January 10, 2005
Why Oh Why Can't We Have a Better Press Corps? (Yet Another Social Security Edition)
Joshua Micah Marshall is climbing the wall again:
Talking Points Memo: by Joshua Micah Marshall: January 09, 2005 - January 15, 2005 Archives: Here is one of many comparisons and observations we'll be making to provide some counterweight to the White House's efforts to deceive the American people about Social Security.
The Social Security Trustees estimate that over the next 75 years the program faces a budget shortfall of $3.7 trillion. As we've noted previously and will again, the Trustees use a very pessimistic estimate of future economic growth to arrive at that figure. But, for the moment, let's stipulate to that amount.
$3.7 trillion is a lot of money. But how much will the president's Medicare drug benefit plan cost over the next 75 years? $8.1 trillion, say the Trustees of that program. And over the next 75 years how much will the president's 2001 and 2003 tax cuts cost if made permanent, as the president wants? $11.6 trillion. So you add that up and you get $3.7 trillion we need to cover Social Security's shortfall and $19.7 trillion we need just to cover the costs of the two major domestic policy initiatives of the president's first term. And yet Social Security, says the president, is in crisis and destined to chew through the rest of the federal budget. (These statistics are noted in this budgeting summary from the Center on Budget and Policy Priorities.)
I would submit to you that in any reasonable universe this simple comparison shatters the president's credibility on fiscal 'icebergs' and spending crises. And yet these basic facts seem to garner little notice.
That is because, in the last couple decades, in the culture of Washington -- particularly among the elite commentators and reporters (just watch Meet the Press) -- presuming that Social Security is financially unviable has become an ready shorthand for public policy seriousness, much as many use a basic knowledge of imported wines or a familiarity with classical music to signal refinement...
Posted by DeLong at January 10, 2005 08:45 AM
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The defining character of the Bush years, in addition to stupidity and dishonesty, has been its contempt for posterity-for the deficits and environmental pollution we are passing on to the next generation. So, how seriously should we take his assertion that he is motivated here by concern for posterity, when his entire record shows he simply does not care what happens after he leaves?
Posted by: Bob H at January 10, 2005 09:06 AM
Bob: I don't he's planning on leaving - Jeb's in the wings waiting.
Posted by: peBird at January 10, 2005 09:16 AM
Brad, I'm confused. Are you saying that Josh is going overboard? This is the second time you've introduced one of his posts with a cryptic comment but no follow-up comment reflecting your thoughts on the piece. Both times I thought Josh was reasonable: the issue is not social security but rather the budget deficit. Well, isn't that correct?
Posted by: Doug T at January 10, 2005 09:38 AM
The press coverage of the condition and possible changing of Social Security has been remarkably slanted. To listen to Public Broadcasting or National Public Radio or BBC coverage is repeatedly to have to accpt the false premise that there is a Social Security crisis. Social Security is described with no coherence and changes discussed with no sense of impact. There is Brad DeLong's or Josh Marshall's complaint
Posted by: anne at January 10, 2005 09:54 AM
For the Record on Social Security
Late February is now the time frame mentioned by the White House for unveiling President Bush's plan to privatize Social Security. The timing is no accident. By waiting until then, the president will conveniently avoid having to include the cost of privatization - as much as $2 trillion in new government borrowing over the next 10 years - in his 2006 budget, expected in early February.
In this and other ways, the administration is manipulating information - a tacit, yet devastating, acknowledgement, we believe, that an informed public would reject privatizing Social Security.
Posted by: anne at January 10, 2005 10:35 AM
The tax cuts cost $11 trillion over the next 75 years?
Doesn't that assume that tax revenue grows to roughly 27 percent of GDP?
How intellectually dishonest do you have to be to make any sort of policy pronouncement based on that assumption?
And how can you assume that economic growth will be faster than currently projected given that 1) labor force participation will fall significantly as a result of the retirement of most baby boomers, and 2) taxes relative to GDP will be higher than at any time in U.S. history?
Posted by: Larry Jones at January 10, 2005 10:40 AM
Not to confer any legitimacy on the alarm about the SS "crisis", but considering that the "shortfall" is $3.7T starting no earlier than 2042 and the proposed "solution" involves borrowing $1-2T NOW, has anyone considered the meaning of 'present value'?
Posted by: Lewis Carroll at January 10, 2005 10:40 AM
i think that 3.7T figure *is* the NPV of the shortfall. hopefully josh's numbers are right and the other figures are also in today's dollars.
