Brad DeLong's Semi-Daily Journal (2004)

> One problem with that approach
> is that it would leave social
> security on an unsustainable
> course.

Other than that, Mrs. Lincoln, how did you like the play?

An awful lot of people here seem very good at climbing to the tops of trees and throwing handfuls of crap down.

Anybody got anything more constructive?

At least somebody is trying to do something with the unsustainable system that starry-eyed socialists saddled us with years ago. The hard fact is that weaning America off of the current Ponzi scheme and onto a more sustainable private/public system is going to require a transition period where payroll tax revenue is going to be lower from the new employees who will be participating in any privatization, but the current and pending retirees will still need their full payments. One painful solution is that the tax rate will be kept high for the new employees to sustain the revenue stream while also allowing funds to flow into private retirement accounts. But these young people will be paid much lower benefits someday from the public portion, with the remainder coming from their private investments.

In other words, a lot of young people are going to be paying extra for benefits they aren't going to get. There is no pleasant and painless way around this. Fair? No. But neither is much of our current method of wealth redistribution.

Or we can just keep going and end up breaking the budget with entitlements.

By the way, any privatization proposal has to involve free choice by the citizen as to where to invest. Some minor restrictions may be necessary, but otherwise it's the citizen's choice.

Ideas for allowing the government to invest Social Security funds into stocks should be rejected out of hand. The potential for corruption is astronomical, never mind the defacto socialization of having the Federal government as a large stockholder of many companies.

> Anybody got anything more constructive?
>
> At least somebody is trying to
> do something with the unsustainable
> system that starry-eyed socialists
> saddled us with years ago.

Well gee. Maybe we should have a trust fund that can be used to defray the added burden when there are more retirees than paying workers. Maybe we should set it aside so it can't be raided for funds when the Republican government wants to cut taxes and still "spend like drunken sailors." (Not my words.)

Oh, wait a minute ...

Before you go around decrying socalist "Ponzi" schemes you might want to check into how many retirees would be living in poverty it it were not for the Social Security system. Who did you think was going to take care of them? Halliburton? Enron?

???? SS is completely solvent until 2042. There is no long run problem with SS that cannot be fixed by adjustments in the maximum payment limit. Demographic projections can and probably will be changed by changes in immigration policy.

The problem is with the rest of the budget. SS is in surplus of almost $200 billion per year. The rest of the budget (defense, etc) is borrrowing the entire $200 billion plus an additional $200 billion. At some point in 2015 or so, SS will be paying out more than it takes in and will start drawing down the surplus that has been built ($3 trillion currently, + another $2 trillion over the next decade). At that point, the rest of the government will no longer be able to borrow from SS, but have to collect taxes to pay for government AND pay back SS funds that have been borrowed. SS is solvent, it is the rest of the budget that is headed for rough seas.

There never was a budget surplus. Mr Bush has taken our SS taxes and lined the pockets of his wealthy buddies with his tax cuts and deficit spending. Now Greenspan argues that the wealthy should keep their tax cuts, that SS taxes should continue to subsidize the remainder of the budget so the wealthy can keep their tax cuts. What a loon! We are not stupid. We will not allow this to happen. Mr Bush can only confuse the public on this issue for so long. When the truth is known, the consequences will come due.

Bush is not stupid. He may be stupid and evil. Or merely evil. But he ain't stupid.

He was elected to bankrupt government and roll it back to pre-1932. Projections show he has.

He had a goal. He's on his way to achieving that goal.

All that's left is his trial and sentence, that is, if justice is reached within the system.

It won't be.

I would not be so hard on the fellow above who suggested that maybe we should cut social security payments. The question of whether seniors should be left to starve to death is a normative one on which reasonable people may choose to disagree.

But the problem with Bush's plan to starve seniors is that he has not announced it. He should be clearer, as Greenspan was this past week, that "giving the money back to the people" will require that we starve a few old folks. Just so long as he is clear.

Was it Geore W. or Karl Rove who said, "You can fool some of the people all the time, and those are the ones we've got to concentrate on."

Surely they are starting to feel that reality is closing in.

Some one must have stolen Mr. Throsz's marbles when he was a kid, and he never got over it.

I don't know, Alan. How many retirees WOULD be living in poverty if we had not instituted a system making every one of them the defacto property of the government? Do you know? Does anyone? I do know what the result would have been for modern retirees if they had put their Social Security payments into a wide distribution of stocks over the past forty years or so. Do the numbers.

And Knut: I'm fifty years old. I paid over $30,000 in income taxes alone last year. How many marbles have you contributed to the party so far? I find a considerable number of enthusiastic socialists still live in their parents' basement, or are safely sequestered on university campuses.

"Note that the president's habit of proposing not actual legislation, but rather vague "principles" that tell no one anything about anything is quite systemic. "

This is what happens when you elect an MBA who thinks the President should be a CEO.

"Before you go around decrying socalist "Ponzi" schemes you might want to check into how many retirees would be living in poverty it it were not for the Social Security system."

Even in a traditional Ponzi scheme, the people who get in early do well. The problem is the scheme isn't sustainable so people who stay in or get in late get creamed.

The last of the people who will do well in the system are in or about to get in.

I'd just like to point out that Bush's lack of concern about what legislation either house passes can be explained by the simple fact that his people can just rewrite the legislation the way they want in conference committee. It's actually a canny display of power.

Has anyone thought to put SS funds into something like a lock box?

One the problems I have with the privatization of the Social Security account is that it's a tax. And just like any tax, when the government collects the money, the individual looses their right to direct its use. This is particularly true of Social Security since the money collected now goes to current retirees, the disabled and survivor benefits.

If President Bush honestly wants to allow people to direct funds for retirement, a vehicle already exists in the forms of IRA's and 401K’s. It seems raising the limits of contribution in these plans and relaxing the participation rules back to what they used to be would do more for people than to let them direct a few hundred dollars a year in the Social Security program which would be open to corruption and manipulation.

"At least somebody is trying to do something with the unsustainable system that starry-eyed socialists saddled us with years ago." Oh, I like this. And I agree. We should be ruled by starry-eyed libertarians instead. They write cooler books.

I mean, really, do the pie-in-the-sky proclamations of free-market, government-is-evil, the invisible-hand-will-take-care-of-us-all types work any better in real life than the pie-in-the-sky plans of the socialists who these clowns love to hate so much? I can think of a few working socialist countries. tbrosz might not like to live there but they're not about to fall apart. Has radical economic libertarianism been tested anywhere?

Radical economic liberalization is about to be tested here. Unfortunately, this Frankensteinian faux-Laissez-faire of pseudo-deregulation, pseudo-free-market trade, and psuedo-financial-budgeting isn't going to work. It's like the whole government, with Bush in charge, is faking it! They may or may not have a grand strategy that the are attempting to run government into a brick wall, but they sure as hell wouldn't know how to act like the real thing and not as poseurs.

However, I'm not entirely sure that Kerry or Edwards or the Democratic gang are going to be all that better ... somewhat better if they bring back some real experts into the system ... but to save it, there has to be some radical changes made to the way things are done ... and I don't see the Democrats with that kind of will either.

For the record, I changed my party affiliation to Democrat from Republican and caucused for Dean. I'm not saying that GW isn't awful, I'm just saying that I'm not sure that Kerry or Edwards has the political will to do what it takes to clean up the mess. And that is a depressing thought.