Monday, February 24, 2014

Fred Hiatt Doubles Down On Dissing Obama Over Social Security Indexation

Two days ago I dissed Washington Post's Editorial Page Editor, Fred Hiatt, for attacking President Obama for dropping the proposal to change the COLA index for social security to the chained -C-CPI-U measure, that would reduce future benefits by an estimated 0.3% per years.  I said he had "lost his cookies."  I shall not reiterate the arguments there, but now note that he has doubled down today in a signed column on the matter entitled "Is there Change Obama Can Believe In?"  This column does cover other issues, mostly Syria where Hiatt complains that Obama has not supported "free markets and democracy" there, while not remotely addressing how difficult and complicated that issue is.  He also lists a boilerplate set of issues that he says Obama is supporting, but dismissively notes that these are popular, with some of them even supported by Republicans.

However, he starts with his complaint about Obama dropping the chained index proposal, which clearly has him really upset (those darned cookies).  He quotes Obama from 2009 and also  from 2010 stating that (from 2009), "To preserve our long term fiscal health we must address the growing costs of Medicare and Social Security."  He does briefly admit that "Defenders would say that...he's done his bit for entitlement reform with cost-bending measures in Obamacare."  Hmmm, "bit"?  In fact, the change in the medical care cost curve (which also affects Medicaid) has completely transformed the future deficit outlook, drastically reducing those projections.  The few percents impact the chained index change would make would be utterly trivial by comparison, but this is not good enough for Hiatt.

Two further points.  One is that he is all upset that supposedly in 2011 for political reasons "Obama cold-shouldered the fiscal commission he appointed..."  That would be the Bowles-Simpson one that Hiatt as a deep-dyed Washington VSP just loved to bits.  However, as Dean Baker has repeatedly noted, that commission never issued a formal report.  Why?  Because some of its GOP members, led by Paul Ryan, refused to sign off on it because it (eeeek!) contained tax increases.  There never was a formal report, and what Hiatt is referring to was a statement put out by Bowles and Simpson, but that document never had any official backing from the commission.  Getting worked up about Obama's reaction to it is a joke, and, of course, until  recently, Obama was offering the essence of the deal, this chained index proposal if only Republicans would accept some tax increases.  But, they have said no, so why is Hiatt getting so indignant that Obama has pulled back on his offer?

The other is the idea that somehow Obama got elected to propose this.  In fact, during the primary campaign against Hillary, he shifted his position to one of strictly defending Social Security as it stood and stands.  Thus, for all Hiatt's whining, Obama has returned to his position during his initial run for president: to preserve and protect Social Security as it is.  Hiatt and his fellow VSPs need to drop their silly hysteria over the Social Security issue, the sooner the better.

Barkley Rosser

12 comments:

Parker Suzen said...

Hi...
I'm here not to support any one.. Fred Hiatt is attacking President Obama for the dropped proposal of COLA index for social security.

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rosserjb@jmu.edu said...

Um, Parker, fine not to support anyone, but why are you commenting then, please? I have stated a strong position in both this and the previous post on this matter, which is that Fred Hiatt is totally out to lunch on this.

I shall go further. His intense position on this is a sign ultimately of serious incompetence. He should resign as Editor of the editorial page of WaPo, although I fear that libertarian Bezos might replace him with someone like Sasha Volokh who might just start advocating total privatization of Social Security, which would end it.

No wonder today's youth think it will not be there for them.

Sam Baker said...

Today's youth don't believe social security will be there because they rightly assume the United States is morally and financially bankrupt. What they don't know except intuitively is that this bankruptcy is due to the sort of upside down Keynesian logic that you and your comrades on the establishment left and right equally espouse while pretending to hold radically different positions.

Sam Baker said...

A more relevant comment I'd like to leave here relates to the bogus claim you have begun to make repeatedly in your recent blogs, i.e. that Obamacare bent the healthcare cost curve and saves us from entitlement hell. This is an absolutely ludicrous claim. Obamacare hasn't even been rolled out yet thanks to technical delays and executive "adjustements." the cost curve has bent because companies have shifted to higher deductible, lower premium policies. This has injected a modicum of market pricing into the health care market and we've seen the cost curve bend as a result. Thanks but no thanks to Obamacare.

rosserjb@jmu.edu said...

Sam,
I would agree that the source of the bending of the cost curve is at this time unclear and remains to be determined, perhaps never, not to mention that it might end and go back upwards again. Current mainstream views suggest that ACA has played some role in it, but it is not the whole story, with the other components including the recession and a broader push for cost awareness given how high US medical care costs have become, 40% higher than the nearest competitor on that.
Of course, ACA is only a peripheral issue on this thread, which is mostly about Social Security. I am not interested, frankly, on your particular take on moral bankruptcy, etc., but I note that virtually all high income nations now have some form of Social Security, with our particular model closely following that established in the 1880s in Germany by Chancellor Bismarck in an effort to please workers upset at the suppression of the Social Democratic Party, which still exists in Germany. Offhand, I consider Social Security to be something highly moral rather than the opposite. I agree that there is much immorality in the US, but I do not see either ACA or Social Security as remotely a part of this.

