January 14, 2005
Jonathan Rauch Loses It
He writes that George W. Bush's campaign to dismantle Social Security is a profoundly moral action. But Jonathan, lying to America is not usually thought of as a moral thing to do:
Social Studies (01/14/2005): What does President Bush think he's doing? On Capitol Hill, many Republicans wonder if they're being led off a cliff.... Well, he says, there's a Social Security crisis. "The crisis is now," Bush said in December. But he must know this isn't true. Economically speaking, stabilizing Social Security's long-term finances is a task of only middling difficulty and importance; it requires no fundamental change in the program and need not be tackled right away. As for private Social Security accounts, they are -- again, economically speaking -- a solution in search of a problem. No, what Bush and the Republicans are focused on is not the economy, stupid. It is conservative social engineering on the grandest possible scale....
On close examination, the economic payoffs are surprisingly unimpressive.... The real fiscal crisis is not that Social Security will be technically insolvent in a few years, it's that the whole U.S. government is genuinely insolvent right now.... Bush's profligacy is largely to blame for the government's current fiscal disrepair.... Social Security can be brought into long-term balance without changing its structure, simply by making it less generous. So why private accounts?... [S]tocks... pay higher returns... [but a]long with better returns, however, comes greater volatility....
Earlier this month, a White House aide named Peter Wehner... [said:] "We consider our Social Security reform not simply an economic challenge, but a moral goal and a moral good," he wrote. "If we succeed in reforming Social Security, it will rank as one of the most significant conservative governing achievements ever.".... It stressed moving "away from dependency on government and toward giving greater power and responsibility to individuals."... [N]either creating private Social Security accounts nor ratcheting down the growth of future benefits would be an economic milestone.... What [Conservatives] really hope to change is not the American economy but the American psyche.... Government should help provide for unforeseeable contingencies.... But if there is one event in all of human life that is wholly foreseeable, it is the advent of old age. Why, then, shouldn't people save for their own retirement, instead of relying on welfare from the government -- which is what Social Security, as currently constituted, really is?... Create private Social Security accounts, and millions of low-income Americans will be stockholders and bondholders. Republican political activists look at the way portfolio investors vote -- and salivate at the prospect of millions more of them.
The 2004 exit polls suggested, to many conservatives, that "moral values" won the election for Bush. It may seem odd, then, that his boldest post-election priority is not abortion or gay marriage or schools, but Social Security. The key to the paradox is that Social Security reform is not, at bottom, an economic issue with moral overtones. It is a moral issue with economic overtones.
Posted by DeLong at January 14, 2005 12:38 PM
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When I read this:
"Why, then, shouldn't people save for their own retirement, instead of relying on welfare from the government -- which is what Social Security, as currently constituted, really is?..."
I'm reminded that FDR insisted on capping payroll taxes because he did not want Social Security to be perceived as welfare. Since, alas, it is perceived this way anyhow, let's get rid of the caps on payroll taxes.
This would make our most regressive tax slightly less regressive, while also providing a bit more income for the program.
Posted by: slacktivist at January 14, 2005 01:25 PM
That's just it: Social Security is intended for what he describes. Nobody bases their entire retirement on it--and if they come close, I imagine, they pay the price.
Posted by: Brian at January 14, 2005 01:38 PM
I forgot to address this when Wehner's garbage was first posted:
> But if there is one event in all of human life that is wholly foreseeable, it is the advent of old age.
Bzzt! No, sorry. It's just a another event with a probability of less than 1 like everything else in life.
Posted by: a different chris at January 14, 2005 01:56 PM
Substitute "moral" for "ideological" and you get closer to the truth.
Posted by: Carlos at January 14, 2005 01:59 PM
One problem with the morality of the "foreseeable" argument is that by the time you arrive at old age, it's too late for a change of values and actions to change your fate. It's one thing to stick someone with the consequences of their actions when they still have the opportunity to redeem themselves. But to give everyone the full responsibility for their own retirement is to make each old person a helpless hostage of their younger, stupider self.
A second problem is that shit happens to people, and as a result, many people will be unable to save for a decent retirement, through little fault of their own. This is how it used to be, in the pre-Roosevelt era: most people worked until they died.
And a third potential problem - and I've got this cold feeling in my gut that this is the true motivation behind Social Security 'reform' - is that the corporate world seems to be steadily gaining power in our society, at the expense of ordinary citizens, especially in their capacity as employees. It's been over three years since the last recession ended. GDP is perking along reasonably well, as is productivity. Wages are in the doldrums.
If the corporations continue to increase their power, the number of people unable to save for a decent retirement is likely to increase. And combined with the demolition of Social Security, that would be a huge win for the powerful at the expense of the rest of this society.
And the chill in my gut wonders if that isn't what it's really all about.
Posted by: RT at January 14, 2005 02:21 PM
This talking points memo has certainly been widely circulated. However, does anyone think that had George Bush said something like:
"For all you 20 somethings out there, you should know that we've been taking in more in payroll taxes than we've been paying out in benefits, and using that excess to pay for paper clips, computers, salaries, and implements of torture for Iraqi democrats confined in Abu Ghraib.
"However, in a few years the Baby Boom generation will start to retire, and we'll begin to take in a little less in payroll taxes, and pay out a little more in retirement benefits. Not much at first--a few billion dollars--but every year the excess of taxes over outgo gets smaller.
"Meaning we have to either find other sources of revenue, or cut some government spending elsewhere. Medicare confronts us with an even bigger, but similar dilemna.
