January 04, 2005
Why Oh Why Can't We Have a Better Press Corps? (Why Does Howard Kurtz Still Have a Job? Department)
The Washington Post, January 3, 2005:
washingtonpost.com: Social Security Formula Weighed: In informal briefings on Capitol Hill, White House aides have told lawmakers and aides that Bush will propose the change in the benefits formula.... Currently, initial benefits are set by... adjust[ing] those earnings... based on wage growth.... Under the commission plan, the adjustment would be based instead on the rise of consumer prices.... [A] middle-class worker retiring in 2022 would see guaranteed benefits cut by 9.9 percent. By 2042, average monthly benefits for middle- and high-income workers would fall by more than a quarter. A retiree in 2075 would receive 54 percent of the benefit now promised....
Howard Kurtz, writing in the Washington Post on October 20, 2004:
washingtonpost.com: Ads Push the Factual Envelope: John F. Kerry is denouncing deep Social Security cutbacks that President Bush has not proposed.... A Kerry ad, based on a private comment Bush is reported to have made on wanting to privatize Social Security, says: "Now Bush has a plan that cuts Social Security benefits by 30 to 45 percent." But the president, while favoring allowing younger workers to put part of their benefits in private accounts, has never put forth a plan -- and has vowed that any change would not affect current retirees...
Posted by DeLong at January 4, 2005 10:23 AM
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Hark! That awful, sucking sound… the indescribable shape looming towards us through the gloom… that gagsome stench… What could it be? (Melvin?) —No, it’s the January Surprise: the plans to abolish Social Security, as prop... [Read More]
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The details of the President's Social Security plan are coming out, and their sure to draw howls. Besides the private accounts, a huge change would be to change the payout indexing from tracking the rise in wages to tracking inflation.... [Read More]
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Brad DeLong wants to sack Howie Kurtz, who wacked John Kerry for saying that Bush had a secret plan to cut Social Security benefits. [Read More]
Tracked on January 4, 2005 03:16 PM
There's plenty I could say bad about Howard Kurtz, but the blame really goes to Brooks Jackson, who supplied Howie with this material at factcheck.org. In fact, he included Kerry's statement as one of his "whoppers of 2004":
Posted by: DonPedro at January 4, 2005 10:55 AM
This is so discouraging. Let's change the way we index Social Security benefits. No cuts, no cuts, we'll just use the price index to keep benefits up with inflation rather than the wage index. Such a subtle change, so long to find the destructive effects. The point of changing Social Security is to finish off the New Deal legacy by any means possible from reducing benefits that assuredly need no reduction to turning to private accounts at an astonishing cost that can not possibly be borne unless there are Social Security benefit cuts. Oh dear.
Posted by: anne at January 4, 2005 10:55 AM
It's absolutely disgusting. Bush was too afraid to mention the plan at all during the campaign, and every time Kerry told the truth about it, they just went out there and lied, making Kerry out to be the big baddy in the eyes of the press. The dishonesty is really an art form.
Grand Theft: Social Security edition is just getting geared up.
Posted by: dstein at January 4, 2005 10:58 AM
We should absolutely raise taxes on the upper 20% of our population NOW, in addition to their regular tax burdens, to repay the missing Social Security surplus, because the money was taken from the surplus paid by the bottom 80% as a result of the 1983 change, and it was put into the upper 20%'s pocket, and this was called Bush's Tax Cut. The money is ours, not theirs. Then we should put that surplus into the financial markets, as many states and cities do, to earn money to cover the shortfall, when and if it comes. This would be fair and honest.
Indeed, one-third of the total Bush tax cuts, the amount going to the upper 1% of our population, is almost exactly equal to the missing SS surplus. ...And they say these guys have no sense of humor!
Posted by: Lee A. Arnold at January 4, 2005 11:10 AM
OK, so now, the transition goes at least till around 2050 - because it takes AT LEAST that long to get to a place where diverting 4% of payroll (or 40% of old age benefit funding) to come into balance with the acknowledged cuts.
So, instead of $1 to $2 Trillion of transition costs, it's probably more like $7 Trillion of transition costs.
What's Bush's plan for the transition costs beyond 2010? Do we just turn SS benefits into an unfunded mandate (meaning current beneficiaries have benefits cut, perhaps by 40%), or are we really going to issue $7 Trillion (current value) of debt to finance the transition - passing on the problem to our grandchildren - whose guaranteed SS benefits will also be cut by 75%?
