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February 11, 2005

The Decembrist Directs Us to the Center on Budget and Policy Priorities

Mark Schmitt writes:

The Decembrist: The Privatization Tax: I am in awe of the work that various analysts, but particularly Jason Furman of NYU and the Center on Budget and Policy Priorities have done to figure out exactly how the Bush Social Security plan would work, in the absence of any official details proposal, by just drawing on what's available and from on-background briefings by senior adminstration officials. (And speaking of the Center on Budget and Policy Priorities, congratulations on a new website and a new logo. It looks great. And how fitting that it should arrive at this moment when the Center's contribution is even more critical than usual.)

And I'm glad that the Senate Democrats could so quickly grab the import of Furman's work proving that the entire value of one's private account is likely to be taken away at retirement and dubbed it 'the privatization tax.' This isn't just a bit of clever pejorative framing... In the article I linked to a couple days ago... two Heritage Foundation staffers... discuss an 'opting-out tax' as part of the system...

Posted by DeLong at February 11, 2005 04:15 PM

Comments

I realize this is an important subject but please oh please don't you have anything else to talk about?

Like nature, science type subjects, what you talked about at coffee break? Where's your favorite place to go swimming?

How are your owls doing? What trouble has your dog been in lately? Been to any good fish fries?

Posted by: nkirsch at February 11, 2005 05:29 PM

nkirsch: I take it you haven't been reading Josh Marshall for the past 3 weeks.

Posted by: Adam M at February 11, 2005 05:58 PM

Thinking of owls, thinking of parrotlets, thinking of birds :)

http://www.nytimes.com/2005/02/01/science/01bird.html?ei=5070&en=0ed10634f3d9b33b&ex=1108789200&pagewanted=all&position=

February 1, 2005

Minds of Their Own: Birds Gain Respect
By SANDRA BLAKESLEE

Birdbrain has long been a colloquial term of ridicule. The common notion is that birds' brains are simple, or so scientists thought and taught for many years. But that notion has increasingly been called into question as crows and parrots, among other birds, have shown what appears to be behavior as intelligent as that of chimpanzees.

The clash of simple brain and complex behavior has led some neuroscientists to create a new map of the avian brain.

Today, in the journal Nature Neuroscience Reviews, an international group of avian experts is issuing what amounts to a manifesto. Nearly everything written in anatomy textbooks about the brains of birds is wrong, they say. The avian brain is as complex, flexible and inventive as any mammalian brain, they argue, and it is time to adopt a more accurate nomenclature that reflects a new understanding of the anatomies of bird and mammal brains.

"Names have a powerful influence on the experiments we do and the way we think," said Dr. Erich D. Jarvis, a neuroscientist at Duke University and a leader of the Avian Brain Nomenclature Consortium. "Old terminology has hindered scientific progress."

The consortium of 29 scientists from six countries met for seven years to develop new, more accurate names for structures in both avian and mammalian brains. For example, the bird's seat of intelligence or its higher brain is now termed the pallium.

"The correction of terms is a great advance," said Dr. Jon Kaas, a leading expert in neuroanatomy at Vanderbilt University in Nashville who did not participate in the consortium. "It's hard to get scientists to agree about anything."

Scientists have come to agree that birds are indeed smart, but those who study avian intelligence differ on how birds got that way. Experts, including those in the consortium, are split into two warring camps. One holds that birds' brains make the same kinds of internal connections as do mammalian brains and that intelligence in both groups arises from these connections. The other holds that bird intelligence evolved through expanding an old part of the mammal brain and using it in new ways, and it questions how developed that intelligence is.

"There are still puzzles to be solved," said Dr. Peter Marler, a leading authority on bird behavior at the University of California, Davis, who is not part of the consortium. But the realization that one can study mammal brains by using bird brains, he said, "is a revolution."

"I think that birds are going to replace the white rat as the favored subject for studying functional neuroanatomy," he added....

Posted by: anne at February 11, 2005 06:41 PM

Anne,

Thanks for the total hijack of the topic :) It's nice to read something fun on Friday evening.

Posted by: pat at February 11, 2005 08:29 PM

Play is welcome, and I am always grateful for the play. Birds, from owls to crows are certainly among dear my loves and interests. But all of these recent threads on economic and social policy are precious. We are not spending too much time in focus on the issue of Social Security and current policy initiatives.

