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Some time ago, I was corrected on my interest on interest understanding and the political problems that posed when my grandchildren are paying regular income taxes to pay the interest due the trust fund so my children can recieve SS benefits well beyond what they paid for me and my wife, but I think I had it pretty much right. I guess my question is whether apart from the federal government simply changing the Trust Fund law, is this really any different from my grandchildren paying all those income taxes so interest payments can be made to China? To my way of thinking the answer is "no". Also in yesterday's post, I did not mean to suggest that the Trust Fund was paying for all the costs of the Iraq war or the full fiscal effect of the Bush tax cuts, only that the deficit spending that has arisen because of the Bush tax cuts--my understanding on Iraq is that it is an off budget item meaning we just add the cost to the national debt and do not count it as part of the annual deficit--has been masked by counting the surplus FICA contributions of a couple hundred billion dollars, as a general revenue. I could be mistaken, but I thought that Reagan was getting a lot of heat for the ballooning deficits and that he signed onto increasing SS contributions as a way to make it appear the deficits were not so bad.
terry | 05.07.08 - 12:37 pm | #
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Intermediate cost assumptions lead to outcomes more similar to the high cost than the low cost set of assumptions. (I think I detect hints from earlier comments from Bruce that this is not mere coincidence. The intermediate cost assumptions just may have been kept pessimistic, and thus close to the higher cost assumptions, for a reason.) The actual outcome, however, has always been somewhere between the intermediate and low cost assumptions, and the results they generate.
One big issue has been the use of rather low productivity growth figures. After a period of less robust productivity growth in the last years of this expanstion led to some worry that the period of elevated productivity growth was coming to a close. The latest batch of productivity data, released today, suggest that we may simply be seeing a different pattern. Since labor hoarding is not cutting into productivity growth much in lean years, there isn't much rebound in productivity in fat years. If that's right, then we might want to return to questioning the credibility of the Trustees' productivity assumptions. We might also want to give back a bit, though, if the recent slowing in immigration endures.
Anyhow, the point is that we may well face an outcome somewhere in between the intermediate and low cost outcomes. That covers a lot of territory, but it is all territory with more favorable outcomes for retirees than the Trustees and the Bush White House (and lots of other folks) have suggested.
k harris | 05.07.08 - 12:54 pm | #
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from the last thread:
But the point I was really making was that PayGo doesn't equal Ponzi.
I agree. The only thing that makes is appear somewhat ponzi-like is that it relies to an extant of an ever increasing pool of current payers to support a pool of current payees (former payers). A conventional Ponzi scheme collapses when one runs out of willing new payers. Because SS is a mandated government program, the number of payers is (for the most part*)demographicly driven. The question is how we match a rate of growth of payees that is projected to grow faster than the rate of growth in payers.
*Most people have a great deal of choice with regard to when they move from one column to the other, and the government has slowly expanded the types of employment covered by SS.
jim a | 05.07.08 - 12:55 pm | #
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So under Outcome I, I guess the implication is that the 1983 increase in payroll taxes was already bailing out the long-term General Fund deficit. Clinton pushed for some reduction in the General Fund insanity but Bush43 increased General Fund insanity to the point where we'd need even more payroll taxation (less SS benefits - same tax rate). Gee - the Republicans do love to stick it to the working class no matter how you slice it!
pgl | 05.07.08 - 1:00 pm | #
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Dead on pgl. Cultivating commissions from the masses by "privitizing" your FICA was going to be the next big boom for the Wall St crowd. Comissions and fees for as far as the eye could see was their modern day version of sugar plum faries...
dickeylee | 05.07.08 - 1:07 pm | #
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k harris
precisely right.
The interesting thing about 2008 Low Cost is that it let the lid off. One of my first observations about Low Cost, made in about 1999 was that it always ended up with a system in equilibrium with Social Security fully funded with a flat Trust Fund ratio. And this continued right through to the 2007 Report. I call this the Baby Bear forecast, by coincidence or design the combination of Low Cost economic and demographic projections always resulted in a porridge that was just right, never too hot and never too cold. Statistically this was an unlikely outcome, it was very, very odd that better than projected current year growth was consistently offset by changes in future numbers in a way that produced what was operationally the same outcome.
But whatever produced this effect it is no longer in place and so freeing us to make the observation you do. I don't need to make the argument that Low Cost is likely, just that results better than Intermediate Cost are more likely than not. Which will cause outcome II to on balance move farther out and potentially get back to long term actuarial balance.
In any event there is nothing in the numbers that suggest we need to take action short term. People who assert that delay just makes the final price tag bigger simply don't have the numbers, the payroll gap went down sharply between the 2006 Report (2.02%) and the 2008 (1.7%). A good part of this was due to one time adjustments in assumptions. In 2006 a change in assumed interest moved the gap from 1.92% to 2.02%, in 2008 a change in methodology on immigration moved the number from 2007s 1.95% to 1.7%, meaning we can't just do a straight out extrapolation. But the medium term trend is running in favor of solvency or at least of pushing depletion back. Twelve years of doing nothing has taken the payroll gap down from 1997's 2.23% to 2008's 1.7%, in effect delivering an average 2% tax cut to all wage workers over that time period. Such is the Cost of Inactivity.
