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June 23, 2005

Comments

So: we add 1.1 trillion dollars to the federal debt, in order to give today's workers private accounts that will total a few thousand dollars, which we will then deduct from their Social Security benefits. What a nifty idea!

The overall suckiness of Bush's plan or new plan aside, it makes no sense to me to criticize it based on that it will add 1.1 trillion to the deficit. Exactly the same thing happens if Congress just raids it and slips in a few bonds as they likely will, because when those are paid back it's coming out of general revenues anyways.

Jonas: the thing is that this proposal just adds 1.1 trillion to the deficit, unless the GOP comes up with 1.1 trillion in cuts, which they show no signs at all of doing. They are already raiding the trust fund; this raids it a second time.

Hilzoy, okay, I get it now. The $1.1 Trillion will reduce the federal budget over the next ten years by that much, annually taking ~$100 Billion out.

Actually, I'd like to see both parties think of ways to cut at least a $100 billion a year. But I'm a dreamer that way...

It's like we've said: While we appreciate that the Social Security framework, while not in "crisis", could do with being overhauled to better perform the task it's doing in the modern world, we just know better than to let this bunch of innumerate yahoos anywhere near it.

Jonas: that's part of what makes it such a horrible idea -- all that deficit with so very little to show for it (except "movement!")

I don't think you can get $100b/yr with cuts, myself, but I'd be willing to give it a go. I propose we start with agricultural subsidies. I think eliminating the department of commerce would be OK too. Also, the last round of tax cuts was almost exclusively corporate giveaways -- nothing at all for ordinary human beings, and almost all of it things like the tax breaks for importers of Chinese ceiling fans. I think that even conservatives should count it as honorary spending, and go for its repeal. I also nominate reinstituting the estate tax.

I like the estate tax, I don't like the idea of going after corporations. Who are we kidding? The general taxpayer will pay that too at the end of the day.

The estate tax though...let's call it the death tax, to be fair. When you tax a behavior you get less of it, and who here is in favor of more death?

With accounts so small, presumably the costs of administration would be huge as a percentage of the amounts in the accounts.

Hilzoy,

I propose we start with agricultural subsidies.

Ah, a fine choice, indeed.

I think eliminating the department of commerce would be OK too.

I'll trust your judgement on that. Anyone willing to speak up for the DOC before we drown it in the bathtub, speak now or forever hold your peace.

Also, the last round of tax cuts was almost exclusively corporate giveaways -- nothing at all for ordinary human beings, and almost all of it things like the tax breaks for importers of Chinese ceiling fans.

I slightly disagree. If I were a consultant to the Democrats (ha!) I would have counterproposed a cut in corporate taxes equivelent in size that would have merely reduced each and every corporations tax burden, as opposed to the disgusting and wierd giveaways to friends that it wound up being. Small Business owners would eat it up I bet, and it's probably a good thing to do anyways.

I also nominate reinstituting the estate tax.

Reinstituting taxes is never easy, but I dare say - hype aside - the estate tax would probably be the easiest one to do. I just don't think many outside the Repubs narrow base give a crap.

On a much more frivolous note, your mention of chinese ceiling fans recalled last week's consistently funny Onion article: "Chinese Factory Worker Can't Believe The Sh*t He Makes For Americans." link

Perhaps more seriously. I find myself tuning out to the social security debate. I read dozens of blogs daily, I know the general contours of the debate, and when the "reforms" were first proposed, I sat down and tried earnestly to understand the math. At this point, however, I worry about my lovelife, our invading Iran, my dissertation, the Supreme Court, the situation in Iraq, the week-long Mormon family reunion, Bolton's appointment, the European Constitution, the genocide in the Sudan, ideological attacks on the academy...roughly in that order, and then my mental energy is gone and I take your, Josh Marshall, and DeLong's word on the current go-round on Social Security since it's not something I understand. (Also, as a young-un, I don't truly expect it to be there for me, but I know lots of elderly women from the church who *just barely* scrape by on Social Security and lots of charity.)

So, in some ways, I'm offering this comment as a data-point of fatigue. By all means, please continue to inform us of recent updates, but also know that even some regular readers, let alone the electorate, are starting to slide back into the swamp of lethargy and partisanship.

