Copyright © 2005 Frank Lynch.
Copyright © 2005 Frank Lynch.
Me: Frank Lynch Home These are my mundane daily ramblings. Email: |
I HAD thought I'd give Social Security discussion a rest tonight. But David Hogberg went so out on a limb in deriding the idea of Social Security as an inter-generational compact: So, when did I, or anyone else, get to enter into the so-called "Social Security compact" freely? Last time I checked, I had no say in the matter the money was forcibly drawn out of my very first paycheck. Call it an intergenerational government program. Call it an intergenerational forced payment. But don't call it a compact. Mr. Hogberg was probably also not present at the signing of
the Magna Carta, the Declaration of Independence, and the
issuance of the Emancipation Proclamation. None of them have been
reversed due to his absence. The bad news for Mr. Hogberg is
this: the social contract does not require his approval. If he
disapproves of the compact, he is free to fall out of the work
force, or work in another country. His choosing to work here is
an implicit acceptance (and approval) of the compact. He
approves of it every damned day, and is foolish to suggest
otherwise.
But at least the economy's in great
shakes. Not
. (You know, I hate these headlines that say "worst in two
months." Is there something so sacred about the last two months?
Why not just say it continues to suck?
"Wally, are we having fun yet?" It's
not just amazing that the Bush Administration refuses to set
criteria for when we'll leave Iraq (criteria, not a timetable),
but so far as I know they haven't said anything about how to
judge the success of our efforts. (You can see how desperate the
insurgents are getting by how effective they are at killing
people, was the best I heard.) Yeah, well, I'm tired of them showing how desperate they are. I'd really like it
if they felt triumphant once in a while and didn't feel like
slaughtering people, you know? We're dealing
with Hezbollah; how long before Bush realizes that it's not
artificial vomit cleverly placed on the floor before the
refrigerator in the residential wing of the White House?
More isolationism from the Bush White
House. In order to protect the sanctity (OK they didn't drag
out that word, but they may as well have) of US death sentences
for foreign nationals who are convicted of capital crimes here,
the Bush administration has withdrawn from an international treaty which we
sought in 1963. Americans living abroad now may not be able
to see diplomatic consuls when they need to, but that's OK, at
least we'll be able to fry who we want when we want.
That's ONE way to look at it. Nightmare at
Paddington Station. I've been enjoying this guy's work for
quite some time, it's time for a call-out. Make sure you click
"before" over and over.
Yes, this blog was a bit quiet today.
As I mentioned in a post yesterday, I have a freelance engagement
for a week or so, so blogging will only happen at night. I don't
use blogging software (I code straight HTML, and it you want to
get a sense of how hi tech this operation is, I use WordPerfect.
So I can't blog remotely, and if I could I wouldn't, because when
I work on site I don't take breaks. I think the engagement will
last through next week, so look for this to continue. I don't
want to get into financial details, but we can use the money. But
since I'm here now, you can probably expect night time posts. (By
the way, this doesn't deserve its own post, but I have the Allman
Brothers Band At Fillmore East playing... It's odd, but I've
listened to it so many times, it's practically like Beethoven's
Ninth. Still stirring, but no more surprises. Do you have similar
pieces you know so well that they fit like a pair of old blue
jeans? And, do you wish you could rejuvenate that first time
feeling?)
We don't do "Open Thread" posts here.
That's for Atrios and Kos, not me.
Diversity is good. Yesterday (or was it the day before? I forget...) I criticized Donald Luskin's reference to thereisnocrisis.com as "the Left," as if the left were some monolithic creature walking in lockstep as it comes to Social Security issues. Diversity is all around, even at Social Security Choice, the Club For Growth's web platform for arguing for privatization. The other day, Donald Luskin was arguing that privatization would take care of the "insolvency" of Social Security... Frankly, the White House has done a poor job of making this case so far. White House policy wonks have mistakenly conceded that personal accounts don't address the solvency issue -- which the Left takes every opportunity to point out. But as with everything else the Left has said in this debate, their rendition of the White House's concession is greatly exaggerated. Sure, the White House conceded that putting money into personal accounts that would have otherwise gone into the Trust Funds doesn't create new money to bolster the system. But that doesn't mean that personal accounts invested in private markets wouldn't strengthen the system another way -- by prefunding future benefits will real economic resources. And yet, here's Louis Woodhill's post at the same site: PSSAs are not a solution to the problem of Social Security solvency. The Social Security "unfunded obligation", currently estimated at $3.7 trillion, will have to be dealt with by cutting the growth rate of promised future benefits. ("PSSAs" are private accounts — although he spells the acronym out differently.) Now, I'm far from insisting on a unified front, when diversity helps explore the issues; but this points to how it would be so much better if the President put out an actual plan, so it could be discussed concretely. By the way, even if you don't normally click links, you might
want to click Woodhill's, if only to read an open admission in
its title: "Yes, Personal Accounts Are About Dismantling
the Welfare State"
And so, Mr. Lynch, you were going to say? Yes, I promised a post on the verbiage and semantics surrounding the debates on Social Security. But I wound up spending four hours getting medical attention for our guinea pigs. (Hurray.) Our mama had died just after Christmas, and the second pig we bought to provide company for the remaining pig from Mama's litter was pregnant coming home from the pet store. She gave birth about 10-11 days ago, and the other day we noticed wheezing not from the baby but from... oh, heck, it's too tough for you to follow if I don't give you their names, and that's probably more than you care about. Suffice to say I took car services around the neighborhood looking for an appropriate vet, I did get attention, the baby's in fine health, and the other two are now on different flavors of antibiotics. So, no, I haven't given further thought about the words, but I will, and I hope you're understanding about this four hour black hole I encountered while getting my daughter's guinea pigs proper care. But don't get too hopeful, because I'm about to start a freelance assignment for a week or so; I'll try and get my thoughts down about the semantics tonight. I do want to thank "Doug" for chiming in on the comments, it
helped pick up the slack on a hanging issue.