Bruce Webb | Homepage | 05.07.08 - 1:12 pm | #
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pgl put a little more extreemly that I would have, but..yes.
People who assert that delay just makes the final price tag bigger simply don't have the numbers, the payroll gap went down sharply between the 2006 Report (2.02%) and the 2008 (1.7%). I'm simply not sure that we CAN do anything meaningful now. As a "trust fund skeptic," I simply don't think that it's really possible to pre-fund the BB retirement. We can't REALLY pay future retirement benefits out of current payroll taxes. The trust fund is simply an accounting way of paying for them partly out of future income taxes.
The central problem is that the American people don't want to live within their means and consistantly vote for politicians that promise them that they won't have to. "Tax cuts pay for themselves" and "I'll cut somebody else's porkbarrel, but I'll make sure that our special program gets funding." are the nonsene that we hear. The balancing act just gets harder and harder as an ever-larger part of the budget goes to interest, both on publicly held debts and trust funds. Really the only thing that we could do NOW would be to pay down publicly held debt now to preserve the governments ability to borrow at reasonable rates when the trust fund accounts need payment. I'm not holding my breath.
jim a | 05.07.08 - 1:27 pm | #
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Bruce Webb,
Re: "cutting benefits or increasing revenues by such measures as raising the cap are counterproductive, they simply increase the amount of accrued interest without actually benefitting anyone today."
As I pointed out on the other thread (as of now, you're still refusing to respond to my arguments and you're just spewing your usual insults as an evasive tactic), even if you assume that SS under current SS FICA taxation would be eternally "solvent", the "benefit" of cutting SS benefits or eligibility at some point is to reduce our long-term fiscal imbalance. This would be accomplished if we reduced projected SS spending, reduced SS FICA taxation accordingly, and offset that tax reduction with tax increases elsewhere. Which isn't to say that we SHOULD do that, only that we COULD.
Brooks | 05.07.08 - 1:28 pm | #
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pgl that is not in fact a correct charaterization of the 1983 increase.
By law the Social Security Trustees are supposed to target a Trust Fund Ratio of 100 or one year of reserves. That ratio slipped under 100 in 1971 and gradually slipped until it flirted with zero in 1982-83. The 1983 increase simply was designed to put the Trust Fund back on track to Short Term Actuarial Balance, defined as a TF Ratio of 100 in each of the next ten years. The 1983 Commission determined that if the economy performed somewhere in the range of its two intermediate cost assumptions that Short Term balance would be restored within a ten year period. Their call was astonishing accurate the economy did in fact perform mid-range and the result was that in 1993 the combined Trust Funds once again had a TF Ratio of 100.
You can fault Reagan for many things but Social Security is not one of them. He inherited a problem that was allowed to drift towards imminent crisis by three Presidents (Nixon, Ford, Carter) and went along with a fix that delivered Clinton with a program in actuarial balance, which is to say he did what current law required him to do. In any event the dollar amounts of the surplus were in the Reagan years almost invisible in the context of the larger budget, the notion that the TFs were 'looted' or used to 'hide' budget deficits under Reagan was simply a piece of clever agitprop tossed in by the Right to subvert discussion among the Left by feeding their existing suspicion of the motives of Reagan and Reaganites. Clever yes, but ultimately without numeric foundation, it just didn't happen in the way the narrative would have it.
Table VI.A4.?Historical Operations of the Combined OASI and DI Trust Funds, Calendar Years 1957-2007 [Amounts in billions] By the end of 1987 we are looking at a total Trust Fund of $22 billion dollars, or an average of a little over $5 billion a year since the FICA increase. Not insignificant money but not even rising to the level of fig leaf in the face of actual Reagan deficits.
Bruce Webb | Homepage | 05.07.08 - 1:29 pm | #
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Brooks look up the concept of 'equity' and get back to me. You are suggesting that wage workers and wage workers only should be paying extra to back fill General Fund deficits and do so while accepting a reduction in benefits they were promised in 1983.
That is unfair. That Congress could make it legal doesn't reduce the inequity involved. Arguendo screwing over all wage workers does to some degree address our long term fiscal imbalance. Your task is to explain why wage workers should simply bend over and take it.
And you weasalish "I am not talking 'should' but 'could'" is not convincing anyone. You have made it abundantly clear that you favor cutting Social Security. And though you probably don't remember you started the name calling right back with about your third comment all those months ago.
Please go away. You are not adding substance to this particular discussion, instead you are trying to hijack it back to the same point you have been making endlessly since day one. I do not believe in censorship in principle, on the other hand the tools exist. If you want to actually focus on the issues under discussion and do so in a numerically centered way then great. Otherwise --
Your point as stated is trivial. It's unstated implications are not and result in what amounts to theft from workers. That you will not and have not addressed the substance of that is much of the problem here.