I think the commenters here miss the point (maybe hilzoy does too, but, being as she's hilzoy, I doubt it) about the latest Republican Social Security proposal: the merits (if any) of their ideas aren't the issue: it looks way more as if the issue is simply to try to put the Democrats (House variety this time) on the spot over SS to try to get some/any political traction out of the subject. It's a simple process: House GOP makes a proposal: House Dems have three choices: 1) agree, 2) just say "No" (again), 3) come up with their own ideas.
1) is a non-starter, 2) will work - even if it does give the Republicans more "Party of No" ammo, and 3) runs the risk (for the Repubs), that the Dem alternative will prove more popular than their own.
I think McDuff above, at 12:18 nails the problem exactly: whatever the problems are with the Social Security System (and there are looming long-term problems, no mistake!), after four years of Dubyanomics, this Administration has, IMO, little or no credibility left with the public when it comes to numbers. That and the seemingly unshakeable impression (despite the President's dog-and-pony-show campaign) that Bush's notion of "reform" of SS really means destroying it altogether.
Real Social Security "reform" should not be all that diffcult a task: but only if partisan politics does not enter into the mix (Hah!).

Jay, I don't think your option 3 is much of a risk for the Republicans, but it's a huge risk for the Democrats. Once any movement starts happening on Social Security "reform" with the current Republican control of Congress and the White House, and the "Hey, hey! Ho, ho! Social Security's got to go!" motivations of the party, there is zero chance that whatever comes out of the legislative process will resemble any Democratic proposal that might have been thrown into the mix at the start.

JayC: I think you're right about what the Republicans are trying to do. What I can do, as I see it, is to try to explain the policy, so that people can decide for themselves what to make of the fact that Democrats reject it. It's one thing for Republicans to put forward a range of thoughtful and interesting proposals and Democrats to obstruct them; it's quite another for Republicans to put forward one dumb idea after another just to watch Democrats say 'no'. And for people to make that distinction, they need to know what the Republican proposals actually amount to.

JayC,

I think that "looming long-term problems" is an overstatement. Social Security may need an oil change. It does not need its engine rebuilt.

One thing the Democrats could propose is a set of changes contingent on certain events. Begin by raising the cap on taxable payroll to cover 90% of the wage base, as planned in 1983. Then perhaps increase the taxation of benefits, with proceeds going back to the trust fund, but only if the plan deteriorates.

By the way, would it be a good political move to start referring to the current system as the Reagan-Greenspan Plan?

Why do Republicans want to destroy the system created by FDR and strengthened by Reagan?

I believe the proposal would be total national debt neutral. What would happen is that instead of $1.1 trillion being added to the "intragovernmental holdings" part of the public debt it would be added to the "debt held by the public" part.

See the Bureau of the Public Debt: Debt Outstanding to the Penny for the current numbers.

prof hilzoy:

last i checked, there were only 5 fed govt programs of any relevant size: Defense, Social Security, Medicare, Medicaid, Interest on Federal Debt.

while I don't have time to check this morning, i believe you could zero out every single other federal program and barely make a dent in the federal budget.

Commerce contains the following agencies:

Bureau of the Census
Bureau of Economic Analysis (BEA)
STAT-USA Database (password may be required)
Bureau of Export Administration
FEDWorld
International Trade Administration (ITA)
National Institute of Standards & Technology (NIST)
National Marine Fisheries Service (NMFS)
National Oceanic & Atmospheric Administration (NOAA)
National Ocean Service
National Technical Information Service (NTIS)
National Telecommunications & Information Administration
National Weather Service
Patent and Trademark Office Database

per this link

which program are you cutting?

[yes, i am speaking up for Commerce. One very useful role of the federal govt is data collection.]

I'll second Francis on the importance of data collection. I use the product of several of these agencies in my daily work, and I am sure others here do too.

Francis,

yes, i am speaking up for Commerce. One very useful role of the federal govt is data collection.

I'm glad you did. I was so caught up in a program cutting fervor that I failed to consider what it would mean!

It does look like a lot of those programs could be consolidated (i.e. only have one weather program that covered everything, one economic/statistics program, etc.) and heck, maybe the work could just be outsourced to Universities or something, turning them into a grant-making program rather than a bureaucrats crunching numbers programs.

Steven Engelhardt,

I believe the proposal would be total national debt neutral.

That's only in a perfect world where Congress says, "Oh crap, now were short $100 Billion a year, we're going to have to cut $100 Billion worth of stuff."

We don't live in that world, do we?

OK, I retract the worthwhile bits of commerce. Darn.

Steve E: the money does get added to the debt held by the public. The next question is: what, then, happens to Social Security, which no longer gets the bonds from the surplus? There are basically two options: (a) we don't make up the money, in which case SS runs out of money a lot sooner, or (b) we do, in which case it just adds to the deficit. (Of course, we could make up for (b) by also cutting spending or raising taxes by an equivalent amount, but as I said, Congress shows no signs of doing this.)