A sad thing to see. David Hogberg could well be a decent fellow; I've never met him, and wouldn't mind going up against him in a game of Set. The important thing for me to get across is that you can't judge whether or not someone is a decent person merely on the basis of political differences. Hogberg supports privatization. So what? He probably loves his wife very much and religiously takes his kids to soccer practice. But tonight he bent over backwards to defend Donald Luskin against my post earlier today. (My post is here, his defense is there.) He didn't do well. Aside from my inability to understand why he doesn't let Luskin defend himself, there are a couple things Mr. Hogberg missed. One, Mr. Hogberg says it doesn't matter that the White House is no longer calling it a crisis. Well, it does matter if you're trying to defend Mr. Luskin, because the latter had suggested that the White House had convinced America that it was a crisis. The White House isn't using that term. If America has concluded it's a crisis (it hasn't, see next paragraph), it isn't thanks to a White House which doesn't use the term. Two, Hogberg takes consolation that even if the polls don't show that Americans think it's a crisis, a lot of Americans think that it's at least a problem. Fine, but that wasn't Luskin's point. And Luskin tried to suggest that Americans thought it was a crisis to justify his fantastic conclusion that Democrats were moving off a "there is no crisis" defense in order to defend another front. Three, Hogberg tries to defend the crisis meaning by saying that the White House is using the word "bankruptcy" (or "bankrupt") to describe Social Security, "If bankruptcy isn't a type of crisis, what is it?" Yet here Mr. Hogberg hasn't done his homework. Search on the word "bankruptcy" at whitehouse.gov, and the last time it was used was when Bush said "Social Security is heading toward bankruptcy." Now, that was a couple weeks ago, and given how much the White House likes to play with words, switching from private to personal and so on, I wouldn't have wanted to have gone out on that limb. At the very least, we all know that bankruptcy in this case can be averted; we also know that privatized accounts, which Mr. Hogberg prefers, do nothing to avert bankruptcy. Nothing. That is, if there is a crisis, Hogberg needs to sing a different song. CORRECTION: The White House web site contains a very
recent use of the word "bankrupt" — from this Monday. In an
"Ask the White House" session, Special Assistant to the President
for Economic Policy Chuck Blahous wrote,
"The Social Security system does not currently meet that Social
Security Trustees' test of sustainable solvency. Under current
law, it will eventually not have sufficient assets to meet its
obligations, and will thus be considered to be insolvent or
bankrupt." So I was wrong; I thought I'd overcome the usability
problems associated with the White House web site's search
engine, but I hadn't. (Search on just "bankrupt," and this
document appears; but if you search "bankrupt bankruptcy," which
is apparently how the engine wants you to search an "or"
condition, and it doesn't.) I'm about to post more about the
terms used in the debate, and so will end this correction here.
The profits of privatization. About a
month and a half ago I wrote that
Wall Street's profits from privatization wouldn't come from fees
so much as from an influx of capital, buying up the same old
stocks that would now be suddenly worth more thanks to more money
chasing them. That's the basic idea, you can read more of the
post if you like. Via Josh Marshall,
we learn of a new blog written from someone who founded an assets
management firm, and his first post has an even scarier
perspective: owners of companies whose stocks are dogs and
really need privatization to happen for them. Might be
worth a bookmark...
Another winter blast. Spring isn't
here yet: it's now 24 F, and has dropped about 20 degrees in the
last six or seven hours. Snow started falling a few hours ago,
and it's supposed to go down to 14. Just so you know.