You're right. While being dead wrong. That is not an insult, it is an analysis, one that you have refused to engage.
Bruce Webb | Homepage | 05.07.08 - 1:44 pm | #
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"political problems that posed when my grandchildren are paying regular income taxes to pay the interest due the trust fund so my children can recieve SS benefits well beyond what they paid for me and my wife,"
Terry this will be the subject of a whole other post. But in a nutshell Social Security works best if it is in actuarial balance and not overfunded. With a Trust Fund Ratio of 100 and a nominal interest rate of 5% then you end up with a worker retirement system funded about 95% from worker contributions and 5% from the General Fund in the form of interest payments on money set aside as a reserve. That is not only a reasonable allocation of responsibility for worker retirement but politically insulated from the demands of people who do not draw their income from wages, it is what makes Social Security insurance and not welfare.
But consider outcome I above and a TF that bottoms out at 390 around 2041. What would be needed to flatten the tail? Well you would need to boost the General Fund contribution to about 20% for a 80%/20% split between wage workers and the rest of the economy. What if you proposed to get the system from there back to a TF ratio of 100? Well in the short term you would actually have to boost the General Fund contribution and cut contributions. And given that more and more recipients would be taking benefits while not actually contributing to the principle buildup you set up the recipe for intergenerational conflict your comment suggests. And the effects just get worse the longer you wait. At a TF ratio of 650 in 2085 you have a huge balance of $118 trillion dollars mostly made up of interest on interest on principle put in by workers who have long passed on. The obligation is there, it is real, but at some point stops being politically feasible, the insulation provided by worker funded insurance for workers begins to wear thin when the policy choices are just to let the TF bloat or take the hit by having the General Fund take on an increasing burden or more likely by imposing steep cuts in benefits.
An overfunded Trust Fund is at more risk from those who would kill Social Security outright than an underfunded one, it creates an opening in the form of the General Fund 'subsidy' (for certainly that is how it will be spun) and so allowing the interests of capital to meddle in a worker unfriendly way.
Bruce Webb | Homepage | 05.07.08 - 2:05 pm | #
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I hope I am not the one who "criticised" Bruce's "interest on interest" concern.
In fact Bruce is right... though I don't think you need to worry so much about the interest on interest aspect of it, as that simple borrowing, and compounding of unpaid debt will produce an exponential growth in the debt (any debt) that eventually exceeds your ability to repay. that compound interest is interest on interest is no different that if you formally paid the debt every year and then borrowed it back, including the amount you just paid, interest included.
But more important, i get the feeling that many people take the Trust Fund more seriously than it deserves. the Trust Fund is not Social Security. It does not matter much when or whether it "goes broke" especially if goes broke means, as it does,simply paying it off.
In the case of the low cost scenario, the "fix" would be simply to cut the payroll tax until SS is at least drawing down the Trust Fund faster than interest accumulates.
It would be better to cut the payroll tax sooner, and by a larger amount, to get rid of the Trust Fund entirely (except the one year buffer).
But we don't need to even think about that until we actually see that "interest on interest" beginning to run away from us.
Not that it isn't a good idea to get people to think about the fact that so far from "going broke" there is a reasonable chance that Social Security is over funded.
as for one commenter above (jim a 1:27) the trust fund is "simply an accounting way to pay for them out of future income taxes"
this is not really correct. you are forgetting that the excess payroll tax is real money collected from real workers. lending it to the government is income to the government, which it presumably uses in ways that make the country stronger and more able to pay its debts inthe future... just like any other investment. at the very least,the people who got tax cuts paid for in part by the Trust Fund borrowing, presumably invested that money and now are richer and better able to repay the money they effectively borrowed.
it's really not a case of robbing peter to pay paul... much less your befuddled uncle sam tryng to pay one pocket by taking money out of the other pocket... it is in form an ordinary case of borrowing from those who have to fund somethng useful and to repay the borrowed money out of the profits.
if you argue that gummint wastes the money... well that's an issue for the general budget between you and your congressman. it really has nothing to do with Social Security.
coberly | 05.07.08 - 2:32 pm | #
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Brooks,
The argument that is offered by a good many of our elected leaders is that while it is perfectly OK for general fund activities to be paid for with a Social Security Trust Fund surplus, it is inconcievable that a Social Security obligations be funded by redemption of Treasury debt held by the Trust Fund. That is a purely political argument, which like any such argument is likely to pick up supporters if repeated often enough, but has no claim to ethical superiority.
Your verbal math works out, but it partakes of the political arugment. Similar mathematical truisms could be figured out for walking away from Iraq, ending agricultural subsidies, reducing our military preparedness to a level adequate to defend our borders and ending subsidies to energy companies. Those arguments simply haven't been repeated as if they had special (magical) ethical import. Math is not the issue. Policy is the issue. Why should the SS Trust not redeem its Treasury holdings? Why would it be good policy to reduce future payments of retirement benefits below the level that was the pretext for increasing FICA taxes in 1983? Why is it good policy to use the additional money millions of workers have paid to the Trust to fund their own retirement to pay for general fund obligations, and then refuse to pay those workers the promised level of benefits if it requires the general fund to pay back that borrowed money?
