April 21, 2007

The Nightmare Of Socialized Medicine Social Security

Jerome-a-Paris tells the story of his family's experience with French socialized medicine. His two-and-a-half year old son had a brain tumor. Here's the story. Americans, eat your hearts out:

[My son] was first diagnosed by our pediatrician, a private sector doctor, who sent us to the (public) specialised pediatric hospital in Paris for additional exams. We did a scan and a MRI the same day, and that brought the diagnosis we know. He was hospitalised the same day, with surgery immediately scheduled for two days later. At that point, we only had to provide our social security number.

Surgery [was performed by] one of the world's top specialists in his field...After a few days at the hospital, we went home. At that point, we had spent no money, and done little more than filling up a simple form with name and social security number.

Meetings with the doctor in charge of his long term treatment, and with a specialised re-education hospital, were immediately set up, and chemiotherapy and physical therapy were scheduled for the next full year.

Physical therapy included a few hours each day in a specialised hospital, with a varied team of specialists (kinesitherapy, ergotherapy, phychologist, orthophonist) and, had we needed it, schooling. As we lived not too far away, we tried to keep our son at his pre-school for half the day, and at the hospital the other half. Again, apart from filling up a few forms, we had nothing to do.

My wife pretty much stopped working to take my son to the hospital every day (either for reeducation or treatment) - and was allocated a stipend by the government as caregiver, for a full year (equal to just under the minimum wage). Had we needed it, transport by ambulance would have been taken care of, free of charge for us (as it were, car commutes to the hospital could also be reimbursed).

During the chemiotherapy, if he had any side effects (his immune system being weakened, any normal children's disease basically required him to be hospitalised to be given full anti-biotic treatment), we'd call up the hospital and just come around. Either of us could spend the night with him as needed. We never spent a dime.

After a year at the specialised hospital, ongoing re-education was moved to another institution specialised in home and school interventions. In practice, a full team of 5 doctors or specialists come to see him over the week, either at home or at school, to continue his treatment (such follow up, possibly less intense than at the beginning, will be needed until he reaches his adult size). Of course, they manufacture braces and other specialised equipment for him and provide it free of charge to us.

Check up exams take place every 3 months, with all the appropriate exams (usually including a MRI), and we've never had to wait for the appointments. Again, no cost for us, no funds to be fronted.

When he relapsed, our doctors considered all available options. In the end, the most promising technology was in another Paris hospital. Such technology, linked to nuclear research, exists only in 3 places in the world, one in Boston and one in Switzerland, so the French system itself was able to provide a cutting edge option. But had we needed to go to Germany, the UK or even the USA for treatment because that's where the best hope was, the costs of that would have been covered too by French social security.

Now that our son is in first grade, he has the right to special help for handicapped children at school (a fairly recent law), and he now benefits from part time help - a person who is around about 20 hours per week to help him do his work and catch up when he is absent for his therapy. This is paid by the city of Paris and the ministry of education. [...]

So, we did not have to spend a single cent. We got support to be available for him. He gets top notch treatment. We never had to wait for anything. And this is available to absolutely everybody in France, irrespective of your job, age or family situation. If you are badly sick or injured, you simply do not have to worry about money at any time, nor about lack of care. [Emphasis added]

Whenever the local NPR station carries a discussion of single-payer health care systems, there's always some belligerent guy (it's always a guy) who calls in and goes on about the how the US has "the greatest health care system in the world." It never fails. So clueless.

Pass the Freedom Fries.

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May 23, 2005

White House Casting Call Politics  Social Security

Ever wonder how the White House picks the shills who appear on stage with Bush during his Social Security "town meetings"? The LA Times reports on a White House memo that lays out exactly what they're looking for. Excerpt:

As President Bush resumes his cross-country campaign to promote his vision of Social Security restructuring, it's no secret that he is relying on outside organizations to help provide the supporting cast.

Yet a memo circulated this week among members of one group, Women Impacting Public Policy, illustrates the lengths to which the White House has gone to make sure the right points are made at the president's public appearances.

"President Bush will be in Rochester, N.Y., for an upcoming event and has called on WIPP for help," said the memo to New York-area members, from one of the group's leaders. "He would like to visit with local workers about their views on Social Security."

The memo went on to solicit several types of people "who he would like to visit with" — including a young worker who "knows that [Social Security] could run out before they retire," a young couple with children who like "the idea of leaving something behind to the family" and a single parent who believes Bush's proposal for individual investment accounts "would provide more retirement options and security" than the current system. [...]

The women's group memo said the White House was seeking only people younger than 29. It reflected the latest refinement of the White House strategy for promoting its Social Security plan: highlighting the benefits Bush sees for younger workers.

The theme was on full display Thursday as Bush took his campaign to Wisconsin, the 26th state he has visited to promote Social Security restructuring.

"You got any thoughts about Social Security?" Bush asked 22-year-old Concordia University senior Christy Paavola, one of five younger workers who appeared on stage with him at the Milwaukee Art Museum.

"Yes," Paavola said. "I don't think it's going to be there when I retire, which is really scary."

Many young people, the president commented, think they are paying into a retirement system that will never pay them back. He asked Paavola: "Got anything else you want to say?"

"I really like the idea of personal savings accounts," Paavola said.

"You did a heck of a job," Bush told her. "You deserve an A." [My emphasis]

Pardon me while I retch.

Is there anything that comes out of this White House that isn't a made-for-TV lie?