People on Semantic delusions. I mentioned yesterday that Donald Luskin feels that when some liberals say there isn't a crisis in Social Security that they are categorically denying that are insolvency issues worth fixing. I also showed that many people (both liberals, like Josh Marshall, and conservatives, like Lou Dobbs) don't argue with projections for insolvency yet reject the language of crisis, I also pointed out that the White House itself avoids the word crisis. So it's no surprise to see Mr. Luskin again writing today from a context of confusion. He hears people like Ted Kennedy express a willingness to increase taxes, or raise retirement ages, or similar steps (but still saying no to private accounts) as recognition that there's need to work on Social Security. And what does he conclude? This would seem to be a concession that the Democrats' first defense against the GOP's reform initiative -- that there is no crisis -- has failed, as has been proven in several recent polls, so they have abandoned it and reversed course on it. Now they are reading the polling results showing eroding support for personal accounts, so they've fallen back to defending that position. Maybe a smart tactical retreat, but probably no way to win the war. The White House has succeeded in convincing America that there is a crisis. So now it's time for the White House to switch emphasis and convince America that personal accounts are the answer -- that they represent your own personal Social Security lockbox. Once the Dems have been rolled over twice, there won't be any defense left. Now the polls don't say that the American people say there's a crisis; polls say people recognize a problem, a position that many Dems have long understood. And as for working against private accounts, that's what the Democrats have always been doing. I never saw the movie "Dumb and Dumber," but if I recall correctly the trailer showed a scene where some woman says to Jim Carrey's character something like "I'll go out with you when it snows in July," and Carrey's character is elated: "You mean there's a chance? There's a chance! There's a chance!" It's the Privatizers who are losing this battle. And no, the White House is not running around talking about a crisis, Don. Search the White House's web site. UPDATE: I should offer supporting information in pointing out that Americans don't feel it's a "crisis," as Luskin says. In Alabama, a very Red state, In a poll by the Mobile Register and University of South Alabama, 16 percent of 405 adult Alabamians said Social Security is in a crisis; 51 percent said it has major problems; 23 percent said it has minor problems; 5 percent said no problems; and 5 percent said they weren't sure. From an article at National Review, summarizing the results of a CBS/New York Times poll:
I'm not sure how many more examples I should come up with to
convince Luskin that America doesn't share his view that it's a
crisis. Saying it's not a crisis is not a retreat, it's an
acceptance of reality.
A technical question... Can anyone
reading this point me to a good resource for writing a redirect
page? I'd like to simplify the URL for this blog home page, but a
lot of links point to the current URL. Thanks in advance.
Wonderful.
Of linkos and thinkos. Someone I worked with was fond of evolving the word "typo" into "wordo," where the wrong word might be used; perhaps a type of malapropism in some cases. I suspect someone has already coined the word "linko," for when someone codes the wrong link on the web. I just had an email exchange with Donald Luskin surrounding a post of his from yesterday, where he accused the Left of refusing to acknowledge insolvency with respect to Social Security. (I won't take you through the exchange where he ultimately realized he'd linked to the wrong place, but he graciously thanked me for questioning him and he corrected his piece.) But I fear he's gone from a "linko" to a "thinko," wherein one could question not his link but his thinking. After making his correction, his opening paragraph goes... Of all the lies we hear over and over in the Left's attack against Social Security reform, the most dangerous and profoundly untrue is that personal accounts would do nothing to help cure the system's insolvency. It's an odd lie for the Left to tell, considering that they also claim that there is no insolvency problem in the first place. Here's the thinko: the last link is the one he corrected, and it links to thereisnocrisis.com. Firstly, there are several points where thereisnocrisis.com takes note of 2042 and how the Trust Fund will not be able to cover all the promised benefits. For instance, here they approvingly quote Lou Dobbs, who wrote, "Last year's report on Social Security projected the program will take in less revenue than it pays out in 2018, ultimately reaching insolvency in 2042." The web site does not argue that Dobbs is wrong here. And in this post, they approvingly quote Josh Marshall, who says insolvency is further away now than it was in Clinton's term: "President Clinton tried to devote the final two years of his presidency to 'saving' Social Security from the threat of future insolvency -- a threat which appeared substantially closer then than it does today, less than a decade later." Here too there is no argument that Social Security is solvent. Now, these are only some of the opinions which thereisnocrisis.com calls on; there are some that also get posted that express suspicions that 2042 won't be as bad as has been projected. I suspect Luskin is focusing on the web site's name (there is no crisis) and equating that with a belief that 2042 is meaningless. But not only have I shown that there are plenty of acknowledgments of 2042's significance (you can see more with this Google search), I think Luskin is wrong to mandate that recognition of an issue has to translate to a feeling of crisis. Bush and the White House rarely use the word crisis, preferring "problem," and I don't think Luskin would say the White House refuses to acknowledge insolvency. (The last time the word came up regarding Social Security was in a press briefing on February 5, and McClellan wasn't really using it himself so much as responding to questions about the word's use.) But even if thereisnocrisis.com was unified in saying over and
over that the shortfalls projected for 2042 were hooey, Luskin's
next thinko is in isolating this one web site as if it is
"the Left." There are many here who do take 2042 seriously, and
it's wrong to single out any source as if it were "the Left." (So
far as I know, I have never identified anything from Luskin as
representing "the Right.")
