A Forum for Grinches and Ho-Ho-Hoes

[Gattigap]

Originally posted by Tyrone Slothrop
Why are the Administration's economic predictions gloomier when they talk about Social Security? Why, bilmore, why?

• DOES BUSH BELIEVE IN THE CRISIS? Following up on the post below and a suggestion from Nick Confessore, I thought it would be instructive to compare the Social Security Administration's economic forecasts on which the alleged "crisis" is based to the administration's own growth forecasts. The SSA says that "the average annual growth in real GDP is projected to be 2.9 percent over the short-range projection period (2004-13), a slower rate than the 3.3 percent average observed over the historical 40-year period (1962-2002)." Meanwhile the White House's Council of Economic Advisors has recently released its own economic forecasts (PDF) for the years 2004-10, concluding that we'll see an average of 3.4 percent growth for that seven-year period.
  For the numbers to work out, we'd need to see an extraordinary collapse to 1.87 percent average annual GDP growth for 2011-13. Another way of putting this would be that for five out of the seven years in which their projections overlap, the administration's estimates for productivity growth are higher than those used in the SSA's intermediate forecast. If even the White House doesn't believe the SSA's short-term forecasts (i.e., the ones that are most likely to be accurate) why should the rest of us (and the press and politicians in general) be expected to take their 75-year (and even infinite horizon!) forecasts seriously?

Matt Yglesias at TAPPED.

Actually, this tension will only increase as the Administration also pushes its (next) tax cut plan.

The breaking point will occur when Bush has to explain his rationale while employing (and pronouncing) the term "asymptote."

[Tyrone Slothrop]

Originally posted by Gattigap
Actually, this tension will only increase as the Administration also pushes its (next) tax cut plan.

The breaking point will occur when Bush has to explain his rationale while employing (and pronouncing) the term "asymptote."

Not if he "refuses to negotiate with himself."

[Gattigap]

Originally posted by Tyrone Slothrop
Not if he "refuses to negotiate with himself."

Fair point.

"John, I don't get to write the growth projections ...."

[Hank Chinaski]

Originally posted by Gattigap
Actually, this tension will only increase as the Administration also pushes its (next) tax cut plan.

The breaking point will occur when Bush has to explain his rationale while employing (and pronouncing) the term "asymptote."

Help me.

SS will go broke in about 2050 unless fixed soon. Bush has a proposal, you don't like it- okay- it seems like the sort of thing that really should be a joint Dem/Rep solution since it's long term, and will necessarially span several administrations. What is the Dem solution? Hillary was co-President for 8 years. Why didn't we hear about it then? What was his solution?

Let them eat cake?

I know I still need to get used to "We're in power-we'll always be in power- and the also-rans will bitch"- like on HS b-ball when Thurgreed was second string to me, and he kept saying I shoot too much when I came near during time outs. But really, like I finally told T. back then, you don't have a better shot, so shut up, please.

[sebastian_dangerfield]

Originally posted by Gattigap
One possible downside of SocSec privatization is that, despite its moral superiority, perhaps many Americans wouldn't want to be overwhelmed by the choices it presents.

• People want control over their lives; they value their freedom. But the first reason to wonder whether "ownership" is always good is that it can be stressful. It may be true, as promoters of ownership like to say, that nobody ever washed a rented car; but renters are very happy not to have to get the hose out. If it's up to you to choose how to invest your pension account, agonizing over health stocks vs. Asian bonds may not be such a privilege.
  
  It's not just that financial planning is a dry topic to most folks. It's that modern life is overloaded with choices. In "The Paradox of Choice," the Swarthmore College psychologist Barry Schwartz shows how a certain measure of choice can be liberating but how too much is a treadmill -- sometimes even triggering depression. Freedom and choice are wonderful things that allow us to realize our human potential. But there's a limit to how many choices each of us has time to make, and most people in the rich world are pretty much maxed out already.
  
  You see this truth in the behavior of the affluent, who actually pay to avoid choices. They hire home decorators so they don't have to stare glassily at 200 kinds of curtain rail. They hire marriage planners so they don't have to fret about cream napkins vs. white ones. There are said to be 10,000 wedding consultants practicing in the United States. If the rich are deliberately avoiding choice, why are we so sure that the majority want more of it?
  