By the way, none of us is objective enough to know when we are getting a fair shake. You seem to think Bruce has somehow not given you a fair shake in this discussion. Let me say that, in general, Bruce has demonstrated a greater knowledge of the workings of the SS system than anybody else posting here, anybody reponding to posts here, and generally anybody who writes regularly for the websites you linked to in your earlier post. Bruce generally deals fairly, if not patiently, with dissent, but refused to be led off track when dissent seems to have missed the point. I'm not saying that is the current case, but it is generally true. You may find you are using up any good will that may be available to new guys on this site by trying to get into a slanging match with him.
Bruce seems set on an extended tour of the math of Social Security, and that cannot be a bad thing for most of us, who know less about it than he does. You are probably better off setting aside what you think you have learned elsewhere - at least for now - to given Bruce a full hearing. After that, if you still think the other guys have a better grasp of the issue, let us know.
k harris | 05.07.08 - 2:37 pm | #
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jim a
the number of payees may be growing faster than the number of payers... but not by anywhere near as much as you think, and not for the reason you think.
we have more payees because we are living longer (this is after the Baby Boom passes. the Boom bulge was paid for through the excess payroll tax.)
and it reaches a limit... very nearly the famous two workers for each retiree you have heard so much about. but this is the same as two working years for each retired year per worker/retiree.
work about forty years, live in retirement about 20 years (to 85 on average). pay for it with a tax of about ten percent on the worker and ten percent on the employer (total 20%) so that you can pay a benefit that "replaces" 40% of your average real lifetime salary.
this is not burdensome... unless you have convinced yourself that young people neeeed a new lexus every couple of years more than they need a reserve of money to live on in retirement if that is what the want to do or have to do after they reach 65.
try to remember the total cost is 6% of GDP... and that is money going to keep you in groceries and a roof over your head when you are old, not money going to buy shiniy new smart bombs for the pentagon.
and the way to pay for it is... under the intermediate cost assumptions... raising the payroll tax a total of 2% for each worker (and his boss) in 2040 this would be about twenty dollars a week on a pay that has increased by 300 dollars a week over what it is today.
and there is no way for people to avoid paying the money. and social security is a more rational, and safer, way to pay it than any other on the table.
coberly | 05.07.08 - 2:41 pm | #
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in case it's not clear, i agree completely with Bruce's last post (2:05)
he may say it better than i do.
for some people.
what's funny is that we could go from "Social Security is broke, flat bust" to "Social Security is a huge monster eating the economy" without missing a beat. In fact we have been through the "runaway Trust Fund" before, back in the beginning, when the Right saw it as a "slush fund" that would enable Big Government to come into every home and job and tell people how to manage their private affairs.
coberly | 05.07.08 - 2:56 pm | #
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Re: “Brooks look up the concept of 'equity' and get back to me. You are suggesting that wage workers and wage workers only should be paying extra to back fill General Fund deficits and do so while accepting a reduction in benefits they were promised in 1983. That is unfair. That Congress could make it legal doesn't reduce the inequity involved. Arguendo screwing over all wage workers does to some degree address our long term fiscal imbalance. Your task is to explain why wage workers should simply bend over and take it.”
There is absolutely no advocacy of any policy choice in the arguments I presented on this thread and in my initial comment on the other thread regarding the appropriate conceptual framework for Social Security and for the decision of whether or not to reduce SS benefits or eligibility at some point http://angrybear.blogspot.com/20...y-i.html#696873 . I’m asking you to address what I said, not what you think my policy preferences are. You are apparently incapable or unwilling or pretending to be incapable of understanding this distinction. Can you please try to separate my argument regarding the proper conceptual framework for decision-making from the particular positions you think I would advocate, and just comment on the former? Do you understand the meaning of this request? (that was not a rhetorical, snarky question; if you really do not understand this distinction, let me know and I’ll try again to explain it).
Re: “And you weasalish "I am not talking 'should' but 'could'" is not convincing anyone. You have made it abundantly clear that you favor cutting Social Security.”
There’s nothing “weaselish” about my statement. Again, you are missing a key distinction. My saying that a point I was making means that we COULD do something but not necessarily that we SHOULD is not the same as my saying “we could but I don’t think we should” or “we could but I don’t advocate that we do”. It’s just me saying that THAT POINT, that CONCEPTUAL or analytical point, in itself, does not constitute advocacy of that particular act or policy. Please tell me you understand this distinction.
As for my policy preference, I have been clear and up-front from my very first comment on a SS-related thread several months ago that, due to our need to reduce our long-term fiscal imbalance, I do favor means testing of Social Security to some degree (and I don’t know if it would cut off only millionaires or where the line should be) at some point (and I don’t know the optimal timing of phasing it in), along with cuts in other spending and tax increases. But I am open to considering and discussing arguments against means testing, as I’ve demonstrated here in my exchange with coberly (re: his objection on the grounds of “theft”).