Hey, let's go ahead and increase the deficit, says one proponent of privatized accounts for Social Security. Over at Social Security Choice, Louis Woodhill argues that transition costs will be easily borne: It is true that letting workers put $200 billion/year into PSSAs (roughly what 4% of taxable wages amounts to) would increase the reported Federal deficit by $200 billion/year. However, from the viewpoint of the financial markets, the government's financial position would not change at all. To the bond market, the Social Security System's current $3.7 trillion "unfunded liability" is just as real as the Federal government's current $4.5 trillion of "debt held by the public". He's basically arguing that the amount is relatively inconsequential when put into context. He's also arguing that he's comfortable with increasing the unfunded liability from $3.7 trillion to $3.9 trillion (an increase of $200 billion, or about 5.4%). Perhaps that's a trade-off he's willing to make, although as I've said elsewhere, increasing indebtedness isn't something I usually associate with the "Daddy Party" — especially when you remember that we're at war and have to watch our finances carefully. The trade-off he's proposing increases over time, however: that $200 billion is only for one year; as wages increase over time, that $200 billion will be there every year and every year larger. It's difficult to say what will really happen in terms of transition costs, but according to Vice President Cheney the costs will ultimately be in the trillions. I don't know about Mr. Woodhill, but I'd prefer to hear the total cost of the transition, not one year's worth. (If you've ever gotten a mortgage, for instance, your lender might have told you the total interest costs over the term of the loan, just to make sure you understand.) So far, it's important to remember that the President has not
put forth a plan, and much of what is being discussed by those
who argue for privatization is hypothetical. When the President
puts out a genuine plan, everyone will be in a better position to
understand what the transition costs will really be, and those
arguing for and against privatization can speak more concretely.
As it is, I don't think framing the debate in terms of a single
year's loss to the Social Security Trust Fund adds to the debate.
Another home run from Tom
Toles.
Misrepresenting Clinton's views on Social Security? Today on NBC News' Meet the Press, Senator McConnell sought to compare Democrats' current calm reactions to what Social Security faces to their opinions in the past: Senator Durbin, my friend here to my left, said back in 1998 he thought it was a crisis then. President Clinton said in 1998 he thought it was a crisis then. This is seven years later. Did Clinton really say it "was a crisis then"? I'd personally like to know where. A pretty good resource for Clinton's statements regarding Social Security can be found at the Social Security Administration web site. Do a page search on the word "crisis," and you'll see that on several occasions Clinton did use the word crisis: but in every instance he's referring to the crisis as being in the future ("looming;" a suggestion that it's not yet "close at hand;" "still only on the horizon;" "prevent a crisis later;" "take action now to avert a crisis"). I couldn't find an instance where Clinton in 1998 "thought it was a crisis then" — unless you liberally interpret McConnell to have meant that in 1998 Clinton saw a crisis in the future. I don't think we can afford that generous interpretation, because when he appeared on CNN's Late Edition with Wolf Blitzer in January, McConnell said, "do [Democrats] want to do anything about a crisis that President Clinton said in 1998 is upon us, or do we want to wait until the last minute?" As I've shown, the speeches online at the Social Security Administration don't show Clinton saying a crisis is "upon us." I think it's fair to say that McConnell is demagoguing here, by suggesting that today's Democrats should be beholden to something Clinton "said" in 1998 but apparently didn't. Let's pretend for a moment that Clinton did say what
McConnell claims. If Democrats should adopt the standard of
following Clinton's faux remarks, shouldn't McConnell,
too? Back in 1998 Clinton was talking about setting money from
the budget surplus aside in order to fully fund the anticipated
shortfalls for the Social Security Trust Fund. What was
McConnell's position in 1998? He voted to use the budget surplus
to establish private accounts as a supplement to
Social Security (which is different from what Clinton wanted to
do, use the surplus to fend off the shortfalls which were
foreseen in the future); he's been a proponent of private
accounts for quite some time. So what's the deal, Senator? Was
"Clinton" correct or not?
