old age. I’m more than happy that my Social Security taxes – not “contributions” – are providing such a safety net for both Jonnie’s grandparents and other children’s grandparents. I’d do it personally if Social Security didn’t exist.

No, as George Stephanopolous said, it's properly viewed as cracking the code of the Republican gameplan.

Which of course makes it fact, pure and simple.

Means testing is cutting off the benefits to well off people in order to make the whole program less costly by not wasting billions of dollars paying people who are already well off. The fact that this can be seriously portrayed as attacking the poor to benefit the rich only shows how ridiculous the debate is.

Two comments here:

1. While I have voiced some tentative support for means-testing SS in the past, it has not been convincingly demonstrated to me that the administrative costs of a whole new SS bureacracy for calculating the post-retirement wealth of individual retirees (something the IRS is not equipped to do), performing periodic audits to make sure people aren't hiding wealth to collect SS, etc., would trigger a significant cost savings over what we have now. It also hasn't been demonstrated to me that the cost of sending SS checks to people who are independently well-off after retirement is a significant portion of SS spending (especially considering that they couldn't have possibly contributed beyond the FICA cap). (And I don't even know how this would be calculated anyway, so I suspect most people who complain about are just making WAGs.) Do you have reliable data on these things?

2. Your first sentence is predicated partly on the trust held by the people to whom this plan has to be sold that such cost-savings and strengthening really is the desired end, and not that it's step one in a longer-term program to dismantle the whole thing. For various reasons, a lot of people don't have that trust, and I think the current administration, at least, is beyond the point where they can simply say, "Hey, trust us!" It's a real proble, and you can't ignore it away by accusing your opponents of arguing in bad faith.

To extend on my last point, I don't like this argument that if SS is casted as welfare, it'll get voted away because welfare is bad. First, it's demonstrably counterfactual. Second, it's unnecessarily cynical. Third, I fear it's to some extend self-fulfilling. If you keep repeating it, people will assume it and exhibit it without thinking about it.

I think a better response is 'so what if we start calling SS welfare. Americans support welfare.'

Slartibartfast--

"What, exactly, do you find objectionable?"

It was your misinterpretation of Edward's reasons for not wanting to see SS considered a welfare program. It seemed to me that he had made his reasons perfectly clear in his post, and that they had nothing to do with his changing his mind about the justifiability of welfare, or with his suddenly signing on to an anti-welfare bandwagon that says that "welfare=bad". He was not expressing a new-found moral condemnation of welfare; he was pointing out that anything treated as a welfare program is well on its way to phase-out, which is exactly what the Rove/Bush/DeLay gang wants.

So, when you took him to be saying that welfare is bad, instead of interpreting him in the way that seemed to me far more obvious from his words, it seemed to me that you were engaging in a kind of tendentious misinterpretation, an intentional twisting of words, that I think of as relatively rare on this site, and especially rare in its principals' interactions.

If you simply and sincerely misunderstood him, then I have nothing to be offended at. But it certainly read as though you were taking a cheap shot at one of your co-authors.

Please read the post again if you think the campaign of misinformation isn't what's being done today by the Republicans.

The Republicans aren't innocents here--far from it. That doesn't change that Social Security was founded on a lie and that that original sin has contaminated all future discussion of the issue.

Slarti,

No, but I trust George S. rather than Sebastian H. to be both more in the know and willing to publicly say what the gameplan is.

Actually, this is your work, Edward. But I agree, low quality. You're arguing from emotion, here.

so to call SS checks "welfare" with that same stigma attached

Anyone in charge doing that? What's being proposed is an optional shift to self-managed accounts. I'm not arguing that this is actually possible or desirable, I'm questioning whether the angst is justified. So far, it looks like it isn't.

Actually, this one is simple. If it doesn't happen, then fine. The pundits will have been wrong, I will have over-reacted, and life will go on. It happens.

If it does happen, however, if the pundits are right, then the consequences will be much more dire.

I'm convinced, as I have been for months, that Bush would like Social Security gone and is covertly undermining its popularity. Even there...EVEN THERE...I'm willing to entertain ways to do that (I think its foolish, but if that's what the majority wants, or the minority can convince them they want, so be it). But NOT at the cost of American senior's dignity. That is beneath contempt.

Means testing is cutting off the benefits to well off people in order to make the whole program less costly by not wasting billions of dollars paying people who are already well off. The fact that this can be seriously portrayed as attacking the poor to benefit the rich only shows how ridiculous the debate is.

Sebastian,

The problem, from my point of view, is that the kinds of means testing on the table is not very sensible. As I've said before, if you're serious about it, and want to avoid the various practical and perceptual and political problems associated with means-testing, it ought to be done in a "soft" fashion, by increasing the income taxation of benefits paid to the well off, raising the cap on the payroll tax, and other things.