But again, that’s beside the point. Please start making appropriate distinctions instead of confusing and equating two very different types -- one conceptual/analytical and the other policy advocacy -- and please learn to respond to the former on its own merits and engage substantively (and starting now would sure be nice).
Re: “And though you probably don't remember you started the name calling right back with about your third comment all those months ago.”
You initiated the name calling, personal attacks and general lack of civility from the very start, and in the vast majority of cases (threads) you initiated it. I have a recap of what I think was our very first encounter in my 4:31 comment here http://thebrucewebbrucewebb.blog...ogtownhall.com/ But really, Bruce, I really wasn’t seeking yet another food fight with you here, and I ask again only for you to address my arguments directly, substantively, rationally and logically.
Re: “Please go away. You are not adding substance to this particular discussion, instead you are trying to hijack it back to the same point you have been making endlessly since day one. I do not believe in censorship in principle, on the other hand the tools exist.”
So you are not threatening censorship as your ultimate tool of evasion? Unbelievably lame. Again, all I ask for is substantive discussion/debate. I laid out a fundamental challenge to your post regarding the appropriate conceptual framework for Social Security and related policy choices and debate, and you responded with an explicit refusal to respond, coupled with personal attacks and an implication that my arguments were clearly wrong, yet with repeated refusals to offer any refutation of my arguments whatsoever.
Re: “If you want to actually focus on the issues under discussion and do so in a numerically centered way then great.”
Excuse me, but are conceptual matters not worthy of discussion, particularly when someone is arguing, as I am, that many are not using an appropriate conceptual framework? My arguments have nothing to do with projections of SS “solvency” and related data. In fact, my arguments grant you, arguendo, infinite SS “solvency” under current policies. Do you understand that?
Re: “Your point as stated is trivial.”
Why don’t you say what you said to me on your blog, that my points are all “true and trivial”. Interesting omission on your part here in this forum, as opposed to your blog on a thread which you promptly deleted. (1) Even if you think my points are trivial, are they correct? If not, which points are incorrect and why? (2) Why are my points trivial?
Re: “It's unstated implications are not and result in what amounts to theft from workers.”
There are no unstated implications of the conceptual framework I presented in terms of policy advocacy. It is simply a rational framework for decision-making on this issue. It recognizes the actual problem and the actual trade-offs involved with policy alternatives. And once the actual trade-offs are acknowledged and assessed/quantified, the policy choice becomes a matter of our values and priorities. There’s nothing about that rational framework that would prevent or even bias someone toward cutting SS. Someone may apply that rational framework and, by doing so, fully acknowledge the actual trade-offs and conclude that, based on his/her values and priorities, there should be no reduction in SS benefits or eligibility. Understand?
Re: “That you will not and have not addressed the substance of that is much of the problem here.”
No. The problem is that your inability or unwillingness to distinguish between conceptual/analytical points and policy advocacy points and your unwillingness to address my arguments directly and substantively. Your personal attacks, while unbecoming, are not “the” problem, since we could still have a substantive debate if you would only add substantive arguments to those attacks, instead of using those attacks as one of your evasive tactics, in LIEU of substantive discussion/debate.
Re: “You're right. While being dead wrong.”
I’m “right” about what? Are you saying that the arguments I presented in my initial comment on this thread http://angrybear.blogspot.com/20...y-i.html#696873 are correct? If you disagree with any of it, please say so and please say why you consider it incorrect?
As for the “while being dead wrong”, I’ll be glad to discuss your points related to that contention. But as a matter of blogging etiquette and in the interest of productive, informative discussion, please respond to the initial point – my conceptual point – in that initial comment of mine on this thread.
Lastly, let me say this once again. Can we please just proceed to substantively discuss/debate each others arguments on their merits, preferably without the insults and other assorted garbage? Seriously, let's just have a real conversation, consider each other's points and respond directly and substantively, preferably with civility (but that's not a requirement if that's a deal-breaker for you).
Brooks | 05.07.08 - 3:02 pm | #
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There's another perfectly good comments section ruined. Foolish me - I had been hoping I might learn something.
k harris | 05.07.08 - 3:21 pm | #
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Brooks sorry you slipped up one time.
I posed the question that k harris did. Why if we are just talking about an abstract point of budget finance do you always use the same example? Why not use the Wild Mushroom Regulation Board (if such a thing exists). And you said it was because all of these small agencies paled in comparison to the challenge posed by Social Security. In that moment you irrevocably showed your hand, it really was about this particular program in this particular budget context. Your attempts to back track since are simply not convincing, your credibility, which was fairly low to start with after you decided to insult Dean Baker on his own blog on exactly this same issue, simply vanished.