  Ownership does not merely involve choice; it involves risk also. A certain measure of risk is fine; indeed, if you want a dynamic society it's positively essential. But just as the modern economy threatens Americans with choice overload, so it also piles more risk on the shoulders of the average citizens. The risk of not being able to afford health care has risen, albeit because health care has more to offer than it used to. Fewer people have risk-free "defined benefit" pension plans that guarantee a fixed proportion of salary upon retirement. An index devised by Yale's Jacob Hacker shows that income volatility has increased sharply since the 1970s. Given that risk is already on the rise, perhaps public policy should avoid adding to it?

I've seen a whole load of articles lately about the horrors of having too many options/risky decisions to make. This is part and parcel of a greater fearful reaction to the flood of information we get regularly as a result of technology. Some Americans have this fucked up reaction to knowledge - they actually seem to believe you can know too much, or have TMI about a given topic. I hear this shit from old people all the time - "We were better off when things were simpler." Ignorance is bliss. One idiot in one of last month's NRs actually hinted that we should re-embrace religion and stop researching genetics because we're better off "believing" in an absolute than learning the scientific bases for everything. That writer's prime concern was the fact that scientists are beginning to unravel the synaptic and chemical components of what we've called our "souls" or "inner selves" for centuries. Having choice is the worst of all worlds for the "ignorance is bliss" crowd. Now, not only are they forced to think, they're forced to make decisions based on processing varying data. This is the point where the radical left and right are in agreement. They both want a larger group to make all their decisions for them. Jesus or Uncle Sam? Which will it be? Just. Don't. Make. Me. Responsible.

There are far too many rubes and imbeciles in this nation to privatize SS, but in theory, I love Bush's idea.

The simple solution to the problem of too much choice for the unskilled or scared SS investor is to offer them an opt out. They should be allowed to opt out of choosing their own investments and allow theit account to be managed by the govt. If they want to change that later - as they will when the next tech boom erupts - they should have to go through a rollover period sort of like when you roll your pension into an IRA.

[Gattigap]

Originally posted by Hank Chinaski
Help me.

SS will go broke in about 2050 unless fixed soon. Bush has a proposal, you don't like it- okay- it seems like the sort of thing that really should be a joint Dem/Rep solution since it's long term, and will necessarially span several administrations. What is the Dem solution? Hillary was co-President for 8 years. Why didn't we hear about it then? What was his solution?

Let them eat cake?

I know I still need to get used to "We're in power-we'll always be in power- and the also-rans will bitch"- like on HS b-ball when Thurgreed was second string to me, and he kept saying I shoot too much when I came near during time outs. But really, like I finally told T. back then, you don't have a better shot, so shut up, please.

Hank,

I appreciate the humor that scatology brings, but the holiday season seems to induce really weak shit from you. Must be the egg nog.

The problem is that Bush's proposal, such as it is, doesn't really solve anything. It's a massive change that converts a welfare program into government controlled 401(k)s, but does little to fix the problem that you're so concerned about.

Bush is proposing a solution that, far as I can tell, even its advocates concede won't solve the problem by itself*. Like I asked earlier, if you can point me in the direction of something that actually refutes the proposition that privitization *can't* create the boost necessary to make SocSec solvent by 2050 (or whenever), I'd like to hear it.

It's also a problem which, btw, can be addressed easily over the next 50 years by tinkering with the tax rate or with the level of benefits. That's a touchy problem, though, so I can understand at some level Bush's inclination to THINK BIG, and in a way that distracts us from actually addressing the problem.

While we're at it, we can also talk about the ONE TO TWO TRILLION DOLLARS required to make this adjustment to accommodate the ideological fantasies of conservatives if you'd like to, but since Bush has declared that we'll borrow every single dime of that amount, we'd better have that discussion quickly before the Administration takes the borrowing off-budget, and we never hear about it again but start wondering why the dollar's valuation has fallen off the edge of a fucking cliff.