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April 06, 2005

DeFazio Rebukes Bush Politics  Social Security

After Bush's reckless claim yesterday that the Social Security Trust Fund consists of worthless IOUs, Rep. Peter DeFazio (D-OR) took to the House floor to deliver this stinging rebuke [via Atrios]:

[T]he President did say today something extraordinary, in Parkersburg, West Virginia, and suggested something unconscionable. The President said, "There is no trust fund." And then he went on to suggest that our Nation might not honor its debt to Social Security. This is what the President said does not exist.

Let me read from this [bond I hold in my hand]. This is a Social Security Trust Fund bond, considered the best investment in the world, a U.S. Treasury Bond. This is the most privileged of Treasury bonds, issued to Social Security, redeemable at any time at full face value, unlike any other bond that they issue. These are the most privileged of their bonds. The President says it is nothing but an IOU. Well, here is what it [a Social Security Trust Fund bond] says:

This bond is incontestable in the hands of the Federal Old Age and Survivors Insurance Trust Fund. The bond is supported by the full faith and credit of the United States. And the United States is pledged to the payment of the bond with respect to both principal and interest.

The President questions that? He is questioning whether we are going to repay our most privileged debt to Social Security. We have $7.9 trillion of debt. He is adding to it at a record rate, borrowing $1.3 million a minute. Who is he saying we are going to repay and not repay?

Are we going to repay the Chinese but not the Social Security Trust Fund? Are we going to repay President Bush, he happens to have some U.S. Treasury Bonds in his personal portfolio, but not the Social Security Trust Fund? Are we going to repay other wealthy investors around the world and in the U.S., but not the Social Security Trust Fund? [...]

This year Social Security will collect $170 billion more than it needs to pay Social Security benefits, and they are invested in the trust fund. If what the President said is true, there is no trust fund, and we are not going to honor it, then Congress and the President are perpetrating a fraud of extraordinary magnitude on the working people of America, extorting through taxes $170 billion more than they need to pay current benefits that this President has no intention of repaying. That is unbelievable.

Every minute, every minute, this President and this Congress are borrowing $320,000 of Social Security taxes and spending it on something else. And the President says he is replacing it with worthless IOUs; they are not bonds, they are not investments. He questions whether they will be repaid. He questions the full faith and credit of the Government of the United States of America and its willingness, our willingness, to meet our obligations and our debt.

If what the President says is true, then we ought to give the working people of America, instead of the rich people of America, the biggest tax cut in history. Reduce the Social Security tax, which falls more heavily on working people. [Most] working Americans pay more in Social Security taxes than they do income taxes to the Federal Government.

If he has no intention of repaying that $170 billion that he is borrowing this year of excess Social Security taxes, then we should not collect it under false pretenses. We should give people a big tax break. That would stimulate small business, employment, and put a lot of money in the pockets of working people. I am not advocating that.

But if he does not repay it, he should be advocating it, and instead of trying to switch the game and having an irrelevant debate over a so-called privatization plan which actually makes the funding problems of Social Security worse and would require another few trillion dollars of borrowing, in which I guess [bond investors] would get these worthless bonds that the President questions. [My emphasis]

The endgame that Bush and his backers are shooting for is an eventual default on the bonds held by Social Security. That's why they need to drum it into everyone's head that the Trust Fund consists of "IOUs", not US Treasury Bonds. By 2018, if they have their way, we will all have heard this lie so many times that we will think a default is an inevitability, instead of the multi-trillion dollar ripoff that it would be in reality. Bastards.

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IOUs Politics  Social Security

CBS MarketWatch yesterday:

President Bush on Tuesday said the Social Security trust fund doesn't exist, and that the Treasury bonds held by the program are "just IOUs"...

The remarks, which followed a visit to the federal facility in West Virginia that physically houses copies of the special-interest Treasury bonds held on behalf of the Social Security system, drew immediate denunciations from Democrats.

They charged that Bush was dangerously close to implying that the federal government won't stand behind trillions of dollars in debt held by creditors around the globe.

US Constitution, Amendment XIV, Section 4:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions..., shall not be questioned.

Presidential Oath of Office:

I do solemnly swear (or affirm) that I will...to the best of my ability, preserve, protect, and defend the Constitution of the United States.

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March 27, 2005

Cheney Grilled On Social Security Social Security

First Draft has an interesting post about Dick Cheney's Social Security road show. Unlike Bush, Cheney actually takes questions from some genuine, non-shill voters, and it's not going so well. Read it here.

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March 07, 2005

News Flash: Boomers To Retire (Greenspan) Social Security

In today's LA Times, Ronald Brownstein weighs in on Greenspan the hack:

Is he kidding?

That's the only possible reaction to Federal Reserve Board Chairman Alan Greenspan's conclusion last week that the massive federal budget deficit accumulated under President Bush was "unsustainable." Declared Greenspan: "The principle that I think is involved here...[is] that you cannot continuously introduce legislation which tends to expand the budget deficit."

That would be an entirely reasonable — even urgent — warning from someone who didn't bear so much responsibility for the problem he's describing. Greenspan lamenting higher deficits is like New York Yankees owner George Steinbrenner complaining about inflated baseball salaries.

Let's recap. When Bush was elected, the nation had enjoyed three consecutive years of federal budget surpluses under President Clinton. The Congressional Budget Office projected that the government was on track to amass surpluses large enough to pay off the publicly held national debt by 2008. That would make the nation debt free for the first time since the presidency of Andrew Jackson.

Greenspan had reliably supported this fiscal discipline under Clinton. But after Bush's election, Greenspan bent to the prevailing wind. Within days of Bush's inauguration, he gave his seigniorial blessing to tax cuts in testimony before the Senate Budget Committee.