The plan goes for the second option. From the Center for Budget and Policy Priorities:

"The analysis of the plan issued today by the Social Security actuaries shows that by diverting substantial sums from the Social Security trust fund to private accounts, the plan would worsen Social Security’s solvency problems — were it not for the inclusion in the plan of an assumption that large revenue transfers would somehow be made from the rest of the budget. The actuaries’ analysis shows that the plan would drain $1.1 trillion from the Social Security trust fund in the first decade of the proposal."

Francis beat me to a defense of Commerce with an accompanying list of programs.

Question for Jonas: You have suggested consolidation of programs. Based on what? Because more than one of the programs contains the word "weather" in them? Why would consolidation be cheaper and more efficient, if those are the results you desire? Perhaps discrete programs are the cheaper, more efficient choice. Also, why is cheaper and more efficient the better choice. More expensive and efficient might work too.

We could consolidate all Federal agencies into one entity. With one person doing everything. Karl Rove could interrrupt his regularly scheduled broadcasts to throw in a tornado warning occasionally. :)

I once worked for the Federal government. My wife is a scientist with a Federal agency now. The ebb and flow through the decades of consolidating functions and then splitting them again, all in the name of efficiency and saving money, is just management masturbation, as I am sure it is the private sector as well, with the added bonus in the public sector that consultants (political donors) get a big contract for telling other folks that they don't know what they are doing. My wife knows her job, does it well, and is frugal with her funds. The time she spends on other people's requests to reorganize because everyone seems to know her job better than she does wastes time and money and takes her away from her actual work.

Now, I realize everyone gets to throw in, given that we live in a democracy and its everyone's money. It's an American trait to believe everyone else is obviously incompetent and sloppy with the funds. But it could be "everyone" is full of crap about the Dept. of Commerce and maybe the infinite number of reorganizations over past decades with funding cuts and funding increases and hiring freezes and hiring binges have placed the Department in some sort of state of maximum efficiency. Neither one of us really knows, do we?

It could be that some functions of Commerce are viewed as fat plums for political donors if they were outsourced. It could be that shutting some scientists up at NOAA and NCAR regarding their views on global warming is the point of funding cuts, not any sense of efficiency.

Just some things to consider.

And, just in fun, Hilzoy's pleas for budget cutting sound a little to me like Tweety(sp? Pie walking down Sylvester's tongue admiring the view ;). Sylvester would be Norquist or some hack at the Cato Institute, or maybe Larry Kudlow.

It's funny. I never shop at Walmart. But I use Dept of Commerce products every week either directly or indirectly. But Wal Mart keeps growing and everyone wants to get rid of the things I use.

I guess because one is merely wasteful discretionary spending, which would be more efficiently put to use in buying medical insurance or saving for kid's educational needs and one is a dreaded, awful tax, which might be put to better use shopping for crap at Walmart ofr shipping dead meat home from Iraq. But that's just me, the elitist.



Did I say that I agree with Hilzoy's main point regarding the SS proposal?

Consider it said. Also consider it said that all Republican proposals should be viewed in the light of Edward's rant some weeks ago that they are constructed to eventually kill the program itself and/or take funding away from other programs. Probably both.

John Thullen,

You have suggested consolidation of programs. Based on what? Because more than one of the programs contains the word "weather" in them? Why would consolidation be cheaper and more efficient, if those are the results you desire? Perhaps discrete programs are the cheaper, more efficient choice.,

It's just my guess that you could eliminate some redundancy if you consolidated. You may be right that small and discrete could work more efficiently, I'm just throwing ideas out.

Also, why is cheaper and more efficient the better choice. More expensive and efficient might work too.

Sure, it might work, but we're broke and I'd like to see the debt reduced and I don't consider increasing the tax burden a good choice. Shifting the existing burden more progressively is fine with me; increasing the overall burden is just not a good idea.

The ebb and flow through the decades of consolidating functions and then splitting them again, all in the name of efficiency and saving money, is just management masturbation, as I am sure it is the private sector as well, with the added bonus in the public sector that consultants (political donors) get a big contract for telling other folks that they don't know what they are doing.

John, you're probably exactly right about this - I was being unspeakably naive in assuming that improvements in efficiency could be made just by asking. The behavior you describe is an epidemic both in government and big business. As someone in a small business, I find it rather absurd, and wish to anything common-sense efforts to stay efficient could actually happen in such an environment. This actually strengthens the validity of your notion of keeping things small.

It could be that some functions of Commerce are viewed as fat plums for political donors if they were outsourced.