This is not a difficult concept. Brendan Nyhan has caught NBC's David Gregory in a fundamental misunderstanding of the issues surrounding Social Security and Alan Greenspan's testimony this week. Gregory gave viewers that Greenspan came out in favor of private accounts as a way to fix Social Security, when what Greenspan said was that benefits should be cut, and done so with ample warning so people could plan. It's one thing if a blogger can't describe the problem
correctly; and it's more serious if someone on Fox or CNN misses
the boat; but David Gregory is a reporter on the highest-rated
television news show in America. This, as they say, is a problem.
They've run out of facts... So soon?
And what's left after you have no more facts? Americans for Tax Reform, Grover
Norquist's group, has a feature on the left margin of its web
site home page called "Social
Security Fact of the Day." Assuming the links' codes represent
the date (a pretty good assumption when their codes have bits
like "02-23" and "02-24" in them), they only have five facts of
the day. They started on February 23, and fact number 5 is dated
March 3. Let's give them the weekends off: there should be eight
facts, and there are only five. In school, five out of eight gets
you an "F." It's hard work.
How good is your eyesight? When was the last time you read the details of your credit card agreements, really thought about their implications, and noted the little fliers in your bill talking about term revisions? Haven't in a while, huh? Credit card companies are now looking at your broader profile, not just how you deal with them, in determining what your interest rate will be; not just at the time the account is set up, but even as your relationship with them continues. And if you're late on your payments on Card A, if Card D hears about it Card D might jack up your rates even though you've historically been on time with Card D. Your rates could sail to the skies, and according to an article in the Washington Post (seen via Kevin Drum), penalty rates can go as high as 40%. You probably know that the Congress is in the process of revising bankruptcy legislation that would make it harder for people to file for bankruptcy, even though on so many occasions the need arises out of an unforeseen medical emergency in spite of having health insurance; but are you aware that on Thursday an amendment that would "limit" interest rates to 30% failed in the Senate? The credit card industry is defending itself by pointing to
its tiny print, and saying that they've fulfilled their legal
obligations of informing consumers. But as everyone knows, there
are laws and then there are ethics. I'd bet you dollars to
doughnuts that they've all done research to figure out how few
people know the terms of their agreements, and have made
conscious decisions to take advantage of the ignorance. It's
called gouging, and it, too, is legal, but that doesn't
make it ethical.
A rejection of conspicuous consumption? It was a looong time before I knew that MaryCaitlinAshley Olsen was actually two people, Mary-Kate Olsen and Ashley Olsen, but it seems we have so much to learn still. It was not enough to serve my parental duties of watching their movies with our daughter (and I actually think Ab did that more than I did). But it seems as if Mary-Kate is setting fashion trends by dressing down and not putting her wealth on public display. It's a reversal of trends, and may signify an awakening to value heretofore unseen:
So here are your opportunities for doing good.
"The details were disappointing." February
jobs beat expectations, but the unemployment rate rose and
wages did not (so, with inflation considered in, real wages are
down). Given the number of months where job growth has been
below expectations, having one above expectations is
welcome news. Still, since investors make money by getting their
estimates right, you'd have thought that expectations would have
been lowered and that about half the time the figures would beat
expectations and about half the time they'd be lower than
expectations. But that's not the case: the figure has usually
fallen short. Why has Wall Street continually bet on higher
performance?
How to communicate when writing for the web. God, and even people who I disagree with, know I try to be fair to different viewpoints. If I don't think they're valid, the supporters of those viewpoints may not think I'm being fair, but that's only because they're twits who are likely three months out of juvenile delinquency programs. That being said, if you read the next post and the comments appended from me and others, you'll see a lot of hot air over the effectiveness of communication techniques. I won't claim a monopoly on either clarity or gondola launching; but I will be more than happy to share some expertise on how to communicate on the web. What are my qualifications to do so? Well, at a Fortune 100 company I was in charge of improving satisfaction with the company's web site, and in doing so had to immerse myself in all aspects of web site usability. One of the most important pieces I ever read was this piece by Jakob Nielsen, on how people process information on the web. Even though it was written years ago, it's still valid. Read it, and ask yourself whether or not you read a screen the same way you do a book page. I think you'll agree. (If you don't know his name, Jakob Nielsen was widely acclaimed as the guru of web usability. Many disagreed, but there were no challengers so widely acclaimed.) How does this pertain to the question below about what's on Cato's web site? It's kind of like the tree in the forest model of communication. To be credited with making a sound, it has to be heard. It may not really be true for trees in a forest, but a web site can't claim that "it's there" if it's difficult to find. This is where it all comes in. Cato said in a letter to the New York Times that Paul Krugman should have known that Cato had addressed an issue because it had 20 years of research on it. Cato made no mention of where the fruits of those 20 years worth of research could be found. So far, the tree makes no sound. Others have defended Cato by saying the information is easily found on their web site, under a link which is labeled with the very words in question. It's true, you go to their web site, and there's a link labeled with the title of the issue. But click the link, and you're confronted with a list of articles, none of which is labeled with words addressing the issue in question. If the tree started to make a sound, it quickly jumped back up on it's roots, aborting the sound. It's really easy to put up a bunch of articles (and links to them) on a web site and say OK we've done that. But that's not communicating. If you want to get a point across, you craft a new page which summarizes a viewpoint and supports it. You don't just throw pieces of pasta against the wall (links to articles) and hope something will stick. That puts the entire burden of communication on the reader. Trust me, they won't read. If in your summary you want to link to specific articles and
paragraphs, fine, use links to do that. But by no means,
never should you just spill out a list of articles and
think you've "answered" a question, when none of them offer any
clues as to where the answer lies. To do so is suicide. Your tree
will make no sound. Got it?