As Bruce Bartlett, a leading conservative economist, wrote at the time: "With Greenspan's support...the last substantive barrier to tax reduction has evaporated." And Congress, with Greenspan's critical reassurance, passed the largest of Bush's massive tax cuts that year.

Greenspan built his argument for tax cuts in 2001 largely on his concern that the projected surpluses would be too large, allowing the government not only to extinguish the debt but also to accumulate financial assets, such as stocks and bonds.

That always seemed a dubious notion. But if that concern was legitimate, it seemed to be pretty well resolved by the time Bush came back for another tax reduction in 2003. The federal budget had already fallen back deeply into deficit...

Against that backdrop, surely the great voice of fiscal restraint would counsel caution about burdening future generations with more debt through more tax cuts.

Well, sort of. Greenspan, to his credit, said the second round of tax cuts shouldn't be passed without offsetting spending reductions. But he never seriously pushed Congress to reconsider the initial tax cuts passed on the obsolete assumption of vast surpluses.

Even today, Greenspan endorses even more borrowing for Bush's Social Security private investment accounts (if not quite as much as Bush wants), and points at spending cuts as the principal answer to the debt trap that he helped to create. Taken together, Greenspan's advice paints him more as an activist committed to shrinking government than a dispassionate banker counseling fiscal prudence. [...]

The best estimate is that over the next 75 years, Bush's tax cuts will cost $11 trillion — about triple the projected Social Security shortfall over the same period that Bush has labeled a crisis.

Greenspan really earned a place in the annals of chutzpah when he raised the impending costs of baby boom retirements as a principal reason why Washington should tackle its deficits. It isn't exactly a news bulletin that large numbers of baby boomers will be retiring at the end of this decade, or that this will swell the costs of Medicare and Social Security.

These trends were well known when Greenspan endorsed tax cuts in 2001. And yet by doing so, he helped sabotage America's best chance to reduce the burden of those costs for future generations.

Let's recap again. Clinton's plan was to use the projected federal surpluses to pay down the national debt. That would have significantly reduced, and eventually eliminated, federal interest payments on that debt (now running just under $180 billion annually). Then he proposed to use those savings to help fund Social Security. [...]

Greenspan last week described this slow-motion crisis as if he were some concerned bystander. But in the federal government's financial crackup, Greenspan's more like the guy at the party who handed the car keys to a drunk. Now, after the wreckage, he's sad. But we'd all be better off if he had spoken up when it could have done some good. [My emphasis]

To summarize, quoting Atrios:

Greenspan supported 11 trillion in tax cuts and then woke up and discovered the baby boomers would retire and cost $3.5 trillion — and the retiring boomers are the fiscal problem.

What is absolutely dumb-founding — and infuriating — is that Greenspan gets away with this sort of mendacity. It's the Emperor's New Clothes, and the guy's bare-assed naked.

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March 05, 2005

Ideology Versus Empathy Musings  Politics  Social Security

A conservative reader sent me a WSJ op-ed (Socialism's Last Redoubt) by former Delaware Governor Pete duPont, in which DuPont argues that the reason people on the left oppose wrecking Social Security is that we're socialists. I.e., it's really the ideology of socialism that we're defending; that's what motivates us. There's much in the piece that's wrong on factual grounds (he argues for a plan that exists only in his imagination; it's not the White House plan at all), but here's the portion I want to comment on:

Ultimately the argument isn't about investment accounts, or stocks or bonds or "gambling" or "insecurity." It is about socialism versus individualism, about Attlee's social justice and Hillary's common good and Chomsky's economic solidarity. [...]

When you increase an individual's wealth, he becomes less dependent on government, and his attitude towards government changes. Socialists can't allow that, for it erodes their fundamental principle that social justice can only be achieved when important segments of the economy are under government control.

And that is why today's very liberal Democratic Party is so vehemently arguing against personal ownership of Social Security market accounts. The government's Social Security system is socialism's last redoubt, and must be preserved at all costs. [My emphasis]

DuPont, of course, was born a multimillionaire, so worrying about retirement is not exactly his area of expertise. That aside, his claim that opponents of Social Security rollbacks are motivated by ideology — that it's not Social Security they're defending, but the larger, abstract idea of socialism itself — struck me at first as sophistry: just a way to make the argument. After all, I oppose wrecking Social Security, and it has never crossed my mind that what was at stake was some ideological conception of socialism in the large. I just don't want to see a lot of poor and middle class people get screwed.

But maybe duPont really believes ideology motivates the left. Why? Because ideology is what motivates him and many of his fellows on the right. Mostly, they want to destroy Social Security for ideological reasons, not out of a sincere concern for the welfare of the many people down here in the real world who depend on Social Security to make the difference between an old age spent eating cat food and one where they're at least getting by. If you see the world in ideological terms, you assume other people do, too. But those other people may actually be looking at the world through a different lens altogether: a lens of empathy, not ideology.

It's empathy that leads us to the conclusion that there are certain things that need to get done, things that government can do but capitalism will never do. So it's not that we love government. It's that government is the means to an end — an end motivated by empathy. Digby:

Capitalism cannot substitute for a democratic government that answers to all the people. The invisible hand doesn’t give a shit if children starve or old people have to work until they are eighty or if half the country has to work at slave wages to support the other half. Only government can guarantee its citizens the equal right to life, liberty and the pursuit of happiness. We believe that progress toward that end requires that the government be active and engaged in delivering those things.