Social Security has been the focus of attacks on the New Deal for decades. The reason for the attacks are the consensus that we reached during the New Deal to go beyond the protections set in place during the Administration of Theodore Roosevelt for what would be our middle class America. The negative protections of Theodore Roosevelt might limit child labor or check monopoly, but what of a need to positively provide for the well-being of millions of households when confronted by severe economic pressure and peril much beyond individual control? The New Deal consensus was that household support would be afforded to provide for a middle class base for Americans. There were monuments from the sense that fiscal and monetary policy could be used to spur a desirable level of general economic activity. There were monuments of infrastructure development from education to energy and communications and transportation to what would be mortgage support for housing. There was the notion of employment and income support for those most vulnerable to economic disruption. There would be medical support for children. There was a sense that we had an obligation to American workers to secure retirements. There was Social Security and in time Medicare.

There were complaints against the negative protections of Theodore Roosevelt's Administration, but far more complaints against the positive supports of Franklin Roosevelt's Administration. Social Security is now threatened. A program that has been a wonderful success, is not subject to reform but to being gradually se aside. Benefits are to be cut, risks to a retirement base are to be raised, what is secure will be in increasing and dramatic fashion less secure, while severe costs are set in place for the undoing of the program.

We can not spend too much time learning about what Social Security is, what it has meant and why and how the program is so attacked. These posts have simply been a superb way for us to learn.

Posted by: anne at February 12, 2005 02:57 AM

Forget Hillary, Anne for the first female president.

Posted by: eric bloodaxe at February 12, 2005 06:26 AM

Dear Dr. DeLong

How dearly I love this website, the posts are always interesting and important while the comments are civil and incisive.

Thank you so much.

Posted by: Jean at February 12, 2005 06:27 AM

Anne suggests,

"We can not spend too much time learning about what Social Security is, what it has meant and why and how the program is so attacked."

I always read your posts with interest, especially because of your passion for the subjects.

However, respectfully, may I suggest that you have on blinders when you make this kind of statement. Please send a moment in any library or book store reading two titles by Jack Trout, The Power of Simplicity and Bottom Up Marketing.

Bush has got his position on SS down to, "you own your private account."

The Democrats have no position, no messegae, but we have wasted billions of key strokes on economic projections over 50 years that are meaningless.

MEGO MEGO MEGO

Yesterday's NYTimes had a block ad on the editorial page by some economics group that hit on the nails on the head--four bullet points, starting with ending the FICA tax, that should be the democratic platform. Look up the ad, please.

This is hand grenades and the position in the ad was close enough for hand grenade work.

We need a message now, not billions and billions of more key strokes.

Posted by: Moe Levine at February 12, 2005 06:30 AM

http://www.nytimes.com/2005/02/12/business/worldbusiness/12pension.html?pagewanted=all&position=

February 12, 2005

Sweden's Take on Private Pensions
By ALAN COWELL

STOCKHOLM - Every spring Marie-Louise Graveleij, a 62-year-old receptionist in a funeral home, receives a large orange envelope through the mail. Now, it is about to become her lifeline, offering her an alternative to a full-time job.

Soon, she said, she will end her current work contract and decide whether she can afford to retire. The orange envelope she expects to receive within the next few weeks will contain a statement of her rights under a five-year-old restructuring of this country's still-generous state pension program that - like the changes President Bush wants to introduce in Social Security - includes a personal investment account.

The question is, will she be able to get by on what the envelope offers or not?

As in other lands where private accounts have been introduced in various forms, the answer seems ambiguous. For all the uncertainty over such accounts, what may be most surprising to Americans is that Sweden, long known for its cradle-to-grave welfare state, has already embraced a system that partly resembles the White House proposals.

"I felt everything was going to be simple; this is Sweden," Ms. Graveleij said in an interview, musing over her understanding of her pension rights before and after the changes in the system. "I didn't worry about it before. I felt safe. I felt everything would be O.K. Then, the safety net was gone."

Even after poring over the statement of benefits, she said, she was still not sure how much she would receive to help her afford the $450-a-month rent on her 400-square-foot apartment. "Everything has become very complicated," she said.

Her anxiety could eventually be shared by Americans who would lose some of the guaranteed benefits of Social Security if President Bush's plans to introduce privatized accounts became law. But Sweden's struggle with a new approach to pensions is by no means unique.

Its experience, along with those from other countries, highlights some of the benefits involved but also underscores the various risks when a government turns over an important investment decision to people not always comfortable with managing their retirement money.

With the possible exception of Singapore's ambitious and expensive savings programs, the experience of other countries has been mixed. In Britain, in the late 1980's, legislation permitting savers to divert funds from company and state retirement plans into private investments backfired when the value of those investments fell and insurance sales representatives were accused of selling products under false pretenses.

In Chile, the introduction of private investment accounts almost 25 years ago led to accusations that hidden fees reduced benefits by as much as a third.