This is really funny. Over at Social Security Choice, Donald Luskin calls out a Cato Institute response to a Paul Krugman column. (If you don't know, Luskin monitors Krugman closely.) The funny thing is, as anyone who clicks through to Luskin's post will see, Luskin highlights a Krugman line that Cato hasn't answered the transition costs issue; and Cato's retort snorts about Krugman's failure to read their archives (without specifying what he should read — the equivalent of saying "trust us, we really have"), doesn't talk about how the transition costs will be borne or avoided, and then changes the topic to simply talk about the benefits of privatization. In short, Krugman says that Cato doesn't explain; Cato doesn't explain; and Luskin points it out. Mahvelous. Simply mahvelous. UPDATE: Donald Luskin noticed this post, and says it's all too easy to find Cato's research by going to their web site. That is true: it's linked on the right of their home page. But Cato had an opportunity to explain their position right there in the letter to the Times or refer the readers to the web site and took neither tack. What we have here is a failure to communicate, coming from Cato's director of communications. (By the way, even the web site falls short: the letter claims twenty years of research, but the web site only has eight years of research on the topic.) (I also love how Luskin called me an apparatchik while complaining about an ad hominem attack; there is nothing in this post which amounts to an ad hominem attack.) UPDATE 2: A commenter points out that if Cato answers
what to do with the transition costs, it's not in the first two
articles on their web site (they insist that the transition costs
don't even exist). If the web site answers Krugman, they can't
expect people to wade through a list of articles where the
first two don't even admit that the problem exists. How
much time do they think their readers have? Try harder, Cato.
Political correctness forbids the word "treason," and so I imagine Samuel Johnson would encounter trouble were he to write about Alan Greenspan. In his Dictionary, he famously defined pensions as "An allowance made to any one without an equivalent. In England it is generally understood to mean pay given to a state hireling for treason to his country." He didn't use that label for people who were conducting espionage and sending intelligence to France, but for officials who seemed to be at the will of the administration, whatever it was that day, with little genuine consideration for the commonwealth. This week, Greenspan has completed a series of back flips which have benefitted the Bush agenda; it's difficult to see their benefit for the country. (If you think you don't need to review events prior to this week, you can skip...) In January of 2001, he looked at the surpluses, praised the idea of paying down the national debt, but suggested that longer term it would be a bad idea to run surpluses. Thus, he shied away from a steadfast approach to maintain surpluses at their then-current level:
So Greenspan basically argued that we needed lower surpluses because if we maintained the momentum, there would be a point where it took us uncontrollably past zero debt, and that would be bad; Social Security needed to be strengthened and perhaps changed; and that tax cuts were better than increased spending as an anti-surplus weapon. (Curiously, all this was said on the basis of a forecast of ongoing rosy times — he had cited gains in taxable income and so on for his support — yet the incoming Bush administration had been talking about how bad times were coming, the business people they'd been talking to were telling of gloomy periods, we're headed for trouble and so on. These "on the ground" forecasts seem to have not been considered by Greenspan, and rather than incorporate the possibility that surpluses might be naturally temporary, he chose to talk about them as stable and reliable, something to be guarded against.) What happened? Taxes were lowered (deferred to a later date, actually), support for social security's long term obligation were not addressed, and spending increased thanks to 9/11 (we do not blame the government or Greenspan for responding to 9/11, but the expenses due to attacking Iraq were certainly unnecessary, given that there were no WMDs in Iraq and we failed to obtain significant international support). Some may try and tell you that the turn from surpluses to deficits is due to increased domestic spending, but an analysis showed that it was really due to a decrease in taxes. Tax breaks continued after we were engaged in our new war against in terrorism, a decision which is certainly questionable in the face of increased budget demands. Yet Greenspan never questioned the wisdom of continued tax breaks, even though they disrupted steady progress towards paying off the national debt during a time of war. Now, as you know, Social Security is very much the topic of discussion. Projections using economic growth rates of 1.8% (annually) result in inadequate surpluses by 2042, and only 70-80% of benefit commitments can be paid. (The economic growth rate is only one input to the model; others which could have an impact are factors like immigration... It's worth linking again to this great New York Times article by Roger Lowenstein.) (As you know, Bush is pushing for a complete restructuring of Social Security, by turning it into a program where you store up your own assets, and on retirement convert them into an annuity