The reason we support Social Security is that it performs a necessary function for which there is no substitute, and it works. And because we care what happens to our fellow citizens. For us, it's not a question of ideology. It's a question of empathy.

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March 04, 2005

Greenspan The Hack Economy  Politics  Social Security

From Paul Krugman:

Four years ago, Alan Greenspan urged Congress to cut taxes, asserting that the federal government was in imminent danger of paying off too much debt.

On Wednesday the Fed chairman warned Congress of the opposite fiscal danger: he asserted that there would be large budget deficits for the foreseeable future, leading to an unsustainable rise in federal debt. But he counseled against reversing the tax cuts, calling instead for cuts in Social Security, Medicare and Medicaid.

Does anyone still take Mr. Greenspan's pose as a nonpartisan font of wisdom seriously? [...]

To put Mr. Greenspan's game of fiscal three-card monte in perspective, remember that the push for Social Security privatization is only part of the right's strategy for dismantling the New Deal and the Great Society. The other big piece of that strategy is the use of tax cuts to "starve the beast." [...]

[C]onservative intellectuals proposed a bait-and-switch strategy: First, advocate tax cuts, using whatever tactics you think may work - supply-side economics, inflated budget projections, whatever. Then use the resulting deficits to argue for slashing government spending.

And that's the story of the last four years. In 2001, President Bush and Mr. Greenspan justified tax cuts with sunny predictions that the budget would remain comfortably in surplus. But Mr. Bush's advisers knew that the tax cuts would probably cause budget problems, and welcomed the prospect.

In fact, Mr. Bush celebrated the budget's initial slide into deficit. In the summer of 2001 he called plunging federal revenue "incredibly positive news" because it would "put a straitjacket" on federal spending.

To keep that straitjacket on, however, those who sold tax cuts with the assurance that they were easily affordable must convince the public that the cuts can't be reversed now that those assurances have proved false. And Mr. Greenspan has once again tried to come to the president's aid, insisting this week that we should deal with deficits "primarily, if not wholly," by slashing Social Security and Medicare because tax increases would "pose significant risks to economic growth."

Really? America prospered for half a century under a level of federal taxes higher than the one we face today. According to the administration's own estimates, Mr. Bush's second term will see the lowest tax take as a percentage of GDP since the Truman administration. And don't forget that President Clinton's 1993 tax increase ushered in an economic boom. Why, exactly, are tax increases out of the question? [My emphasis]

And let's not forget that it was Greenspan who, in the early 80s, convinced Congress to raise the Social Security payroll tax and stash the resulting Social Security surplus in a trust fund that Greenspan said would finance the coming baby boom retirement — the same trust fund that he and others on the right now claim to be an illusion and a fraud.

What these people are up to is a multi-trillion dollar transfer of wealth from the low and middle classes to the wealthiest sectors of society. They get tax cuts, we get program cuts. They get us to pay trillions into the Social Security trust fund, we get benefit cuts when they eventually declare the trust fund's holdings null and void (which is where this is headed). And Greenspan's their mouthpiece.

And now I read that the Democrats' leader in the Senate, Harry Reid, agrees. WaPo:

Federal Reserve Chairman Alan Greenspan generally gets accolades for his public pronouncements. Yesterday he got a brickbat from Senate Minority Leader Harry M. Reid (D-Nev.), who blasted Greenspan as "one of the biggest political hacks we have here in Washington."

Reid ripped Greenspan during an interview on CNN's "Inside Politics." He said the Fed chairman has given President Bush a pass on deficits that have built up in the past four years and should be challenging Republicans on their fiscal policies, rather than promoting Bush's plan to introduce personal accounts into Social Security.

"I'm not a big Greenspan fan -- Alan Greenspan fan," Reid said when asked about the Fed chairman's testimony this week urging Congress to deal quickly with the financial problems facing Social Security and Medicare. "I voted against him the last two times. I think he's one of the biggest political hacks we have in Washington."

Reid said that when Bill Clinton was president, Democrats had confronted the deficit problem by enacting a tax increase in 1993, which helped bring about a balanced budget and strong economic growth later in the decade.

"Why doesn't he respond to the Republicans and tell them the big problem here is the debt that this administration [has] created?" he said. "We had a $7 trillion-dollar surplus when Bush took office. Now we have a $3 or $4 trillion-dollar deficit. That's, in fact, what Greenspan should be telling people." [My emphasis]

Right on, Harry.

Update: [4 Mar 5:11PM] James Wolcott sums it up: "Alan Greenspan, pompous hack. Harry Reid, blunt hero."

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March 03, 2005

Social Security Pledge Social Security

Senate Democrats are asking people to sign their Pledge to Protect Social Security. This simple pledge lays out the reasons why George Bush's privatization plan is not the answer:

Sign the pledge today: http://democrats.senate.gov/ss/pledge.html.

Pass it on!

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February 28, 2005

Constituents Are Pissed Social Security

Republican lawmakers are finding their constituents don't want Bush to mess with Social Security. Josh Marshall yesterday:

There are two important and telling articles on the Social Security debate in [Sunday's] papers, one in the Times and another in the Post, both looking at two sides of the same coin: the collapse of the president's initial effort to phase out Social Security.

The Times piece, by Sheryl Gay Stolberg and Robin Toner, confirms what you could glean if you've been reading the papers closely for the last week: the Republicans' townhall meetings on Social Security have ranged from so-so to terrible, with a few cases that were little short of riots. And they're coming back to DC with an even worse case of the phase-out-willies than they left with.