Which is why perhaps outsourcing would have to be prefaced by the law I have for years wished was on the books: the government is not allowed to award any contract to any company whose owners or executives have donated to any campaign. Again, I'm dreaming...

It could be that shutting some scientists up at NOAA and NCAR regarding their views on global warming is the point of funding cuts, not any sense of efficiency.

Controversially, I usually respond to such stories with a shrug - politics getting mixed up in science is going to happen when politics pays for science. I can't quite conceive of the magic system that prevents this from happening without imagining a completely autocratic and undemocratic system, which would be even worse from where I sit.

Controversially, I usually respond to such stories with a shrug - politics getting mixed up in science is going to happen when politics pays for science.

There's a difference, IMO, between politics getting mixed up in science and politics trumping science, which is what's been happening of late. I tend to agree with you that there's no systemic change we can make to prevent this but I think there might be some systemic ways -- other than just voting those people out of office, which is the real systemic solution -- to prevent the abuses we're currently seeing.

It's just my guess that you could eliminate some redundancy if you consolidated. You may be right that small and discrete could work more efficiently, I'm just throwing ideas out.

This is exhibit one as to why any party advocating any kind of government spending is going to have an uphill fight, at least for the next 50 years or so. (This is not a knock on Jonas, as he has been quite gracious in his response)

Biologically speaking, all living organisms have built in redundancy and you should thank Darwin the next time your nose is stuffed up. Multiple lines of defense and all that. This basic lesson is something that usually has to be learned anew. A lot of programmers around these parts, so I imagine that there are lots of anecdotes about programs with no redundancy built in, or startups with only one copy of the source code, or relying on one programmer and such. The end of the story is always some sort of disaster. Yet the meme continually re-emerges that the purpose of redundancy is for it to be eliminated. Efficiency is something that can only be created from within, it very rarely is imposed from without.

The term of art is to "avoid single points of failure," and it very difficult to design systems that satisfy that criterion.

On the other hand, I have also observed large companies running competing projects to achieve the same goal (sometimes more than two such projects), so redundancy can be taken to absurd extremes.

I think it is a truism that all large organizations develop a tendency to preserve themselves, even when it is contrary to the organization's real goals. Here is my favorite humorous expression of the phenomenon:

News Release: New Element Discovered

The heaviest element known to science was recently discovered by
physicists. The element, tentatively named Administratium, has no
protons or electrons and thus has an atomic number of 0. However, it
does have:

1 neutron
125 assistant neutrons
75 vice-neutrons
111 assistant vice-neutrons

This gives it an atomic mass of 312. The 312 particles are held
together by a binding force that involves the continuous exchange of
meson-like particles called morons.

Since it has no electrons, Administratium is inert. However, it can be
detected chemically, as it impedes every action with which it comes in
contact. According to the discoverers, a minute amount of
Administratium caused one reaction to take four days to complete when
it would have normally occurred in less than one second.

Administratium has a normal half-life of approximately three years, at
which time it does not actually decay but instead undergoes a
reorganization in which assistant neutrons, vice-neutrons, and assistant
vice-neutrons exchange places. Some studies have shown that atomic mass
actually increases after each reorganization.

Research at other laboratories indicates that Administratium occurs
naturally in the atmosphere. It tends to concentrate at certain
points such as government agencies, large corporations, universities,
and church headquarters, and can usually be found in the newest, best
appointed, and best maintained buildings.

Scientists point out that Administratium is known to be toxic at any
level of concentration and can easily destroy any productive reaction
where it is allowed to accumulate. Attempts are being made to
determine how Administratium can be controlled to prevent irreversible
damage, but results to date are not promising.

(Aack! Horrible formatting mistake, sorry!)

Anarch,

but I think there might be some systemic ways -- other than just voting those people out of office, which is the real systemic solution -- to prevent the abuses we're currently seeing.

Yeah, the voting solution is what I'm resigned to. Although if you've got some systemic solutions, I'm dying to hear them...

liberal japonicus,

Yet the meme continually re-emerges that the purpose of redundancy is for it to be eliminated.

I know exactly what you're talking about, and it's not quite what I meant.

I'm thinking of redundancy in terms of facilities, equipment, and maybe clerical support staff. Not to mention the advantages of having people in similiar and related fields in greater proximity to one another. I'm not saying I want more monolithic, single-point-of-failure systems here - just some common sense sharing of mutual resources. And again, the more I think about keeping things small the more that makes sense too, and I'm not sure both ideas are mutually exclusive.

Efficiency is something that can only be created from within, it very rarely is imposed from without.