which will support you to the grave. The transition costs, once it begins, are in the trillions, because "savers" will no longer be providing money to support our commitment to retirees and those who have disability or early death needs. This, of course, would only add to the national debt. Bush acknowledges that these changes will not have an impact on the anticipated shortfalls in 2042.) Now, after multiple tax cuts which he recommended, and a failure by the government to ensure that Social Security surpluses will be adequate, Greenspan spoke out this week about: our unsustainable deficit; the proportion of it which is accounted for by medicare; our ability to meet Social Security benefits and early decision on how to address that; his preference for privatizing Social Security; and lastly, a simplification of the tax code based on consumption (sales). Have you ever heard of a sequence of behavior so manipulative as this? When we had an opportunity to stabilize Social Security's commitments, in 2001, he endorsed tax cuts at the same time, out of a ridiculously short-sighted perspective that surpluses would be everlasting, and that we could afford largesse. And now, in 2005, when those surpluses have vanished and we've gone into greater debt thanks to those very tax cuts (again, we shouldn't call them tax cuts), he talks not about rescinding tax cuts but rescinding Social Security benefits, privatizing Social Security (which would add to the deficit) and restructuring tax codes so they are less progressive (basing taxes not on income but spending), another morsel for the Bush administration. (Any such shift to a consumption-based tax would have the additional kicker of transition costs, thus again increasing the budgetary burden.) Dr. Johnson, meet Alan Greenspan. (By the way, one
picture is worth a thousand words.)
How much safer are we? A key response to 9/11 is getting armed federal air marshals on randomly selected flights; and the higher the proportion, the greater the likelihood that a hijacking or whatnot will be stopped. Similarly, when the proportion is higher, it means terrorists understand they have less of a chance of getting "lucky once." And the public feels safer as a result, more willing to fly, and the commercial air carriers have a decent opportunity to make a buck. That's how it's supposed to go. But the Washington Times (yes) is reporting that the government may be grossly inflating marshal coverage, perhaps by a factor of two. Marshals who have reviewed the reported statistics say that there aren't enough marshals to do as much as the government is claiming, thanks to attrition and failure to expand the program. Now ordinarily you would expect the Washington Times to be cheerleaders; I don't think it's logical to infer it's even worse than what they're reporting, but you have to wonder. (As an aside, I have to say I liked how the bureaucrat told the Washington Times that he wanted to be treated at least as well as CBS treated the White House during "Rathergate," with an advance copy of information before commenting.) This program is really messed up. Do you remember how some
honcho was upset that marshals (who need to blend in to be
effective) weren't dressed in suits and ties when flying over
holiday periods like Thanksgiving?
Opened for criticism. It was probably
predictable, but that doesn't make it trite: China is pointing an
accusing finger at the U.S. for its human rights record. It's
a natural outgrowth from Abu Ghraib, the Gonzales torture memos,
and efforts to skirt the Geneva Conventions. Somehow we have to
get back on the right track before our soldiers become vulnerable
to authorities who start saying, well, if the U.S. doesn't want
to treat people decently...
Ulysses S. Grant. You probably know that I post this blog within my Samuel Johnson site... Well someone just went to the broader site after searching Google on this: who wrote boswell's "life of johnson" Grant. Ulysses S. Grant. And a five-foot ladder.
Bush caving in on "carve out" private accounts? A Reuters article on a statement from the Treasury Secretary regarding an upcoming tour to promote Social Security "reform" includes this:
This is a major deep breath: when Bush formed his Moynihan-led
panel in 2001, their charge wasn't to see if private accounts
made sense, but how to implement them. And the administration has
always been talking carve-out private accounts. (A tip of
the hat to Andrew Roth at Social Security Choice, whose post alerted me to the Reuters article; Roth
didn't mention this part, though.)
AGAIN with the dull reporting. An AP article on Federal Reserve Chairman Alan Greenspan today repeats an illusory figure. Regarding a potential move to private accounts, "The administration estimates those accounts will require about $745 billion in new borrowing over the next decade." Yeah, well the plan as laid out so far wouldn't start for five years. I've linked to this before, but since the AP hasn't gotten it yet (and they might be reading...), this is worth reminding: ... the most commonly cited estimate for transition costs had been anywhere from $1 to $2 trillion, as calculated by Social Security's actuaries. That number, often mentioned without a timeline, is still prevalent in today's coverage. Another number often cited is $4.9 trillion over the first 20 years, an estimate supplied by the Center on Budget and Policy Priorities, a group that opposes Social Security privatization. Why start the ten-year clock ticking before the action starts?