Sen. Chuck Grassley (R) of Iowa tells the Times, in so many words, that unless the president can pull off a major turnaround in public opinion on this issue, it's over. He goes on to say: "I think 90 percent of the lifting is with the president. That process is starting, but it's starting very slow because too many Republicans and Democrats — how would you say it? — don't have the confidence that this issue is ever going to come up."

There you go right there. And Grassley has also inadvertantly touched on one of the reasons [keeping track of where lawmakers stand] has become more difficult in recent days. Folks just don't want to say anything because they're not at all sure this thing's ever even going to come to a vote. [My emphasis]

Democrats need to stand firm. No deals that touch Social Security itself. Don't throw Bush a life-line; throw him an anchor.

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February 27, 2005

What's The Matter With AARP? Politics  Social Security

Paul Krugman invokes Thomas Frank's What's the Matter With Kansas to elucidate the smearing of AARP. Excerpt:

The slime campaign has begun against AARP, which opposes Social Security privatization. There's no hard evidence that the people involved — some of them also responsible for the "Swift Boat" election smear — are taking orders from the White House. So you're free to believe that this is an independent venture. You're also free to believe in the tooth fairy. [...]

The message of Mr. Frank's book is that the right has been able to win elections, despite the fact that its economic policies hurt workers, by portraying itself as the defender of mainstream values against a malevolent cultural elite. The right "mobilizes voters with explosive social issues, summoning public outrage ... which it then marries to pro-business economic policies. Cultural anger is marshaled to achieve economic ends."

In Mr. Frank's view, this is a confidence trick: politicians like Mr. Santorum trumpet their defense of traditional values, but their true loyalty is to elitist economic policies. "Vote to stop abortion; receive a rollback in capital gains taxes. ... Vote to stand tall against terrorists; receive Social Security privatization." But it keeps working.

And this week we saw Mr. Frank's thesis acted out so crudely that it was as if someone had deliberately staged it. The right wants to dismantle Social Security, a successful program that is a pillar of stability for working Americans. AARP stands in the way. So without a moment's hesitation, the usual suspects declared that this organization of staid seniors is actually an anti-soldier, pro-gay-marriage leftist front.

It's tempting to dismiss this as an exceptional case in which right-wingers, unable to come up with a real cultural grievance to exploit, fabricated one out of thin air. But such fabrications are the rule, not the exception.

For example, for much of December viewers of Fox News were treated to a series of ominous warnings about "Christmas under siege" - the plot by secular humanists to take Christ out of America's favorite holiday. The evidence for such a plot consisted largely of occasions when someone in an official capacity said, "Happy holidays," instead of, "Merry Christmas."

So it doesn't matter that Social Security is a pro-family program that was created by and for America's greatest generation - and that it is especially crucial in poor but conservative states like Alabama and Arkansas, where it's the only thing keeping a majority of seniors above the poverty line. Right-wingers will still find ways to claim that anyone who opposes privatization supports terrorists and hates family values.

Their first attack may have missed the mark, but it's the shape of smears to come. [My emphasis]

The right's propaganda grows increasingly cartoonish and crude. More obvious — to you and me, anyway. When will red-state America finally catch on to the fact that they're being played for suckers? How much cognitive dissonance will finally be enough?

When, for example, will it dawn on them that Good Old Boy Dubya is really Mr. Andover-Yale-Harvard/son of a President/grandson of a Senator/millionaire from birth/dynastic heir of the Connecticut Yankee Bushes? Are people so completely hypnotized by television that they can no longer see right through even something so blatant as that — or this?

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February 26, 2005

How To Fix Social Security — Forever Social Security

Incomes above a certain level — the "cap," currently $90,000 — are not subject to the Social Security payroll tax. This makes the payroll tax an extraordinarily regressive tax. The payroll tax hits everyone at the same rate — up to the cap — but because of the cap, people with incomes above $90,000 pay a lower rate on their overall income than poor people do. The higher the income, the lower the rate. That alone makes the cap bad policy.

But a new actuarial memo [link via Josh Marshall] from the Social Security Administration ups the ante. According to the actuaries, eliminating the cap would make the Social Security system solvent through 2079 (their estimates have a 75-year horizon).

Moreover, in 2079 the Social Security trust fund, "as a percentage of the annual budget of Social Security...would be slightly larger than it is now." (Marshall)

In other words, the system would be solvent through 2079, at which point it would be in better shape than it is currently.

It's a simple fix, and a fair one. Why shouldn't everybody pay the same rate?

Problem solved.

Of course, wealthy "conservatives" will fight tooth and nail to avoid paying the same rate as poor folks. It's just such a burden, being rich.

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February 22, 2005

Why SS Privatization Can't Possibly Work Economy  Politics  Social Security

In an earlier post, I argued that assertions that Social Security privatization will yield higher rates of return are based on a violation of the principle of "no free lunch".

Michael Kinsley expands the argument, in beautifully clear fashion. Here's his reasoning, paraphrased:

Higher returns can come from only two sources: 1) greater economic growth, or 2) other people. Let's take them one at a time.

1) Greater economic growth could come from: a) more capital investment, or b) smarter capital investment. Privatization, however, will accomplish neither.

a) More capital investment: For every dollar diverted from the Federal treasury into private accounts, the government (whose budget hasn't changed, and which has to get funds from somewhere) will have to borrow a dollar by selling bonds. A dollar spent buying bonds is a private investment dollar that cannot be spent on stocks. Net result: investment in stocks is unchanged.

b) Smarter capital investment: There is no reason to think privatization will result in smarter capital allocation. If anything, privatization is likely to lead to less intelligent allocation of capital, as millions of inexperienced investors enter the market.