But raising the cap has been put off the table by Bush, and I seem to recall, though I haven't been able to find any details, that Congress is or was proposing a reduction in the taxation of Social Security benefits. Does anyone have further information on this?

No, as George Stephanopolous said, it's properly viewed as cracking the code of the Republican gameplan.

Which of course makes it fact, pure and simple.

Of course! It's not like he was ever a professionial liar employed by a pair of congenital liars, or anything like that. I mean--Spin City wasn't at all inspired by him, right?

he was pointing out that anything treated as a welfare program is well on its way to phase-out, which is exactly what the Rove/Bush/DeLay gang wants.

You obviously missed all the angst about his father being cast as a leech on society; I suggest you read the entire thread for perspective.

If you simply and sincerely misunderstood him

I didn't. I simply read what he wrote, which, you ought to give that a whirl before jumping in.

No, but I trust George S. rather than Sebastian H. to be both more in the know and willing to publicly say what the gameplan is.

So, let's see: you're placing more trust in a guy whose entire job was (and still is, although in a different capacity) spin. I'm not sure where the wisdom is in this.

The problem, from my point of view, is that the kinds of means testing on the table is not very sensible.

Others here have issues with the whole means-testing idea, though.

Sidereal,

then welfare doesn't exist. Given the broad appeal of welfare programs throughout the world and in the US, I think it's safe to say humans in general like welfare programs...

I was just playing along here, you don't need to sell me on welfare programs, I believe in them. I just think that a welfare/insurance oriented Social Security makes more financial and moral sense than a universal entitlement system.

Grimmy,

I submit that Social Security is the most successful social program ever conceived, as a welfare program.

If I agreed with that assessment, I'd be prone to give up on the idea of welfare programs entirely.

Unlike the case with my grandparents, Jonnie’s grandparents don’t have to worry about a painful, destitute old age. I’m more than happy that my Social Security taxes – not “contributions” – are providing such a safety net for both Jonnie’s grandparents and other children’s grandparents.

I'd be happy paying SS taxes as well for exactly these reasons - if they merely provided insurance and the rate was reduced accordingly. But it's not a safety net, it's a hammock that everyone lays around in no matter how rich they are or whether they want to or not. It's ridiculous.

M Scott

you're really basing your rejection of speculation by Will, Krugman AND Stephanopolous on a TV sitcom?

When 50 pundits agree that's the gameplan will you at least consider it might be then?

Actually, this one is simple. If it doesn't happen, then fine. The pundits will have been wrong, I will have over-reacted, and life will go on. It happens.

I really don't want to bicker with you, Edward, but it seems like you've unleashed the heat when there's no one at bat, yet.

A small but important quibble. Bush's plan, as currently proposed, would *not* in fact amount to "means-testing" SS. Means-tested programs are those in which people above a means threshold get reduced, or no, benefits.

The progressive indexing change Bush is proposing does not do this. Rather, it transitions, slowly, toward a program which gives all retirees the *same* benefit, regardless of income level-- in contrast to the present system, where people who need SS less get *higher* benefits. That is, it would push SS closer to a simple guaranteed minimum income for all retirees.

Whether such a guaranteed minimum should be called "welfare" is debatable, but there is no cause to call it "means-tested" or "a program only for the poor".

"it seems like you've unleashed the heat when there's no one at bat, yet."

I'm reminded of a totally dissimilar argument about IVF and certain citizens' averring that they had made arguments well in the past about the end result of having extra embryos and how it might lead to current predicaments.

You predicted event A would lead to event B, and argued against A on the strength of it. Are you denying Edward the same right?

Slartibartfast--

Okay, I reread the post, and I think I was in the wrong. The point that framing SS as welfare is a short cut to its phase-out is more central to Krugman's piece; it is not central to what Edward_ said in his own piece.

There, the emphasis is on the contrast between welfare recipients and people who have earned their pension-insurance through their own hard work.

In my favor is the fact that this contrast does not say that welfare is always bad or that welfare-recipients are fundamentally undeserving; it only suggests that welfare recipients are *less* deserving than people who worked hard for what they are receiving.

In your favor is the fact that Edward_ certainly was casting welfare-recipients as less-deserving, (i.e. welfare=bad by comparison to earned pension income). And also that my reading of his point brought in material that was further from what he originally said (stuff from Krugman).

So--I apologize. I ought to have reread the original post before jumping in.

"Social Security is either an insurance program or a pension program with societal benefits, grimmy, but it's definitely not a welfare program. I think it's more like insurance...you pay in knowing that you're guaranteed a return if do live long enough to need it.* In addition, you're guaranteed that you're not bothered by the hordes of old people sifting through your garbage looking for food in the morning. I know there are some people for whom that's not a problem, but for others of us, it sort of throws a wet blanket over this whole "greatest nation on earth" thing we're kind of fond of here."