Posted by: NPV at January 10, 2005 11:04 AM
Why oh why do we have to hear about social security again? Good intentions will have good outcomes. Don't let them mess with your brains anymore. Know the difference between blue and green, and if you are not sure, ask somebody who knows. The trees are green and the grass is green and the desert will bloom again.
Posted by: northernLights at January 10, 2005 11:48 AM
"The Social Security Trustees estimate that over the next 75 years the program faces a budget shortfall of $3.7 trillion. As we've noted previously and will again, the Trustees use a very pessimistic estimate of future economic growth to arrive at that figure."
To be honest, I am wondering why Joshua, and seemingly everyone else, considers this to be pessimistic. Natural gas supplies at the wellhead in North America are already declining at better than 10% annually (significant import capacity is a decade off at least), and in a few years world oil production will begin to decrease (and exportable oil, that is, oil not needed by the producing countries, will drop more swiftly). Nor can nuclear power be brought online in great enough quantities to replace what is lost to oil depletion (and electricity can't replace oil for transportation).
This seems to mean a net decrease in energy available for economic growth. Given that you need energy to do anything, can anyone explain how you will achieve robust growth in a climate of falling energy availability? Gas at, say $25/gal? Electricity at dollars per kilowatt?
Time now for economists to de-specialize a bit...
It seems to me that far from considering the Social Security Trustees estimate as pessimistic, we ought to see it as optimistic, and also admit that there is no chance in hell of economic growth strong enough, over long enough, for the stock market to provide any meaningful growth in assets invested under the presumptive Bushie plan.
Posted by: JohnDL at January 10, 2005 11:59 AM
If so, my bad. Thanks.
Posted by: Lewis Carroll at January 10, 2005 12:54 PM
As JohnLD,you'll be back to subsistence farming, once the shake-up has worked it way thru,with the population size that entails. You are now in an energy sink, it will take more energy than you have to become self-sufficient in energy. Even Elaine is not as self-sufficient as she thinks.
Posted by: eric bloodaxe at January 10, 2005 01:02 PM
I think the folks at MyDD are right. The Republicans probably know they can't win a Social Security fight (although I shouldn't understimate Bush's hubris), but that Republicans are trying to make the Democrats the party of anti-reform.
Posted by: Unstable Isotope at January 10, 2005 04:47 PM
Quote: Given that you need energy to do anything, can anyone explain how you will achieve robust growth in a climate of falling energy availability?
When they hand you a lemon, make lemonade. If it were handled properly, we could make achieving energy independance into a major engine of economic growth.
If the Bush administration tried it, it would simply turn into more payoffs to Bush family cronies.
If we don't do it, somebody else will, and we will have to license the technology from them.
Posted by: lightning at January 10, 2005 06:55 PM
The $3.7 Trillion figure is the official number from SS admin.
The $8 Trillion unfunded cost for the prescription drug benefit came from the Financial Report of the US Government, got to page 8, bottom of the page:
That's in net present value.
As for the $11.xx Trillion unfunded liability of Bush's tax cuts, I suspect that's understated. We've been running an on-budget deficit over 4% of GDP (being cautious). The timeframe for these estimates is a 75 year accounting window. 4% times 75 years is 300% of GDP, or something like $30 Trillion, before getting into the details of know what GDP growth estimates are to be used and what discount rate to apply to get to net present value.
We know, pretty simply, that the general federal budget, excluding Social Security, is the biggest problem to solve, because Congress and the President have been spending about $1.50 for every dollar of tax revenue.
Posted by: Charlie at January 10, 2005 07:40 PM
re: Doug T being confused on this post.
A thought. The GOP is content to repeat, ad nauseum, tripe. Often until Democrats start to use shorthand responses that fail to win the public debate.
Right now, the GOP is on the ropes on Social Security reform. It would be too bad if progressives get lazy and let them get off the ropes or worse.
It's a time to stay focused, because conservatives are quite good at regrouping and retargeting their messages these days.
Posted by: Charlie at January 10, 2005 07:58 PM
Charlie, I agree.
But I don't see Josh being lazy and using short hand responses. He's made a forceful and consistent case that Bush is lying about the state of SS. I am wondering if Brad believes Josh is wrong from an economic point of view. I like, as well, that Josh (and others) have linked their attack on Bush's economic reasoning with a political strategy to isolate Democrats straying from the pack and supporting Republicans standing up for what is right. I agree that Bush is quite vulnerable on this and a big ol' defeat to start the second term (putting aside the disaster in Iraq which may qualify as that defeat already) is just what the doctor ordered.
Posted by: Doug T at January 12, 2005 06:24 AM