Don Levit said...

The morality of Social Security I agree with.
More THAN EVER, RETIREES ARE DEPENDENT ON THAT INCOME.
THE SOCIAL SECURITY TAXES DO PROVIDE A PORTION OF THAT INCOME.
IT IS ECONOMICALLY DANGEROUS TO FUND THE BALANCE OUT OF TRANSFERRING INTRAGOVERNMENTAL DEBT TO DEBT HELD BY THE PUBLIC.
TO ASSESS THAT DEBT IS REALISTICALLY IMMATERIAL, FOR THE U.S. GOVERNMENT OPERATES ON A DIFFERENT PLATFORM THAN A HOUSEHOLD IS TO PROVIDE DIFFERENT ECONOMIC RULES DEPENDING ON THE TYPE OF ENTITY ONE IS DISCUSSING.
DEBT IS POSITIVE IF IT IS INVESTED TO PROVIDE STREAMS OF INCOME FOR THE FUTURE, RATHER THAN TO PAY OFF PAST DEBT.
THAT IS A NATURAL LAW WHICH HOLDS TRUE REGARDLESS OF THE ENTITY INVOLVED.
Don Levit

coberly said...

Rosser

I feel a need to apologize for commenting here. I already know that you will not agree with me. But the other comments here cannot have made you feel any better than I do about the possibilities of public discourse.

My opinion is that as long as Social Security is talked about as though it is welfare there can be no solution to "the problem" other than, of course, treating it as welfare, for good or ill.

But Social Security was carefully designed not to be welfare. If people understand that they are paying in advance for their own basic needs when they will be too old to work, the "solution" is obvious:

A raise in the payroll tax -- really a savings or insurance premium -- of less than a dollar per week per year... for about twenty of the next seventy years... would enable the people to keep their Social Security benefits uncut... indeed, much enhanced... forever.

The role of the government in this is not to "pay for" those benefits, but to manage the pay as you go funding that protects the workers' savings from inflation or market losses. The government also manages the insurance aspect, by which the workers insure each other against arriving at old age without having been able to save enough even for a basic retirement.

Again, the key to this is to get the workers to understand... and force the Congress to understand... that it's THEIR money, they "paid for it themselves" and can continue to pay for it themselves forever. As long as they can stop the right and the left from talking about it as though it was welfare and insisting upon a welfare solution: either benefit cuts or higher taxes on the rich.

Bruce Webb said...

Sam important parts of ACA went into effect in 2010, including the components most responsible for changing Medicare projections (unfounded liability for Medicare dropped by around 75% or around $30 Trillion (with a 'T') in the Report released a year after passage of ACA. That the Exchange didn't go into effectual until 2014 is immaterial, to the extent tht ACA is at least partially responsible for the bending of the cost curve for health care generally those effects would have been expected to start when they did.

rosserjb@jmu.edu said...

Sam,

let me return to your original point that somehow it is reasonable for youth not to expect to receive Social Security. Sorry, but that is not reasonable as Bruce Webb and I have shown repeatedly over the years. They will only fail to do so if they are stupid enough to elect politicians who shut down the system or if there is such a massive collapse of the entire economy that the stock market and every other alternative source of retirement income will have collapsed totally also.

Bruce Webb and I have blogged on this repeatedly, and the point is that if the standard projection goes through, and there is a "bankruptcy," that is the trust fund is used up, then the subsequent pay-as-you-go system will pay benefits around 120% of what current recipients receive in real terms after inflation. This is the horror story that has young people terrified they will get nothing: they might only get 120% rather than 180% of what current recipients get! Eeeeek! Run for the hills and start thumping Bibles about immorality!

BTW, if you google "Rosser's Equation" (mine, name coined by Bruce Webb), you will find further discussions of this matter.

doc said...

Parker--SS benefits are already indexed, The question is whether to apply a different* method of indexation, one that would reduce the growth in SS benefits based on the recent history of the two methods (unchained vs. chained CPI). I will further note that the VSP are not calling for using chained CPI to index income tax brackets...

Jack said...

I'd like to bring the discussion back to Barkley's original focus, Fred Hiatt as a source of opinion on the subject of Social Security. And I do this only because I think it important to judge the source of an idea as a reflection on the quality of that idea.

What is it that allows Hiatt to be recognized as someone with a valued opinion on any economic issue? He is in the business of public relations and tends to the propagandist side of that profession. That statement is based upon a review of Fred Hiatt's credentials as an ideologist in the field of economics and its parts, one of which is retirement programming. Hiatt has no expertise what so ever in this field. He holds an under graduate degree from Harvard; evidence that he isn't stupid. His entire career has been spent in the field of journalism, primarily at the Washington Post. His opinions are just that, and opinions are not subject to the need for objective validation. Hiatt is pressing an ideology. When discussing his ideas it should be required that his lack of expertise be examined relative to the subject of the ideas under discussion.

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