"If you're one of those 'lucky duckies' who never make any money, you'll probably only lose a few percent of the dollars you pay in in SS taxes over your lifetime. But, if you do a little better you'll lose a lot more (10 times as much). If you do pretty well, and earn the maximum amount subject to SS taxes for thirty five years, then you'll probably lose 50% of what you pay in."
that that would be comforting to the twenty-somethings?
Posted by: Patrick R. Sullivan at January 14, 2005 02:53 PM
Patrick R. Sullivan wrote, " '...If you do pretty well, and earn the maximum amount subject to SS taxes for thirty five years, then you'll probably lose 50% of what you pay in.' "
And you're getting the 50% figure from...?
Posted by: liberal at January 14, 2005 03:08 PM
And if you're a real "lucky ducky," you'll break your back when you're 25 and live off SS disability payments till you're 95!
Posted by: joe at January 14, 2005 03:51 PM
Yes, Patrick is in the zone. It really irks him that there is any possibility that he might actually help someone who is less fortunate than him. We are seeing the mark of true character here - "I've got mine so go fuck yourself."
Posted by: Dubblblind at January 14, 2005 04:10 PM
These guys -- our ideologue administration -- seem to think that, because we won the Cold War, socialism is utterly discredited, and that the conditions that gave rise to socialist revolts and revolutions, from 1848 till the 1980's, had no ojective causes. This ties in with their post-modernist attitude to reality. But they are bidding fair to recreate a society in which the working class -- or perhaps even the lumpenproletariat -- will once again rise in revolt, with all the bloodshed and disruption that entails.
It would take at least a couple of decades, and could be prevented by democratic elections bringing forth the necessary corrections, but one begins to fear that a true, bloody revolution is in the future of the United States.
Posted by: Invigilator at January 14, 2005 05:30 PM
God Bless George Bush.
The lame duck is nationalizing the mid-term election! Little wonder that Republicans on the Hill are running for cover!
Posted by: Charlie at January 15, 2005 04:05 AM
Other Aynies realm, are there any examples where a society of greedy self centered people flourished?
Posted by: ken melvin at January 15, 2005 06:14 AM
"one begins to fear that a true, bloody revolution is in the future of the United States."
I wonder what that would look like. I'm sure it won't be pretty. But I can't picture the workers rising up and taking control the means of production. What means of production? All our factories have been moved to China. If a revolution comes, the bourgeoisie can just wire their money to a Swiss bank and fly overseas in their private jets. There'll be nothing left, except for some nice real estate I suppose.
Posted by: PaulF at January 15, 2005 09:45 AM
It is a hard call for me what is more of a moral issue: bashing gays, depriving women of the control of their bodies, or making sure that Social Security Trust Fund is indeed fiction.
Similarly, it is not clear what to do when GOP talks about morality and values: check your wallet or run for the hills (they also fight evil using kidnapping and torture of mostly, but not exclusively, "the right people")? In any case, one should be on full alert.
Posted by: piotr at January 15, 2005 12:00 PM
"It really irks him that there is any possibility that he might actually help someone who is less fortunate than him. We are seeing the mark of true character here - 'I've got mine so go fuck yourself.' "
Ah, good thing the 'politeness policy' rules, else we might waste our time mindlessly insulting each other. However, I'm curious Dubblblind, how do you know this to be so?
And, even if it was, what does it have to do with the economics--this is a blog of a professional economist--of SS?
Posted by: Patrick R. Sullivan at January 16, 2005 09:26 AM
Bringing widespread elder poverty back to the United States is the moral thing to do is it? Well...who'd a thought...
Sure...old age is foreseeable. But it's kinda hard to foresee the bank scandal that ruins your savings, or the corrupt CEO who bellyflops the company and your pension into the bankruptcy pool. It's kinda hard to foresee the economic downturn that leaches away every penny you ever saved, while you try to keep your family fed and housed. I lived through the Reagan and Bush I years. I saw people who worked hard and did everything they were supposed to do, living in tents in camp grounds because they'd lost their homes. That was when I stopped being a Libertarian.
Does Rauch think that depending on a government run army for our national security is a kind of Nanny Government thing too?
Posted by: Bruce Garrett at January 17, 2005 06:06 AM
You people are all conflating the issue of Social Security with the issue of caring for elderly poor people.
Social Security pays benefits IRRESPECTIVE of income. There is no means test.
There are alot of flaws with the program and favoring reform does not necessarily mean favoring a Randian "let them eat cake" approach either.
It's certainly possible to drastically reform Social Security into a kind of coercive, yet self-managed IRA/savings account for people. I still think that's a bit paternalistic but it's better than what we have now.
In conjunction, you could also have a program for helping broke retirees feed themselves (basically: welfare). The advantage of this would be that there is no cross-generational funding going on, which causes resentment and accounting headaches (social security is largely a transfer from the young working poor to the retired wealthy who don't need it).
Everyone agrees that the real problem we want to address is broke retirees. But why force everyone to participate in a solution that will only apply to a few? For the majority of participants, SS is a hindrence to their financial picture. They won't really need it and they'd be way wealthier at retirement if they had been able to keep the 12.4% throughout their lives.
Let people save their own money and for those who screw it up or get unlucky, provide them a means-based living supplement.
Removing the administration costs of SS alone would probably pay for a good chunk of the welfare to those elderly who somehow managed to lose their entire personal savings account.
It doesn't mean you're heartless if you want to change social security. There are plenty of intelligent ways to achieve the goal of feeding the starving elderly.
Posted by: joe blow at January 19, 2005 01:08 AM