Posted by: Charlie at January 4, 2005 11:12 AM
Did Howie ever read Model 2 of the Bush SS commission? But let's be fair to Howie. Bush never endorsed any of these proposals. He's STILL not endorsing the Administration plan (per the CNN report which I just noted as GOP Waffling). But Max Sawicky has nailed it again with his Little Nell post.
Posted by: pgl at January 4, 2005 11:16 AM
Brooks Jackson, supposedly a liberal, also provided cover for the Bush campaign on George Bush's desertion from the National Guard, producing one of the most error-riddled "Fact Checks" I have ever seen.
There are a number of supposedly liberal journalists who make a surprising number of errors in favor of Bush Industries, Inc. They don't want to be called liberals, so rather than be accused of bending over backwards a millimiter, they'd rather lie prone.
Posted by: Charles at January 4, 2005 11:17 AM
Well, they might lose their retirement package...
Posted by: Lee A. Arnold at January 4, 2005 11:25 AM
Actually, Brooks is much worse than "supposedly a liberal." He presents himself as an even-handed fact-checker who equally faults both sides, even when the large weight of distortion is on the side of the Bush crew. He's very damaging. Journalists pay attention to his site--I saw scores of articles written during the campaign based on his material. If he tries to become a "fact check" authority on the privatization debate, his false evenhandedness could be enough to doom Social Security.
Posted by: DonPedro at January 4, 2005 11:27 AM
Brad, I've seen several 'progressive' commenters on Daily Kos et al. indicate that they don't see any problem with indexing SS benefits ONLY to consumer prices. At first glance such a change seems common-sensical, thus many will be inclined to think this is a 'good idea'. The indexing to wage growth and its impact on future benefits and future avoidance of poverty for the retired elderly is not intuitively obvious.
Just an observation on the the SS debate...
Posted by: MaryLou at January 4, 2005 12:02 PM
Should Social Security benefits be indexed to prices rather than wages the income from the program will fall ever further behind the income of the average wage earner. Those who rely largely on Social Security will become ever poorer.
Posted by: anne at January 4, 2005 12:46 PM
Howie was technically correct, and still is. The Preznit hasn't put forth the plan, and would never have done so because he was a close winner as it was. Now, it would seem that our media guru might at this time comment about 43s dissembling, and focus on the current campaign in light of that dissembling, but...naaah, not Howie.
Posted by: tmcotter at January 4, 2005 12:46 PM
Just to tack on a thought to yours ... I believe that the payroll tax is based on wages, up to the limit. If we switched indexing to initial benefits to inflation, we would be taxed based on wages and wage gains, but receive initial benefits based on the presumably lower rise in inflation. That would be a second "wedge" for those below 55 years old (or whatever age the White House finally decides is the cut-off for a good rogering). It would come on top of the "wedge" introduced in 1983, when additional payroll taxes were imposed so that workers would fund part of their own retirement benefit, as well as that of those receiving benefits.
If CPI is good enough as an index for benefits, shouldn't it be good enough as an index for contributions? Oops, that's wrong. That would mean Treasury would have to pay off more maturing notes held by the Trust Fund, and either borrow more directly from the market or rely on the general fund, which is funded progressively, rather than regressively like SS. Let's remember, progressivity is no longer a good thing.
Now, it's possible I've misunderstood Social Securities tax and payment indexing systems. I misunderstand stuff all the time. If I haven't, then this is a pretty naked grab at middle class retirement funds. No surprise there.
Posted by: kharris at January 4, 2005 01:09 PM
Its no longer just the case that media are used by the Republicans, they are Bush's willing executioners of the truth.
Posted by: The Fool at January 4, 2005 01:19 PM
Kharris gets it! In honor of Max Swaicky's latest post (which was fabulous as usual), consider Little Nell. Her SS retirement package will not grow in real terms even as her real wages will. So if we keep the tax rate @ 12.4%, she'll pay more into the system but not get more out. Ah, but we have to do something about increasing tax revenues for the General Fund and heaven forbid that we ask those who earn capital income to pay more. This is precisely the GOP plan to one day be fiscally responsible: tax Little Nell's labor more heavily.