In Poland, an army of sales agents, hired under a new private savings regime in 1999, defrauded the system by charging commissions on false accounts. Since some of the sales agents were paid a commission for every new account, they simply invented them. Other accounts were in the names of deceased people. To try to avoid such fraud and secret costs Sweden introduced its private pensions system by placing a state-appointed intermediary, the Premium Pensions Authority, between savers and fund managers, much as President Bush is proposing to do. Moreover, Sweden created a state-administered default account, comprising foreign and Swedish equities, for people who did not want to choose their own investments.

But in seeking a highly competitive program, Sweden threw open its private accounts system to a staggering 675 funds (compared with 6 in Chile and 21 in Poland), requiring savers to pick 5 of them or invest in the default fund.

Unlike Mr. Bush's Social Security overhaul proposal, which would carve voluntary private accounts out of existing taxes, the Swedish system imposes a mandatory 2.5 percent saving on top of its basic benefit. In Sweden, 16 percent of wages goes into an overhauled pay-as-you-go system that defines the contributions savers make but no longer guarantees the same benefits as in the past.

But while the system was meant to help people like Ms. Graveleij make her investments, it has left many Swedes confused, with some expressing indifference....

Posted by: anne at February 12, 2005 07:00 AM

Moe Levine

An alternate message, a summary message, simplicity and marketing are surely needed. So, I will think carefully to these points :)

Posted by: anne at February 12, 2005 07:14 AM

The message the democrats need to articulate, in plain, unvarnished english is that the president is a liar. He is not being honest with the American people with regard to his policies, be it social security, perscription drugs, the war in Iraq.... And everytime the oppostion trys to obcure the facts with the rehtoric that democrats don't have an alternative, I say the response is: Yes we do. Democrats should insist that the government honor the commitment to repaying the obligations to the trust fund. Democrats should insist on setting up a private savings plan initiative that is seperate and apart from SSI, funded by repealing the tax cuts to the wealthy. Use the "savings" to offer real tax credits to middle and lower income WAGE EARNERS. i.e. for every dollar that is saved, the government kicks in a percentage in the form of a dollar for dollar tax credit. Democrats should insist that seinors have the right to negotiate the cost of their government funded precscription drug "benefits." This is "class warfare" and it is the Republican party that is the catalyst. Turn the argument around, define the oppostiton for what it is, and expose the real truth to the public.

Posted by: nanute at February 12, 2005 08:15 AM

..."We need a message now, not billions and billions of more key strokes."

Moe, would the following suffice?

"If it ain't broke, don't try to fix it."

Posted by: bncthor at February 12, 2005 08:25 AM

http://nytimes.com/2005/02/11/theater/11cnd-appr.html

February 11, 2005

AN APPRECIATION

A Playwright Whose Convictions Challenged Conventions
By CHARLES ISHERWOOD

Arthur Miller may or may not be the greatest playwright America has produced - Eugene O'Neill and Tennessee Williams both have equal, if not more, claim to that phantom title - but he is certainly the most American of the country's greatest playwrights.

He was the moralist of the three, and America, as some recent pollsters rushed to remind us, is a country that likes moralists. The irony, of course, is that Mr. Miller's strongest plays are fired by convictions that assail some of the central ideals enshrined in American culture.

If O'Neill's concerns were more cosmic, and Williams' more psychological, Miller wrote most forcefully of man in conflict with society. His characters have no existence outside the context of their culture; they live only in relation to other men. Indeed, it was a fierce belief in man's responsibility to his fellow man - and the self-destruction that followed on his betrayal of that responsibility - that animated Mr. Miller's most significant work.

His greatest concerns, in the handful of major plays on which his reputation will last, were with the moral corruption brought on by bending one's ideals to society's dictates, buying into the values of a group when they conflict with the voice of personal conscience. To sell out your brother is to sell out yourself, Mr. Miller firmly believed.

Like all artists, Mr. Miller was a product of a particular historical moment. He lived through the Depression, absorbed the fiery righteousness of Clifford Odets's agitprop, and began writing plays just before and during the years of World War II. His first great success, "All My Sons," produced in 1947, fired a warning shot in the face of the country's growing complacency, in the wake of a war that was seen as establishing America's reputation as both the world's policeman and its moral conscience.

Mr. Miller's play scorchingly questioned that status, shining a harsh light on the ethos that underlay an exclusive veneration of individual rights. "All My Sons," in which a middle-class businessman looking out for his family causes the deaths of Army pilots, argued that a moral code that heedlessly placed the interests of the individual over responsibility to the group could breed corruption and destruction.

