Wednesday, January 14, 2009

Huffingtonpost Tells Liberal Democrats To Drink "Fix Social Security Now" Kool-Aid

Scott Bittle and Jean Johnson called posted yesterday on huffingtonpost "Why Liberals Should Want Obama To Take On Social Security Now," at They claim that Obama's remark last week about looking at "entitlement spending" meant he wants to look at social security, and, of course, they buy the most moronic and hysterical projections about social security. If nothing is done now, "everyone will lose." Gag. While the system has not had such large surpluses now that we are in recession, it remains a fact that in nearly half of the years of the past decade, the system did better than the "low cost" projection under which the system never runs a deficit.

More specifically, Bittle and Johnson make four points: 1) that change now will be OK because the public does not want private accounts. That may be true, but to get Republicans on board we are talking about having to take benefit cuts for somebody, either now or in the future that may well not be needed at all. 2) Doing something now will "avoid a generation war." Why is this? There is no change that can be made that is not going to impact one group more than another. None. The supposed Bush plan would have hit a particular group very hard who were born over a six year period. This is just fantasy land stuff. 3) That doing something to social security is "easier than fixing health care." But, as Obama's campaign certainly knew, the big problem in entitlement spending is the sharply rising projections for health care costs, with the medicare fund already running the deficits that the social security fanatics keep freaking out might happen in 2017 or thereafter for social security. Health care may be harder, but it is far more important. And, as Bush discovered, social security is not all that easy, although perhaps these clowns think it is because they also have this delusion that somehow there is some solution that is not going to impact different age groups differently. Wrong. 4) The Dems are (will be) in control of both the WH and the Congress. So, this means they should do something both unnecessary and stupid? Of all the priorities we face right now, fooling with social security must be rock bottom, and at least the Obama campaign figured this out. Let us hope that the Obama administration remembers it as well after they get into power.


TheTrucker said...

It seem to me that the only problem with social security is declining real wages. If wages would have and would continue to experience a fair share of productivity increases then there would be no SS problem. The conservatives seem to have a self fulfilling prophecy on this: If we continue to offshore all the wages then the system will fail. Surprise, surprise, surprise!!!

My own definition of "real wages" are the wages you can put in the bank. I know that is not the standard "economic" terminology but it should be. The CPI and the GDP can be faked by the "basket of goods" fairy. What doesn't get faked is the discretionary income and disposable income. After I work all week at the mill, what do I have left to put in the bank (after medical insurance, of course)?

Anonymous said...

Since I turn 62 in 2009 I've been quite interested in the whole issue of Social Security. Is this an "entitlement?" No, actually it's an insurance policy administered by the government, and well run to boot.

So, what's the real issue? The "Trust Fund" which is growing despite the economic situation and has provided the basis for all those tax cuts to the most wealthy Americans. However, this trust fund was designed to be consumed and that is anathema to those benefiting from lowered taxes that may well have to be raised when the T-Bills get cashed out instead of rolled-over.

Bruce Webb said...

Well of course I agree with Anonymous in principle. But the notion that the CASH surpluses of Social Security "provided the basis for all those tax cuts" overstates the situation. Over half of the current surpluses in Social Security are simply accrued interest and so not available to fund anything whether that be tax cuts or anything else.

When Bush took office the Trust Funds sat at $1.049 trillion. At year end 2007 they sat at $2.238 trillion. Which might lead some to think that Bush borrowed almost $1.2 trillion. Well no by 2003 interest made up over half of that surplus and that percentage continues to go up. It is one of the oddities of Social Security that the Trust Fund Balances continue to rise even after General Fund transfers start being needed (under conventional projections in 2017).

Basically from 1998 to 2003 we enjoyed a quite large and growing cash surplus from Social Security that was used to mask the real impacts of Bush tax cuts. Now those cash surpluses are shrinking while the tax cuts are still with us. But in any event the surpluses never really came close to financing the Bush plan even though they certainly helped them enable it.

Anonymous said...

Sorry people, the "trust funds" never were. They were all used up by government (Congress and the White House, Democrats and Republicans) years ago. Darn.

Barkley Rosser said...


This is delusional. Sorry. They were leant to the rest of the government, which used them. But the SSA still holds the bonds, which are just as good as those the Chinese hold. Indeed, those bonds are so highly valued that during the worst of the recent financial crises people from all over the world were trying so hard to get them that they drove the interest rates below zero. You are suffering from a severe delusion. There is nothing better to be holding.

Plus, if the low cost scenario comes in, and the system has done better than it as many years as not recently, there will never be a deficit and those bonds will never even need to be cashed in, making your worries even more irrelevant.

Anonymous said...

"Leant to the rest of the government, which used them. But (sic) the SSA still holds the [non-recourse] bonds . . . ". It sounds to me like taking the money out of my right pocket, writing up an IOU to myself, then spending the money. Wow! Now, according to your logic, I still have the money and the goods. Cool!

Actually, I am a trustee of a real pension fund. If I did with those funds what you say the government has done with the Social Security Trust Funds, I'd be in jail (or maybe living like Bernie Madoff?)

Anonymous said...

well anon- please explain in clear and simple terms why the bonds held by the SSA are less tangible than any other US bond.

remember- the dollars I pay in SS taxes are dedicated specific benefits. the dollars I pay in federal income tax go to the general fund. If the general fund borrows money= from whatever source- and gives the borrower a bond- those borrowers must be repaid.

Once again, I think we get confused thinking of the US Federal gov as analogous to a person or a family- just as we do when we think about federal deficit spending as stimulus.

Barkley Rosser said...

Well put, Dale.