So we can't be the greatest nation on Earth unless we aggressively protect people from themselves? And an old person in poverty is far worse than a young person in poverty? Must be, since we're collecting money from the former to give to the latter, and it seems to be non-negotiable that your retirement is automatically more important than all other considerations even if you're too dumb to realize that.

"So this frees them of their obligations? "

Hell no. Although no one's obligated to buy their steel, and if people don't, they'll go out of business. Paying the entire wage up front in cash would have completely eliminated the possibility that the company he used to work for going out of business would impact his present income, but enabled him to screw himself over by blowing that money rather than saving it. Do you think steel mills (or the Social Security Administration) should be surrogate parents, or not?

"I find it interesting that so many conservatives regard credit card debts as sacred obligations, to be honored no matter how disastrous the debtor's circumstances, while they consider pension obligations, including Social Security, are simply "IOU'S," and often "worthless" ones at that. "

Calling it an IOU doesn't make it worthless. It just makes it a liability and not an asset, at least if you give it to someone else. If you give an IOU to yourself, it still isn't an asset.

You predicted event A would lead to event B, and argued against A on the strength of it. Are you denying Edward the same right?

I did? Where?

"Meanwhile, some moral hazard must already exist because of the mandatory nature of Social Security as it stands."

As I said above, I consider this small degree of "moral hazard" an economic good as (or if) it leads the middle class to make slightly more risky investments in 401ks etc.

"it'll get voted away because welfare is bad. First, it's demonstrably counterfactual."

One then has to explain the Medicaid cuts and the difficulties in providing Medical care to the poor in this country.

So--I apologize. I ought to have reread the original post before jumping in.

No need, Tad, but the thought is appreciated all the same. Whenever I go twenty-four hours without some sort of blunder, I want some advance notice so I can buy a lottery ticket.

I really don't want to bicker with you, Edward, but it seems like you've unleashed the heat when there's no one at bat, yet.

I don't want to bicker either...sorry if I've been "emotional" about this...but I've seen this batter approaching the plate for months now, Slarti...having the pundits confirm he's stepping up is alarming to me.

If anyone's interested, this was inspired when I was talking with my father about the fact that the pencil-pushing pr*cks at his mill have found a way to cut off his health insurance. He was explaining to me that Medicare won't cover my step-mother's very expensive medicine and so they have to get supplemental insurance now. Not truly understanding the difference (I'm embarassed to admit), I suggested that Medicaid would be a safety net though, no?

My father was indignant. "Medicaid's for poor people," he insisted. That conversation was over. And he's right to be offended. He worked very hard so that he could retire with dignity. It was a struggle, but he managed it...and now things beyond his control (things that shouldn't have happened if others had lived up to their ends of the bargain) are changing the equation. The last straw would be for anyone to suggest that one of his sources of income was a hand-out he didn't fully earn. He doesn't deserve that. He paid in for forty years...he deserves the deal he was promised and deserves to get it stigma free.

Arguing that no one is saying it yet, when insiders who've been following this closely for years insist they will, gives me little comfort Slarti.

you're really basing your rejection of speculation by Will, Krugman AND Stephanopolous on a TV sitcom?

No, I'm just saying that George S's history does not cause me to trust him. Krugman is a liar and a hack. As for Will, I've disagreed with him before and I will again.

"I did? Where?"

Whoops. I searched and it was Sebastian. My bad. I should have kept with the third-person motif.

"One then has to explain the Medicaid cuts and the difficulties in providing Medical care to the poor in this country."

Horrible leadership.

It seems self-evident to me that if welfare programs were inherently unpopular they would not exist in democracies. But I do acknowledge that you need leaders who are willing and able to frame the narrative. 'Welfare queens' is the wrong narrative.

Others here have issues with the whole means-testing idea, though.

Yes, but at least some of that seems to be with the notion of SS being viewed as welfare program. What I'm talking about would not, I think, be vulnerable to that criticism or that stigma. It would simply be a program that provided income to retirees based on their contributions. The income would be subject to tax - perhaps at special rates - just like other income.

I understand that mechanically this reduces the benefit for the better off, just like a straightforward reduction would, but I think the perception would be vastly different. I also think it would be a much more sensible approach.

And an old person in poverty is far worse than a young person in poverty? Must be, since we're collecting money from the former to give to the latter, and it seems to be non-negotiable that your retirement is automatically more important than all other considerations even if you're too dumb to realize that.

An old person in poverty has few options than a young person, so yes, it is worse. The rest of your argument sounds totally heartless. Tell me you're old, please.

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