And I might say that the old 'Joe was unfair to me on some other thread' thing is an old troll trick. It is far better to leave that behind and address the specific issue at hand on the existing thread. To do anything else smiles of cyberstalking, as does your amusing in context BruceWebWatch thing at Clown Hall. People may in fact conclude that I have been mean to you or unfair but why should they ultimately care? In the end you are just a screen name, it is not like I have slandered your good name on national TV.
Bruce Webb | Homepage | 05.07.08 - 3:32 pm | #
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K harris,
Thanks for your sensible comment at 2:37.
Re: “Math is not the issue. Policy is the issue.”
My point is that we have to first adopt a rational conceptual framework for policy decision-making (i.e., getting the “math” right, so to speak), so that we can correctly identify and quantify the trade-offs involved, and then, once we have that understanding of these trade-offs, we can then apply our values and priorities in choosing policies that reflect the trade-offs we consider optimal. I’ve seen people making conceptual errors and critical omissions, and that’s what I’ve sought to correct. Such conceptual/analytical corrections are distinct from policy advocacy, just as telling someone he’s gotten the “math” wrong on how much money he has in his pocket or on how much a Coke and a burger would cost is distinct from recommending what he should do with his money. And I’ve just been trying to get Bruce Webb to substantively address my conceptual point.
Re: “Why should the SS Trust not redeem its Treasury holdings?”
I’m not sure what you mean. We are legally obligated to spend the amount of those bonds on SS. That’s not in dispute, at least not by me. But the current balance of the Trust Fund is only around $2 trillion, equivalent to only a couple of years of SS spending. Most of the long-term SS spending will be funded through ongoing SS FICA taxation.
Re: “Why would it be good policy to reduce future payments of retirement benefits below the level that was the pretext for increasing FICA taxes in 1983? Why is it good policy to use the additional money millions of workers have paid to the Trust to fund their own retirement to pay for general fund obligations, and then refuse to pay those workers the promised level of benefits if it requires the general fund to pay back that borrowed money?”
Perhaps it wouldn’t be good policy. As Coberly argued, reneging on promises that have already been made regarding particular benefit levels, based on SS FICA taxes already paid, is arguably a form of “theft”. Perhaps that principle should ultimately override other considerations. I’m not sure. But the proper moral framework is to ask what the alternatives are and what benefit and harm will be caused by each. For example, take means testing: If protecting Bill Gates’ SS check means (just arguendo) that the working poor must pay higher taxes, but one believes we should protect Mr. Gates’ check because denying it would constitute “theft”, that is a reflection of that person’s values and priorities, and it’s a point of view I respect, although I lean toward the opposite conclusion regarding Mr. Gates’ check and means testing.
Also, remember, promises ALREADY made based on SS FICA taxes ALREADY paid are not the same as promises made going forward based on taxes paid going forward. If we lower the level of promised benefits, then later providing that lower level of benefits would not constitute reneging on what was promised (at least not what was promised explicitly).
Re: “By the way, none of us is objective enough to know when we are getting a fair shake. You seem to think Bruce has somehow not given you a fair shake in this discussion.”
Sure, none of us is completely objective, but have you seen the other thread? Bruce proposed a conceptual framework for SS, and I presented a fundamental challenge to that framework here http://angrybear.blogspot.com/20...y-i.html#696873. He responded with nothing but personal attacks and implications that I was wrong, but nothing remotely resembling any refutation whatsoever. I repeatedly requested a substantive response, and he just continued his attacks. I think one would have to be quite devoid of objectivity to read our exchanges throughout that thread and conclude that he WAS giving me anything close to a “fair shake”.
Re: “Let me say that, in general, Bruce has demonstrated a greater knowledge of the workings of the SS system than anybody else posting here, anybody reponding to posts here, and generally anybody who writes regularly for the websites you linked to in your earlier post.”
I don’t doubt his high level of knowledge about the mechanics, details, data, etc. of SS.
Re: “You may find you are using up any good will that may be available to new guys on this site by trying to get into a slanging match with him.”
All I’ve asked from him is that he engage in substantive discussion/debate in response to a legitimate, relevant argument I made (in response to his post as guest contributor). That’s still all I’m asking for. I would hope that fair-minded people would see that, and judge me and my comments accordingly, as well as judge Bruce and his comments accordingly.
Re: “Bruce seems set on an extended tour of the math of Social Security, and that cannot be a bad thing for most of us, who know less about it than he does.”
Agree. I was just disputing one of the things he said and hoping that he’d respond substantively and rationally.
Re: “You are probably better off setting aside what you think you have learned elsewhere - at least for now - to given Bruce a full hearing. After that, if you still think the other guys have a better grasp of the issue, let us know.”
Not sure what you mean by what I’ve “learned elsewhere” and “the other guys”, unless you’re buying into Bruce’s suspicion that I’m parroting talking points from conservative think tanks or something. I hope you’re not making or buying into that (erroneous) presumption. The conceptual points I’ve been making I developed on my own, just applying logic to the key facts.
Regarding your 3:21pm comment, if I can just have a real, substantive discussion with Bruce, my comments would not detract from the value of this thread in the least. To the contrary, IMHO. Believe me, no one wants more to keep the discussion focused on the points/arguments/questions people are presenting rather than get into a food fight.