2) If privatization doesn't cause greater economic growth, higher returns must come from other people. I.e., other people have to get lower returns.

a) Proponents of privatization assume that stocks will outperform bonds. If that's true, stocks' better long-term returns must come from fools who sell stocks (you can only buy stocks from someone who's selling them) — so they can buy bonds, for example.

b) "In other words, [Kinsley says,] privatization means betting the nation's most important social program on a theory that cannot be true unless many people are convinced that it's false."

c) And even if stocks do initially yield a higher return, the market will adjust. I.e., if stocks are a bargain, people will bid up their price until they are no longer a bargain. It's Econ 101, what I called the principle of "no free lunch."

QED

Social Security privatization is smoke and mirrors. Snake oil. You can't create something out of nothing.

There's no free lunch.

Posted by Jonathan at 06:00 PM | Comments (1) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

February 11, 2005

Social Security Killing Bush's Numbers Politics  Social Security

Social Security is killing Bush's numbers. AP:

The public's confidence in President Bush's job performance and the nation's direction has slipped in the opening weeks of his second term, particularly among people 50 and older, according to an Associated Press poll.

Adults were evenly divided on Bush's job performance in January, but now 54 percent disapprove and 45 percent approve. The number who think the country is headed down the wrong track increased from 51 percent to 58 percent in the past month. [...]

The poll, conducted for the AP by Ipsos-Public Affairs, was taken after the president's State of the Union address and the elections in Iraq and at the start of a heated debate over creating personal Social Security accounts.

Older Americans, especially those 65 and above, were most responsible for the declining confidence and approval numbers.

Time to manufacture a new crisis.

Posted by Jonathan at 01:14 PM | Comments (1) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

February 08, 2005

It's All About Ideology Social Security

Why are right-wingers so intent on dismantling Social Security? It's all about ideology. I think that's obvious (does anyone seriously believe the right-wing's zeal is based on an urgent desire to help the lower and middle classes?), but you don't have to take my word for it. Here's Stephen Moore of the Club for Growth and the Cato Institute:

Social Security is the soft underbelly of the welfare state. If you can jab your spear through that, you can undermine the whole welfare state.

Social Security first. Medicare/Medicaid next.

Posted by Jonathan at 11:45 AM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

Lying About Race Social Security

The White House and their flacks in the media have been pushing the idea that Social Security is a bad deal for African-Americans because African-Americans have a shorter life expectancy. This argument is an out-and-out lie.

African-Americans have a shorter life expectancy at birth because of much higher infant and childhood mortality and higher death rates for young adults. African-Americans who reach retirement age have almost the same life expectancy as whites. For this and other reasons, Social Security actually treats African-Americans as well as or somewhat better than whites. Paul Krugman explains (NYT, 28 Jan 2005):

This week, in a closed meeting with African-Americans, Mr. Bush asserted that Social Security was a bad deal for their race, repeating his earlier claim that "African-American males die sooner than other males do, which means the system is inherently unfair to a certain group of people." In other words, blacks don't live long enough to collect their fair share of benefits.

This isn't a new argument; privatizers have been making it for years. But the claim that blacks get a bad deal from Social Security is false. And Mr. Bush's use of that false argument is doubly shameful, because he's exploiting the tragedy of high black mortality for political gain instead of treating it as a problem we should solve.

Let's start with the facts. Mr. Bush's argument goes back at least seven years, to a report issued by the Heritage Foundation — a report so badly misleading that the deputy chief actuary (now the chief actuary) of the Social Security Administration wrote a memo pointing out "major errors in the methodology." That's actuary-speak for "damned lies."

In fact, the actuary said, "careful research reflecting actual work histories for workers by race indicate that the nonwhite population actually enjoys the same or better expected rates of return from Social Security" as whites.

Here's why. First, Mr. Bush's remarks on African-Americans perpetuate a crude misunderstanding about what life expectancy means. It's true that the current life expectancy for black males at birth is only 68.8 years - but that doesn't mean that a black man who has worked all his life can expect to die after collecting only a few years' worth of Social Security benefits. Blacks' low life expectancy is largely due to high death rates in childhood and young adulthood. African-American men who make it to age 65 can expect to live, and collect benefits, for an additional 14.6 years - not that far short of the 16.6-year figure for white men.

Second, the formula determining Social Security benefits is progressive: it provides more benefits, as a percentage of earnings, to low-income workers than to high-income workers. Since African-Americans are paid much less, on average, than whites, this works to their advantage.

Finally, Social Security isn't just a retirement program; it's also a disability insurance program. And blacks are much more likely than whites to receive disability benefits.

Put it all together, and the deal African-Americans get from Social Security turns out, according to various calculations, to be either about the same as that for whites or somewhat better. Hispanics, by the way, clearly do better than either.

So the claim that Social Security is unfair to blacks is just false. And the fact that privatizers keep making that claim, after their calculations have repeatedly been shown to be wrong, is yet another indicator of the fundamental dishonesty of their sales pitch. [My emphasis]

Lying bastards.

Posted by Jonathan at 11:36 AM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

February 07, 2005

Bait And Switch Social Security

For months, conservatives have been arguing for Social Security privatization on the basis that investments in stocks and bonds will yield greater returns. I.e., they've been basing their arguments on an imagined Social Security plan in which people just get to take some portion of their Social Security taxes, invest them, and reap the proceeds. The White House has stood by and allowed the argument to proceed on those grounds.

Well, guess what. It turns out that is not the White House plan. Under the White House plan private account gains will be offset by reductions in benefits, leaving private account investors actually considerably worse off.