Posted by: pgl at January 4, 2005 01:25 PM
KHarris and PGL
Thank you for so well clarifying what should be so troubling about changing the selection of benefits indexes. Middle class payroll taxes will increase with wages, while middle class benefits increase with prices, so there is in effect a progressive income transfer away from the middle class.
Posted by: anne at January 4, 2005 01:35 PM
Re: Brooks Jackson.....he got his job at FactCheck.org after working at CNN in the "old days". Back then, both political parties engaged in a certain amount of spin pretty equally, and Jackson used the old "balance" equation of providing equal criticism for both sides.
But he still thinks that "balance" is what fact checking is all about. As someone else noted, the National Guard "fact check" was completely ridiculous---Jackson went so far as to leave out a key clause in a quoted sentence from a Boston Globe article to "prove" his point.
This indexing stuff really is a "swindle". At no point is revenue to the Trust Fund slated to fall to 54% of promised benefits, but in 2052 the indexing will result in the disbursement of only 54% of promised benefits. In other words, the Social Security surplus is slated to grow forever---acting as a completely regressive income tax to supplement general revenue in perpetuity.
Posted by: paul_lukasiak at January 4, 2005 02:30 PM
Until someone can run down the text of the ad in question, I will have to rely on this account from the NY Times (which parallels the Howie Kurtz version):
"In a campaign commercial released Sunday, as well as speaking from the pulpit of Mount Olivet Baptist Church in Columbus, Mr. Kerry said the Bush plan for retirement accounts would cut benefits for Social Security recipients by 30 percent to 45 percent.
"The president's privatization plan for Social Security is another way of saying to our seniors that the promise of security is going to be broken," he said, calling it a "disaster for America's middle class."
"Even the president's own economic advisers say that this'll blow a $2 trillion hole in Social Security," he added. "And guess who is going to pay for it: you will."
The commercial, meanwhile, announces ominously that "the truth is coming out," and concludes: "The real Bush agenda? Cutting Social Security."
Now, when Kerry said (either in the commercial, or from the pulpit) ""The president's privatization plan for Social Security is another way of saying to our seniors that the promise of security is going to be broken", was that accurate? Was it consistent with what is being reported today?
For folks who struggle with rhetorical questions, the answers are no, and no. The WaPo version today describes major benefit cuts for folks well down the road; Kerry was described as speaking to today's seniors, not the Seniors of Tomorrow.
Heavy duty wordsmiths may choose to argue that Kerry was simply advising today's seniors that benefits would be cut well in the future, and that the promise of Social Security would not be honored for their grandchildren. Spare me. Or find the text of the ad.
Meanwhile, here is a bit from the Kerry press release:
“Once again, George Bush is out of touch. He just doesn’t get it. According to the bi-partisan Congressional Budget Office, his risky plan will force benefit cuts for seniors of up to 45 percent – that’s up to $500 a month less for food, clothing, and the occasional gift for a grandchild.
Again, do people really want to argue that Kerry was describing benefit cuts of 45% for the Seniors of Tomorrow? Did he really not think that maybe some current seniors might misunderstand him? C'mon.
Posted by: Tom Maguire at January 4, 2005 02:59 PM
Hmm. That said, the text of the ad is at FactCheck (as a previous commenter noted), and here we go:
Announcer: They were hoping to keep it a secret , but we just learned that George Bush and the Republicans are planning to privatize Social Security after the election. Bush and the Republicans have already put Social Security at risk with a record deficit of over $400 billion. Now Bush and the Republicans have a plan to privatize Social Security that cuts benefits by 30 to 45 percent.
Bush and the Republicans, a plan to cut Social Security benefits.
Kerry: I'm John Kerry and I approved this message.
Well, that is more ambiguous than the press release.
Posted by: Tom Maguire at January 4, 2005 03:06 PM
John Kerry said Bush was going to cut benefits up to 45% but it turns out to be 46%. Obviously, John Kerry was fibbing again.
Posted by: Brian Boru at January 4, 2005 04:43 PM
The Commission's plan does not replace wage indexing by price indexing. That is another ubiquitous misinformation about the plan. A switch to price indexing would reduce every generation's benefits by the same fraction (by about 26% per my calculation). What the plan actually does is exponentially phase out benefits over time - asymptotically a 100% reduction.
Posted by: enfant terrible at January 4, 2005 11:14 PM