Brooks | 05.07.08 - 3:47 pm | #
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In fact we have been through the "runaway Trust Fund" before, back in the beginning, when the Right saw it as a "slush fund" that would enable Big Government to come into every home and job and tell people how to manage their private affairs. That was before the politicians saw that they could use it to direct attention to the unified rather than general fund deficit. At that point the well off realized that they could cut THEIR taxes and pay for it by persuading wage earners that they were sacrificing to "pre-pay" for their retirement and "save social security."
Look whether the trust fund is solvent or not is irrelevant. And interest on the trust fund exceeding all SS expenditures is a political fantasy just like the late Clinton "What will happen if we pay off the debt?" was. The people will always elect politicians who will find a way to spend the money. Arguably that WHY we're having this discussion. That big trust fund, just sitting there is drawing alot of political flies.
At the end of the day, we CAN afford for people to retire, although it is equally true that it is likely that when the BBs enter retirement, workers will have to pay a larger percentage of their income (through income and payroll taxes) to fund it.
But Coberly, I would rather have had the government use the trust fund to RETIRE debt held by the public, rather than see the money spent on ipods and plasma screens for the middle class and invested in the tech bubble and MBSs by the wealthy. It would have been easier for the future government to borrow on the public markets to pay for the bubble of baby boomers if it wasn't already drowning in future interest payments from today's borrowing.
jim a | 05.07.08 - 3:49 pm | #
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Well I had a point I wanted to make but somehow it got derailed. So let me quote from Brooks:
"I bear in mind that the credibility is a function not only of expertise, but also on objectivity (as opposed to bias) and sincerity (as opposed to deliberate distortions or lies in pursuit of some agenda), "
Brooks has made one version or another of this implicit claim in every thread right from the beginning. People who reject his argument are simply biased, or deliberately distorting the argument, or outright lying in pursuit of some agenda which Brooks magically can divine. This includes nationally renowned experts. If Dean Baker, the guy that literally wrote the book on this tells you that your argument on Social Security doesn't make sense the smart answer is to go back and figure out WHY Dean came to this conclusion. The really dumb thing is telling Dean to his face that he is deliberately avoiding your point to pursue a hidden agenda. In doing so Brooks called Dean and me and Barkley and Coberly at various times liars. Perhaps he doesn't consider that name calling, but I for one kind of resent it.
Brooks has simply asserted the right to determine objectivity and motive in other participants in the argument. Well fine I can take an elbow, but I don't expect opponents to pull a Bill Laimbeer and flop and whine in hopes of get a foul called after getting a little shove back.
Bruce Webb | Homepage | 05.07.08 - 3:50 pm | #
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Bruce Webb,
I would much prefer to have a substantive discussion of our respective arguments than to waste time and space correcting you on all your utterly absurd, clearly erroneous assertions on side matters. But I can’t let you get away with this garbage. Sorry others, but there is only so much turning of the other cheek that I’m capable of, and I don’t think I’m out of line setting the record straight when someone is grossly mischaracterizing my past comments and charging me with dishonesty on that basis (let alone that he’s doing so only to avoid substantive discussion/debate with me).
Re: “Brooks sorry you slipped up one time. I posed the question that k harris did. Why if we are just talking about an abstract point of budget finance do you always use the same example? Why not use the Wild Mushroom Regulation Board (if such a thing exists). And you said it was because all of these small agencies paled in comparison to the challenge posed by Social Security. In that moment you irrevocably showed your hand, it really was about this particular program in this particular budget context. Your attempts to back track since are simply not convincing, your credibility, which was fairly low to start with after you decided to insult Dean Baker on his own blog on exactly this same issue, simply vanished.”
Bruce, I’ve explained this to you (I think more than once, actually). I would think you’d be embarrassed to keep bringing it up,. I’ll try once again.
You said: “We could pick the smallest out of the way federal agency and make every single logical claim about it you have advanced from day one about Social Security.”
I responded “Well, yes. As I said, every dollar spent on anything is a dollar contributed to our fiscal imbalance (except insofar as it generates a return on investment that produces revenue feedback). But your “smallest out of the way federal agency” would only be contributing to this fiscal imbalance a tiny fraction of what SS contribues. Yes, if someone contended that spending $50 million on this agency didn’t contribute at all to our fiscal imbalance simply because it had a dedicated tax funding it (and that tax was not a new, incremental tax, but was rather already included in the calculation of the fiscal imbalance), I would correct him, too. But such a conceptual/analytical error concerning that agency in particular would not merit as much attention and effort to correct people on their error as would the same type of error concerning a program that cost 10,000 times that much, right?”
Do you really not understand the above?