The problem with your "Oh, yeah? Where's YOUR proposal" argument is that

(1) Bush hasn't actually proposed anything of substance yet, other than the orgasmic word "privitization." The pity is that, according to the man's press conference yesterday, Bush's White House actually doesn't make legislative proposals -- instead, they come up with the Big Idea, and waits for someone in Congress to find a way to make it work in the Reality Based Community.

When he's able to find someone Republican in the hallways of Congress who can grab a #2 pencil and write down exactly how this is going to work, and how he intends to pay for it, then let's talk.

(2) There's not universal agreement that we've got a crisis today. Arguing that we do is part of the reason that we've got an administration churning out sunny-day estimates for tax cut purposes, but an SSA predicting an oncoming typhoon. If Bush really wants to tackle a crisis, we can talk about Medicare, which will dwarf any problems SocSec might pose. The challenge there, I suppose, is that it's harder to refashion Medicare benefits into a private account that can be played in the markets.

(3) When the GOP solution is one that ignores any financial pain whatsoever, relying on the opposition to provide one that is tethered to the constraints of reality is a bit disengenuous, don't you think?

Gattigap




* See, for example, the GAO's own statement that "The creation of private accounts for Social Security will not deal with the solvency and sustainability of the Social Security fund." Once the Ownership Society's orgasm from Bush's proposal has receded, and we're into its multi-month refractory period, we'll have to face up to this unpleasant fact.

[sgtclub]

Originally posted by sebastian_dangerfield

The simple solution to the problem of too much choice for the unskilled or scared SS investor is to offer them an opt out. They should be allowed to opt out of choosing their own investments and allow theit account to be managed by the govt. If they want to change that later - as they will when the next tech boom erupts - they should have to go through a rollover period sort of like when you roll your pension into an IRA.

I was with you until the end. The government should not be in the investment business.

I too can't understand the objections to doing something about SS. You (not you Sebby, the universal you) may not agree with the proposals (which is difficult, because they have not really been presented yet), or you may not think the Bush team knows what they are doing, but I'm not sure how anyone can take the position that the status quo is OK.

[Gattigap]

Originally posted by sebastian_dangerfield
There are far too many rubes and imbeciles in this nation to privatize SS, but in theory, I love Bush's idea.

The simple solution to the problem of too much choice for the unskilled or scared SS investor is to offer them an opt out.

Agreed, an opt-out would resolve the problem of too many choices. I suppose you could tie those people to an overall stock index fund, and they'd be fucked only in the event of an overall market decline. But the question is really if we want the government to play the markets for us. I don't really have the requisite degree of confidence in it.

As an aside, I recently heard one opponent of privitization frame the issue this way, which I thought was interesting: Most people have three legs to the "stool" of retirement. One being a pension or 401(k) or something similar (if they have that), which is dependent on stock market risk; one being their equity holding (usually their house) which is dependent to some degree on housing market risk, and then government assistance through SocSec. Among the discussion about SocSec reform is whether Americans, as much as we like free markets, really want ALL of our retirement resources dependent upon the vagaries of those markets.

[Gattigap]

Originally posted by sgtclub
I too can't understand the objections to doing something about SS. You (not you Sebby, the universal you) may not agree with the proposals (which is difficult, because they have not really been presented yet), or you may not think the Bush team knows what they are doing, but I'm not sure how anyone can take the position that the status quo is OK.

I'm not sure that many people really take that position.

People generally agree that the problem is a big one, albeit one that is generational in duration, and where the big hit occurs decades hence. It's a good idea to fix it sooner, rather than later, and preferably now.

Think of it as a half-completed train trestle across a river. The train is approaching, and people have dithered for years over whether to increase taxes to finish the trestle, or keep funds as they are and use cheaper materials. The Bush Administration's Big Idea is akin to eschewing both of those solutions for getting the train across the river but instead building a gigantic fucking catapult.

This idea, of course, is good news of messianic proportions to the local catapult industry, but those who object this "plan" shouldn't necessarily be described as wanting only the status quo.

[Tyrone Slothrop]

Originally posted by sgtclub
I'm not sure how anyone can take the position that the status quo is OK.

