Tuesday, April 24, 2012

The Not-So-Secret Weapon of the Campaign to Destroy Social Security: Cynicism

First, read these two articles, one from the Harvard School of Journalism, the other from the New York Times, back to back.  A match made in heaven, no?

Now that you’ve done your homework, here is my take.  For the past thirty years we have seen repeated campaigns to eviscerate Social Security—to privatize it, siphon off its finances, drain it of its essential social insurance character.  These have failed, not because of the brilliance or commitment of its defenders, but simply because it fulfills a vital social function and is wildly popular.  Even those who, in their heart of hearts, want to crush it to bits, claim to be in favor of “saving” it.  So what’s the strategy of the anti-SS minions?

Cynicism.  Convince younger voters, whose benefits are still decades away, that the program is dying a slow but certain death, and that politicians are too myopic or pandering or just stupid to do anything about it.  From time to time I poll my students, and by a big majority they always tell me that SS will not be around to support them in their retirement.  (Not that this has provoked a big Feldsteinesque spike in their personal savings....)  As this mindset takes hold, it becomes easier to simply tune out the debate over SS.  After all, it’s not like it’s actually going to be there when I’m old, no matter what they say, right?  At some point, it goes from being a third rail to a footnote to just background noise, to mangle a bunch of metaphors.

What I’d like to see are news stories that say something like, “Social Security has had its ups and downs, but it’s in better financial shape now than it was a generation ago, and unless its enemies prevail, it will be there for you when you need it.”


Barkley Rosser said...

I recently gave the lecture to students that has been said here lots of times: the supposed "bankruptcy" amounts to that they (or whomever) will get benefits that are only 115-120% of what current recipients get in real terms, not zero as most of them think from the rhetoric. They barely believe this fact.

I then pointed out that the current argument is that they should accept cuts in their future benefits now because if they don't, well, they might have to accept cuts in their future benefits in the future! This rather pinpoints how distorted this discussion has become.

Really, some of us have been pounding on this for some time, but the established purveyors of nonsense seem to still have their mitts on the microphone.

Don Levit said...

I find it outlandish to say that Social Security is going bankrupt.
Even according to the recent trustees' report, current benefits will still be flowing in even when the trust fund is exhausted.
The Government got Social Security right as a pay-as-you-go system.
They had intended to get the trust fund right for surplus contributions, by reserving the benefits for Social Security beneficiaries in special issue nonmarketable Treasury securities.
Instead of keeping these securities intact for future beneficiaries, however, the principal and interest were spent on current expenses.
As the trustees report correctly points out, we do have a cash shortfall now, as we have had since 2010. And as the report stated, the trust fund is growing only because "these redemptions will be less than interest."
If the special issue Treasury securities had been kept intact, we would, indeed, have a huge cash surplus. Unfortunately, on a cash basis, the only cash available is the current contributions, which do fall short of the cutrent expenses, and is estimated by the report to get worse until trust fund exhaustion (other than the current cash contributions at that future point).
Don Levit

Jack said...

Levit, You continue to promote your own lack of understanding of the Trust Fund assets. Give it up. You've been corrected umpteen times by Bruce Webb, Dale Coberly and me (if to a lesser extent) repeatedly. Go to your local bank and ask what their cash position is. If they kept all deposits on hand as cash what would they lend in order to fulfill their business plan as a bank? The Trust Fund assets are invested in our country. The interest it is credited with is an enormous income stream. The Federal government is obligated by law to honor the interest due on those Special Treasuries. You know all of this yet you persist in echoing your misunderstanding every time the issue comes up on this and other sites. You are acting out the role of a troll in this regard. Accept that you are wrong and that your "argument" only feeds the misinformation industry. What should the SSA do with all of its assets? Invest them in the stock market? Maybe you'd be happier if they held some CDOs or Default Swaps sold by AIG.

Don Levit said...

Jack asked:
What should the SSA do with all of its assets?
Well, according to a paper entitled "Trust Fund Data, Trust Fund FAQs,", published by the Social Security Administration, the question is asked "How are the trust funds invested? "All securities held by the trust funds are 'special issues' of the U.S. Treasury. Such securities are available only to the trust funds."
Those secuirities are available only to the trust funds, and the trust funds must pay either benefits or administrative expenses related to Social Security.
How does the trust principal earn interest?
Beats me.
I didn't set up Social Security.
Either there is a way which has yet to be tried, or the law's execution conflicts with its objectives.

Jack said...

Come on Don, you're talking like an idiot. Or are you just not willing to admit the truth? Yes, those Treasuries are not available to other investors. They are Special and intended to account for any and all FICA receipts above benefits paid. THEY EARN INTEREST. THEY GENERATE INCOME TO THE TRUST FUND. WHY IS THAT SO DIFFICULT TO UNDERSTAND? Yes, I'm yelling at you don because you're a persistent antagonist and being dishonest in that effort.