I really wish the AP were on top of this. Anyone from there still
reading this blog? C'mon, I've seen your IP address in my server
logs in the past...
Promoting recidivism? In an editorial
today,
The Miami Herald discusses unfortunate shortsightedness on
the part of the Department of Homeland Security. The Mariel
refugees who came into the US years ago fell under DHS
jurisdiction, and DHS has been ordered to release them. The
process DHS is using apparently has as much planning to it as
post-Saddam Iraq: they're releasing them without adequate
resources to successfully assimilate into communities. The
editorial starts with a nightmare: a detainee in Colorado is
given a bus ticket to Miami but no money or food for the three
day trip. On arrival, it's up to the local communities to find a
way to expedite work permits and make sure the released become
law abiding citizens. I'm not sure that it's much different for
typical former prisoners who are newly released, but where the
typical situation is likely a trickle, this will likely be a
flood for South Florida, given its preexisting Cuban
neighborhoods. Since the Department of Homeland Security's
mission goes beyond terrorism, it really looks like they're
dropping the ball on this one.
Targeting cable and satellite radio with decency standards. Reuters reports:
Are book burnings next?
More on al Zarqawi. If you're not yet
convinced of the short-sightedness of the Bush administration in
its delaying pursuit of al Zarqawi in order to stoke the fires for
war, there's this: Osama Bin Ladin has called on al Zarqawi
to start thinking beyond Iraq's borders and to attack
the US. I don't know about you, but knowing that Saddam
Hussein has been captured makes me feel safer.
What have we done by invading Iraq? Yesterday's horrific car bombing challenges all the optimism which anyone expressed following the January 30 elections, and one must be resilient. Still: in the wake of questions about just what kind of government will result from those elections, and State Department reports of abuses by the interim government (oh, you know the kind... torture, rape, and illegal detentions), you have to start asking what this was all for. No doubt, Saddam Hussein was a bad man, and it bears repeating that there were many other tyrants across the globe then and even now; there were certainly no WMDs; Libya's moves to disarm are not attributable to Bush policy so much as British efforts before we even started to rattle sabers with Iraq; the US is certainly no safer with Saddam Hussein's removal; it was apparently Arafat's death which was the catalyst for improvements between Israel and the Palestinians; yesterday's changes in the Lebanese government have more obvious forefathers in Russia, Czechoslovakia, and Ukraine than in anything having to do with "Bush doctrine." (In yesterday's White House press briefing, a reporter named Terry asked Scott McClellan twice if Lebanon's changes represented a "a vindication of the Iraq strategy that the President set out." McClellan abstained from assigning causality to our invasion of Iraq, but noted that it was part of a growing trend towards democracy. He said it was "most notably in the Middle East," but that's not justified; the Middle East may be only the current testing ground, because it would seem to me that examples like Ukraine and Czechoslovakia loom much larger [even if Czechoslovakia was ten years ago]. Let's be clear: Lebanon is no more attributable to Bush's Iraq intervention than it is to the pork tenderloin I made last week.) It would be over the top to say that the Bush administration "caused" yesterday's horrible car bombing; they didn't actually, the agents were terrorists. Yet there is that old "law of unintended consequences;" just because the effects are unintended and there may have been intervening contributors isn't exculpatory. For instance, when the US held back from targeting al Zarqawi prior to Colin Powell's UN presentation in order to have a greater argument for war, I doubt very much that anyone consciously said "and if al Zarqawi somehow escapes and wreaks havoc, it will be our responsibility; we can accept that." I think it's far more likely that people in the White House never considered the possibility that he would be difficult to apprehend; and it is for that lack of consideration (arguably hubris) that the White House should be held accountable. Face it: either the White House didn't consider it as a possibility, or they did and they accepted the risk; whichever you choose, the White House must accept some blame. UPDATE: Over at Talking Points Memo, guest blogger Ed
Kilgore notes that he got a flood of email bemoaning his failure to talk about Lebanon, with
the emails claiming it's part of some Bush-inspired domino
effect. He concurs with my viewpoint that it's not
Bush-inspired. Perhaps it was mere coincidence, or perhaps there
was a flurry of faxes that went out, but the word domino was part
of "Terry's" question to Scott McClellan yesterday. So there's
this meme, and you need to be alert to it. Bush shall not be
elevated to a Great President over this Iraq boondoggle.
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terrorist
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