Quite true, although I think changes in structures and incentives could perhaps change the momentum towards more efficiency.

Jonas
I'm thinking of redundancy in terms of facilities, equipment, and maybe clerical support staff. Not to mention the advantages of having people in similiar and related fields in greater proximity to one another. I'm not saying I want more monolithic, single-point-of-failure systems here - just some common sense sharing of mutual resources.

I don't violently disagree with this. Working in a Japanese university, I spend a lot of time complaining about waste. However, as Francis noted, there are only 5 programs that constituted the bulk of government spending, Defense, Social Security, Medicare, Medicaid, Interest on Federal Debt. Also, I really feel that true efficiency only occurs when virtually everyone signs on to it. I don't see even a small minority accepting it as a goal, but most of the politicians invoking it are treating it as a weapon.

I'd also point out that this kind of elimination of redundancy clears the way for graft and corruption that we see here and here. I'm not saying that efficiency automatically leads to graft, but redundancy does serve a purpose and when we are dealing with 'small' sums (as compared to the big 5), I wonder if it really makes sense at this time.

Also (and this is a bit more of a zinger than I would like it to be, but I can't resist noting it, don't anyone take it personally), I wish someone had complained about redundancy when the administration was setting up B teams to make worst case threat assessments.

But to return to the non-snarky, I think that there has to be a balance between redundancy and efficiency and each case has to be examined separately.

Jonas: Good answers as usual, and may I say that your eminent reasonableness makes you no fun at all. ;)

One small point. You mentioned cutting back clerical staff. This has been cut to the bone in the agencies I'm personally familiar with. But I don't see the efficiency in having professional scientists spending a good part of their day handling clerical duties, squabbling over travel vouchers etc. ad nauseum.

Believe me, every efficiency fad practiced in the private sector and espoused at business schools eventually finds its way into government, too. It's like diet fads. A few pounds are shed but the real fun is adopting the next fad. Maybe the fat girl isn't really fat, but weighs precisely what she should.

May I add that many of the restraints placed on Federal employees in the name of budgetary discipline seem to me to be actually a clever way of impeding agency missions so that they can't do their jobs.

It seems to be a generic American trait to want to create jobs but to fire and layoff as many folks as possible. Personally, I think much of human activity is pointless and a good 75% of folks could stay in bed for efficency's sake. Traffic would improve markedly. ;)

I would just add to all this something I concluded when I interned in state government in my teens: people talk about 'cutting the fat out of government', but most of the fat is related to someone. You almost always cut out the meat instead.

Part of the problem there, hilzoy, is that "fat" is an ill-defined term, and I tend to think this is deliberate. It's much easier to crusade (i.e. campaign) against wasteful excess if you never actually have to think about what this actually means, although it sucks once if you actually try to do something about this when in office (see, e.g., Arnold Schwarzenegger).

Anarch: true, but there are some things that are obvious fat. The problem is, there's always a very good explanation for their existence (good in the sense of successfully explaining, not of justifying.) The actual case that led me to formulate this rule was, iirc, the elevator guys in one MA government building -- this in the 70s, when there was no earthly reason for having people sitting in an elevator, running it. They were, of course, related to friends of the then speaker of the MA house. When people set out to cut the waste, they somehow never got to the elevator guys, for (I imagine) the same reason that people cutting wasteful federal government spending are oddly blind to wasteful spending in the districts of key Congressional leaders.

The problem is, there's always a very good explanation for their existence (good in the sense of successfully explaining, not of justifying.)

Ah, I misunderstood the thrust of your comment: when you said "most of the fat is related to someone" you were being more literal than I'd realized ;) I thought you were saying something akin to "One man's fat is another man's meat", which is what I was addressing.

Big picture, though, maybe it kept the elevator guys off the streets and off of Medicaid for a time.

Unless they were enticed away from their CEO jobs to watch people go up and down.

Probably teenagers who could have been working at Dairy Queen, right? Watching other people drink milkshakes.

Anarch: ah. -- Ever since my days in the MA House, I have assumed that the way to deal with wasteful government spending is to elect people with a conscience, and that having no waste at all is not a feasible option. -- Besides the elevator guys, there were the secretaries: some were competent, but a lot were patronage appointments. In the committee I worked in, which was actually important, one of our secretaries was the girlfriend of one of the speaker's sons, and she was the Platonic form of the ditzy clueless blonde. There's an entire class of sitcoms that make me think: gosh, the people who wrote this must have met Lynne! (She was actually very nice, and always meant well, but she took incompetence to staggering new lows.)

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