If the GOP really thinks that the prospect of a Social Security that (like, e.g., the military) will start drawing on general revenues in 2050 is so bad, why isn't it doing something about the massive structural deficits we have now, or the problems with the Medicare system that we'll be confronting much sooner? Social Security is hardly the greatest of our problems now.

eta: And the idea of adding trillions to the deficit to "save" Social Security from running deficits decades in the future would be comical if not for the fact that so many conservatives seem to be suspending cognitive functioning to line up behind it.

[sgtclub]

Originally posted by Gattigap
I'm not sure that many people really take that position.

People generally agree that the problem is a big one, albeit one that is generational in duration, and where the big hit occurs decades hence. It's a good idea to fix it sooner, rather than later, and preferably now.

Think of it as a half-completed train trestle across a river. The train is approaching, and people have dithered for years over whether to increase taxes to finish the trestle, or keep funds as they are and use cheaper materials. The Bush Administration's Big Idea is akin to eschewing both of those solutions for getting the train across the river but instead building a gigantic fucking catapult.

This idea, of course, is good news of messianic proportions to the local catapult industry, but those who object this "plan" shouldn't necessarily be described as wanting only the status quo.

I think the opposition is purely ideological - the DEMs don't want to see an undoing of one of the pillars of the New Deal.

It seems to me that there is a lot of room to strike a deal here. Would you object to some combination of raising the minimum age and allowing self directed investment accounts for a portion of an individual' SS account?

[sgtclub]

Originally posted by Tyrone Slothrop
If the GOP really thinks that the prospect of a Social Security that (like, e.g., the military) will start drawing on general revenues in 2050 is so bad, why isn't it doing something about the massive structural deficits we have now, or the problems with the Medicare system that we'll be confronting much sooner? Social Security is hardly the greatest of our problems now.

They should.

eta: And the idea of adding trillions to the deficit to "save" Social Security from running deficits decades in the future would be comical if not for the fact that so many conservatives seem to be suspending cognitive functioning to line up behind it.

This is a now or later problem. It would cost between $1.5-2.0 trillion now, or up to $10 trillion later.

[Sidd Finch]

Originally posted by sgtclub
I think the opposition is purely ideological - the DEMs don't want to see an undoing of one of the pillars of the New Deal.

Oh, piff. Dems don't want to see SS undone because it has worked extraordinarily well. Identify a Republican program that has achieved its desired goal for 60 years and is projected to achieve it for another 30.... and achieve 75% of its goal thereafter. SDI?

When the undoing of the program will cost 4 trillion dollars (yes, I know -- Bush only wants to borrow 2 trillion or so, but what will the cost of that debt be?), and will not address the problems of the program, and may well give rise to new and worse problems.... well, I suppose that's merely an ideological response, right?

It seems to me that there is a lot of room to strike a deal here. Would you object to some combination of raising the minimum age and allowing self directed investment accounts for a portion of an individual' SS account?

Why does the former require the latter? The minimum age should be raised to reflect reality -- the reality of longer lifespans, longer working lives, etc.

The gov't has already provided numerous options to allow for self directed, tax-advantaged retirement funds. 401(k)s, Keogh, SEP-IRA, IRA, Roth IRA, cash balance accounts, term life insurance, 529 plans (technically not retirement but covering an expense that itself interferes with retirement saving), etc. SS is supposed to be a safety net -- how does it function as one when exposed to the stock market?

[Sidd Finch]

Do people believe that the Fed will actually repay its debt to Social Security?

Or are Repubs finally ready to admit that Ronald Reagan is the biggest tax (the poor)-and-spend President of all time?

[Tyrone Slothrop]

Originally posted by sgtclub
I think the opposition is purely ideological - the DEMs don't want to see an undoing of one of the pillars of the New Deal.

I think the opposition is ideological, and not based merely on nostalgia.

It seems to me that there is a lot of room to strike a deal here. Would you object to some combination of raising the minimum age and allowing self directed investment accounts for a portion of an individual' SS account?

Raising the minimum age? Fine by me, but what are you going to give us for going along with that? I mean, what's the deal?

On the self-directed investment accounts, this is the rub. It's ending Social Security if you don't have a guarantee at the bottom. And how are you going to pay for it? It's making the problem you're pretending to solve worse.