An editorial in the Minneapolis Star Tribune summarizes it nicely:

There are so many deceptions to discuss in President Bush's plan for dismantling Social Security, and many of them require complex explanations to show just how deceptive they are. For now, let's take on a couple. Please pay attention, young workers, because you get taken to the cleaners by his plan.

The structure of Bush's private accounts isn't new; it was offered as "Plan 2" by the 2004 President's Commission to Strengthen Social Security, so it has been pretty well studied.

In addition to the private accounts, the Bush plan envisions future benefit cuts for everyone. The line being peddled by the White House is that private accounts would more than offset the cuts, leaving younger people better off. That is simply not the case.

Using figures and economic assumptions from the Congressional Budget Office, the Center on Budget and Policy Priorities, a highly regarded liberal think tank in Washington, did the calculations. Here's what they found for first-year benefits for a worker now 25, of median income, who retires at age 65:

• If nothing is done to Social Security, some time between 2042 and 2052 (opinions differ) there would not be enough revenue flowing into the program from payroll taxes and its trust fund to cover the benefits flowing out. If benefits then were cut just enough to make up the difference, our hypothetical worker's annual benefits at retirement would decline $800, from $20,500 to $19,700.

• If the Bush plan is enacted, our worker puts the maximum allowable amount into a private account and the economy performs as the CBO expects, our worker would get only $13,097. Who wants to sign up?

Bush also says you own your private account and that you can pass it on to your heirs. Neither is true. In effect, the government loans you part of your Social Security tax to invest in a private account. But through a mechanism called "benefit offsets" that loan must be repaid at retirement, with interest (starting at 3 percent but adjusted for inflation).

What does that mean? Let's say you put $1,000 in your private account annually for 40 years, and you get a pretty-good 4 percent annual earnings on your investment. The value of your account would grow to $99,800. But the government would deduct $78,700 from your Social Security benefits, leaving you only $21,100, about 20 percent of what your account had accrued. If you earn only 3 percent on your investments, you don't come out a dime ahead from the private account, but you still suffer cuts in your guaranteed benefits.

In addition, most of the money in your private account could be passed to your heirs only if you die before you retire. The government would convert most of the value of your account into an annuity and give it to your heirs. If you live to retirement, the annuity goes to you, and when you die, whether one day or 20 years after retirement, the remaining value of the annuity reverts to Uncle Sam.

Younger workers should not be bamboozled. Something must be done to ensure Social Security pays them the benefits they deserve, but the system is in no danger of "bankruptcy." Bush's plan would make the existing problem worse rather than better, and younger people would bear the resulting financial pain. [My emphasis]

My conservative readers: stop arguing in favor of a plan that doesn't exist. Realize that you have been used. The White House wants to dismantle Social Security. Privatization will not leave people better off. Come clean.

Posted by Jonathan at 09:01 PM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

Bush Explains His Social Security Plan Social Security

From the White House's own transcript [via Digby], here's Bush explaining his Social Security plan during Q&A at a public rally in Florida on Friday:

Because the — all which is on the table begins to address the big cost drivers. For example, how benefits are calculate, for example, is on the table; whether or not benefits rise based upon wage increases or price increases. There's a series of parts of the formula that are being considered. And when you couple that, those different cost drivers, affecting those — changing those with personal accounts, the idea is to get what has been promised more likely to be — or closer delivered to what has been promised.

Does that make any sense to you? It's kind of muddled. Look, there's a series of things that cause the — like, for example, benefits are calculated based upon the increase of wages, as opposed to the increase of prices. Some have suggested that we calculate — the benefits will rise based upon inflation, as opposed to wage increases. There is a reform that would help solve the red if that were put into effect. In other words, how fast benefits grow, how fast the promised benefits grow, if those — if that growth is affected, it will help on the red.

Okay, better? I'll keep working on it. (Laughter.)

I guess it really does matter if you elect a guy who's spent his whole life running away from studying and reading. Bush groupies think this kind of incoherence is endearing and cute, but an explanation this garbled indicates a garbled mind. The guy doesn't understand his own plan. Scary.

Posted by Jonathan at 03:04 PM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

February 05, 2005

Why Isn't This Front Page News? Social Security

Buried in paragraph 25 of a 26-paragraph story in Friday's NYT [via Daily Howler]:

Some Republicans have even gone so far as to suggest the one approach Mr. Bush did not mention in his speech, raising the ceiling on income subject to payroll taxes, which is now about $90,000 a year. The idea appeals to some politicians because only about 6 percent of Americans earn more than $90,000 a year. Imposing Social Security taxes on incomes of up to $200,000 would come close to eliminating the entire deficit. [My emphasis]

Let that sink in. If we just raise the ceiling on the amount of income that is subject to the payroll tax, the whole problem is solved.

This little fact demonstrates just how completely dishonest all of the hysterical White House rhetoric has been. Why honest conservatives don't distance themselves from this kind of dishonesty is beyond me. And the fact that it's buried at the very end of a very long article, where hardly any readers will ever see it — just business as usual in the so-called liberal media.

Update: [5 Feb, 6:55 PM] Perhaps I should add: the payroll tax currently is an extraordinarily regressive tax. As it stands now, upper-income people are taxed at a lower rate than lower-income people, because only part of their income is taxed. Raising the ceiling is not a radical idea. Far from making the payroll tax a progressive tax, it will just make it a flat tax — at least, for people whose incomes don't exceed the new ceiling; they will still pay a lower rate. If the ceiling were removed altogether, the result would still only be a flat tax. Upper-income people who whine about paying the same percentage as poor folks should be ashamed of themselves.