The roots of Mr. Miller's art stretch back to Ibsen, the Norwegian playwright who used tropes of melodrama to expose rents in the fabric of bourgeois society. But with "Death of a Salesman," inarguably his masterwork, Mr. Miller broke free from the conventions of naturalistic drama to write in a more stylistically unfettered manner. In this impressionistic portrait of a deluded man discarded by society, he achieved something akin to poetry. As Harold Clurman astutely put it, the poetry in "Death of a Salesman" is "not the poetry of the sense or of the soul, but of ethical conscience." ...

Posted by: anne at February 12, 2005 08:38 AM

Posted by: at February 12, 2005 09:32 AM

Here is a simple message: "Social Security is fully funded through the 75 year horizon according to the Trustees of Social Security including three Bush cabinet secretaries".

Then sit back and demand that doubters bring numbers. The Trustees have always presented an alternative that produces a fully funded Trust Fund. They have implicitly admitted that if we hit the numbers of the Low Cost alternative the Trust Fund never goes broke, instead we get outcome ( I ) of the following figure.

Trust Fund Ratios: http://www.ssa.gov/OACT/TR/TR04/II_project.html#wp106217

We crushed the 2004 number required to produce that constant 500 ratio (five year reserve), and nobody I know doubts we will beat the 2.1% number required to keep the Trust Fund on its glide path to perfect solvency.

The dates and numbers in the following table will continue to move in the directions they have been whether we find a consistent message or not.

EPI Changes in projections: http://www.epinet.org/content.cfm/issueguides_socialsecurity_changes

The economy will return better numbers than assumed by Intermediate Cost. There you have it, a flat out assertion. Now the task of privatizers is to rally to the support of Intermediate Cost. Justify 1.8% productivity growth in 2005.

The pure facts are that they don't have numbers to show that Social Security is broke and are faced with putting out a new report on March 31 which uses real world 2004 numbers. 2042 will move out. How far out will depend on how daring their book cooking will be. But there is a Sword of Damocles hanging over their head. The only way to preserve crisis is to suppress their current estimates of future growth and every .1 of a percentage point they carve off makes their goal of 6.5% stock return that much more difficult. They can't maintain the 1.8% rate for 2005 assumed by Intermediate Cost, and every number for 2006 and after is already below 2.0%. There is no fat and preciously little beef in this model. I await with awed anticipation to see where they slice: will it be at the 1.9% number for 2007 or the 1.7% of 2011. Because every .1 of additional growth added to the current 1.8% number for 2005 requires a >.1 cut in some future number. Such is the nature of compounding.

Economic Assumptions: http://www.ssa.gov/OACT/TR/TR04/V_economic.html#wp159107

I will be perfectly happy to move on to other topics once Republicans admit that Social Security as currently constituted is fully funded forever. On the other hand I have been preparing myself for this particular battle for almost a decade. Maybe I will spend the next decade studying bird cognition, who knows. But until privatizers surrender I am not going anywhere.

Posted by: Bruce Webb at February 12, 2005 09:51 AM

According to a very important article this past week in _The Washington Post_, the private vs personal thing doesn't really affect poll respondents' positions much.

What did? Telling people that Bush's plan will cost trillions of dollars.

Here's my suggested propaganda lines:
(1) "Bush's plan will drastically cut Social Security benefits for everyone under 55."
(2) "Bush's plan will cost trillions of dollars."

Posted by: liberal at February 12, 2005 12:07 PM

Yes,

The political issues ARE the transition costs and phase 2 HW&M Committee Rep. Thomas' planned reduction of existing benefits. No question.

All one has to do is point to the Center on Budget and Policy Priorities (CBPP) analysis, and ask for a rebuttal.

"$6 trillion by 2030" is my favorite Social Security political discussion phrase. People simply go pale...

Hardline Bush supporters, and friends I know do not know how to answer these questions.

They look at me like a deer caught in headlights.


Posted by: Movie Guy at February 12, 2005 01:12 PM

For those who will do enough research to challenge my $6 trillion figure:

I added the CBPP "up to 2028" projection of $4.9 trillion (direct transition costs) to an estimate of the potential loss of social security surpluses and lost interest (the private account program collapses the surplus expectation back to 2012).

The total related program costs exceed $6 trillion by 2030, but I like round numbers for political discussions.

http://www.cbpp.org/


Posted by: Movie Guy at February 12, 2005 02:21 PM

It's another Reaganomics social security tax hike and another Reaganomics social security "trust fund" to pay for the Reaganomics income tax cut, just like 1986 all over again.

You do understand that when the foreigners stop buying our treasury bonds we will have to abolish what's left of welfare eight times, or abolish what's left of welfare once and shut down the military industrial complex as well if we don't suspend Bush Jr's income tax cuts?

Posted by: walter willis at February 12, 2005 06:12 PM

[comment spam]

Posted by: at February 25, 2005 10:31 PM