Posted by Jonathan at 12:06 PM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

February 04, 2005

A Bit Of Fact-Checking Social Security

A juicy tidbit courtesy of Josh Marshall. In his State of the Union speech, Bush said:

Our society has changed in ways the founders of Social Security could not have foreseen. In today's world, people are living longer and therefore drawing benefits longer — and those benefits are scheduled to rise dramatically over the next few decades.

Sounds plausible, and sounds like a problem. Except it ain't true. Roger Lowenstein, NYT:

In 1934, when Franklin Roosevelt formed the Committee on Economic Security to design what was in effect the first federal safety net, the committee hired three actuaries to stargaze into the future. The actuaries predicted that the proportion of Americans over 65 — then only 5.4 percent — would rise to 12.65 percent in 1990, meaning that retiree costs would soar. They were just a tad high; the actual figure would be 12.49 percent. [My emphasis]

So, the founders of Social Security not only anticipated the demographic changes, they planned for an age distribution slightly worse than what has occurred. Not that anyone in this White House lets facts get in the way of a good sound-bite.

Posted by Jonathan at 04:43 PM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

February 03, 2005

Priorities Politics  Social Security

Don't believe the hype. If Bush et al really cared about fixing Social Security (as opposed to dismantling it for ideological reasons), they wouldn't have pushed the Medicare drug benefit giveaway to the drug companies, nor would they be pushing to make Bush's tax cuts permanent.

Let me quote again from a WaPo article cited in an earlier post:

In fact, Social Security is on a sounder footing now than it has been for most of its 70-year history. Without altering any of its particulars, its trustees say, it can pay full benefits straight through 2042. Over the next 75 years its shortfall will amount to just 0.7 percent of national income, according to the trustees, or 0.4 percent, according to the Congressional Budget Office. That still amounts to a real chunk of change, but it pales alongside the 75-year cost of Bush's Medicare drug benefit, which is more than twice its size, or Bush's tax cuts if permanently extended, which would be nearly four times its size.

In short, Social Security is not facing a financial crisis at all. It is facing a need for some distinctly sub-cataclysmic adjustments over the next few decades that would increase its revenue and diminish its benefits. [My emphasis]

Ignore their words. Watch what they do.

There is no crisis in Social Security.

Posted by Jonathan at 12:27 PM | Comments (2) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

Think Progress Politics  Social Security

The Center for American Progress has a useful new blog, Think Progress.

Items are color-coded by category. It's got a number of points of rebuttal to Bush's SOTU speech. Check it out.

Posted by Jonathan at 11:26 AM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

Benefit Offset Politics  Social Security

Yesterday, a "senior administration official" gave a Social Security briefing on "background" to reporters in Washington. You'll be hearing more about this briefing in the days to come. It provided a few peeks at the actual details of what the White House has in mind. Short version: it's not what they've been selling. It's way worse. WaPo:

[A] "senior administration official" who briefed reporters on the Social Security proposal earlier today disclosed details of the White House plan that I don't think will play well in Peoria. Most significantly, this official revealed that most or all of the earnings from new "personal" or privatized accounts will be paid not to the holder of the account, but to the government. The senior official called this a "benefit offset." It's one way to finance the creation of these private accounts, but it's going to cause quite a political stir, I think. [My emphasis]

WTF? That's your Ownership Society? Atrios:

But, this shouldn't be a big surprise. Benefit offsets have always been part of the whispered plans.

Facts:

A lot or even most of the money in your private account is just going to deducted from your benefits. Zero sum game.

A lot or even most of the money in your private account is not going to be able to be left as an inheritance — you'll be required to buy an annuity upon retirement, and if you die one day later the money will be all gone.

Small wonder that Bush refuses to provide any details of the actual plan. If people understand what the White House is up to, the plan will be DOA. The only way they can get it passed is via massive disinformation. Think WMD.

Posted by Jonathan at 12:10 AM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

February 02, 2005

SOTU Rapid Response Politics  Social Security

thereisnocrisis.com has set up a page for rapid response to the inevitable distortions and outright whoppers regarding Social Security in the State of the Union infomercial tonight.

They'll be "live blogging" the speech (i.e., blogging on the speech in real time during the speech itself). Following the speech, they'll debunk it and provide links to media polls, tools for letters to the editor, etc. They also have a list of other blogs that will be "live blogging" the speech.

Personally, I don't have the stomach for tuning in to the speech, but I'll be joining a conference call for bloggers sponsored by thereisnocrisis.com following the speech, and I'll try to report back on that.

Posted by Jonathan at 05:04 PM | Comments (0) | Link to this  del.icio.us digg NewsVine Reddit YahooMyWeb

January 28, 2005

Social Security Cartoon Humor & Fun  Social Security

Good one.

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January 20, 2005

Newt: Social Security Not A Crisis Politics  Social Security

Even Newt Gingrich agrees there is no crisis in Social Security. Bloomberg:

Americans are having more babies. The trend, combined with an annual inflow of immigrants that is more than the rest of the developed world combined, may undercut a key argument behind President George W. Bush's plan to allow private Social Security accounts: that the current system faces an emergency because of a sharp decline in the size of the future U.S. workforce.

Even Newt Gingrich, the Republican former speaker of the House of Representatives and a supporter of private accounts, says, "The combination of higher birth rates and more immigration makes the United States the healthiest of developed nations. This is not a crisis." [My emphasis]

Posted by Jonathan at 03:21 PM |