And in response to your repeated assertion that I am focused on SS and that that supposed focus reveals some dishonesty and hidden motives on my part, I explained to you that on various blogs I have spent a lot of time addressing other aspects of our long-term fiscal imbalance, related conceptual/analytical matters, policy options, and my policy preferences. In particular, I have spent much more time on combating the myth that “tax cuts pay for themselves” than I have on Social Security or any other aspect of fiscal policy. I’ve also argued for tax increases, against our ethanol policy, recently against a gas tax holiday, and in general, the need to look at ALL spending, in conjunction with tax increases, as we seek to address our long-term fiscal imbalance. But that point, too, apparently didn’t register with you, or you choose to ignore it.
Re: “And I might say that the old 'Joe was unfair to me on some other thread' thing is an old troll trick. It is far better to leave that behind and address the specific issue at hand on the existing thread.”
Hey, I’m all for leaving stuff behind and just addressing the specific issue (and related arguments) at hand on the existing thread. That’s what I keep trying to get you to do. But you keep saying essentially “No, I know you. I’ve seen you before. You’re dishonest. I’m not responding to you.” So a touch of hypocrisy on your part there.
I request yet again, can we just put the garbage aside and stick to substance? Will you please address my arguments – on this thread and the other one – instead of just continuing with personal attacks in lieu of such substance? Please, let's leave this silliness behind and turn to substantive discussion/debate, ok?
Brooks | 05.07.08 - 4:10 pm | #
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Bruce,
Re: "People who reject his argument are simply biased, or deliberately distorting the argument, or outright lying in pursuit of some agenda which Brooks magically can divine."
That is simply not true. I don't want to waste space here demonstrating it. I will, instead, ask you YET again to please just engage with me substantively. If you think my arguments are wrong, just refute them if you can. Address my arguments. That's all I'm asking for. I'm not even asking you to drop the personal attacks if that's something you cherish, only that you add substantive arguments that address the points I've made. Every time you refuse to do so, it becomes increasingly clear that your personal attacks and other criticisms are merely evasive tactics. It's unbecoming, particularly for a new guest contributor on a quality blog.
Again, please stop with the garbage and ostensible reason X, Y, or Z why you refuse to address my points, and let's please just have substantive discussion/debate on the merits of our respective arguments. ok?
Brooks | 05.07.08 - 4:20 pm | #
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Jim a
i agree with your last comment. (at 3:49)
coberly | 05.07.08 - 4:53 pm | #
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Brooks
I gave you a fair run, but now i have stopped reading your comments. i assume everyone else has or will, or that Bruce will invoke his prerogative to censor comments that don't get us anywhere.
coberly | 05.07.08 - 4:57 pm | #
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coberly,
When it comes to responsiveness to arguments/questions -- or more precisely, lack thereof -- you and Bruce are (somewhat) birds of a feather (although Bruce is much worse), so I'm not surprised at all by your comment.
Amazing to me that I could present relevant, substantive arguments, the contributor could repeatedly refuse to address it and instead just keep spewing personal attacks and keep insisting on (bogus) reasons A, B, and C why he shouldn't address my arguments (devoting more time to doing so than it probably would have taken to just engage in a substantive discussion, and with providing no value to anyone except those of us interested in the dynamics of the declining quality of political discourse in America), and someone (e.g., you) criticizes me and not him. Just amazing.
Brooks | 05.07.08 - 5:13 pm | #
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Brooks,
Let me be clear..
Bruce has earned his credentials over the years...your shouting will not earn you anything, right or wrong. Hijacking a thread will only earn being asked to leave, whether you are right or wrong on any particular issue.
There are a number of people here who will take issue in a measured and sequential manner, and argue the points, without hijacking.
Enough, be a citizen, not a hijacker.
rdan | 05.07.08 - 6:09 pm | #
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rdan,
All I've done on this thread and the other is to submit a comment with points relevant to the post. The response was not to address my actual arguments, but personal attacks (including gross mischaracterizations of my past conduct and assertions that I was dishonest and had hidden motives) and a bit of straw man argumentation, along with the implication that I was wrong but nothing even remotely resembling any refutation, to which I responded, ONE-FOR-ONE (not repeated posts on my own; each was a response to a comment addressed to me), including in my responses repeated requests to get engage in substantive discussion/debate.
Now you accuse me of hijacking the thread. And you say nothing about the incredibly lame refusal to engage substantively by your guest host.
What am I missing here? What should I have done in this situation? Not responded to comments of a contributor (or commenter) implying I was wrong without offering any refutation, while attacking my integrity and presenting gross mischaracterizations of my past comments elsewhere? That's not a rhetorical question; I really would like to understand how you think I should have reacted.
And do you have no criticism on the cause of this ugliness: Bruce's refusal to engage substantively despite repeated requests, and his repeated personal attacks and other evasions in lieu of such substantive discussion/debate?
I realize it's your blog, and you don't have to be fair. But I am appealing to your sense of fairness, as well as your concern for the quality of discourse on this blog and the quality of political discourse in America generally.
As a note, I suffer from no delusions of grendeur. I'm just a humble commenter, and I'm not asking for any special treatment or presuming that a contributor is obligated to address all, or even any, of my comments, but this is an exceptional case. I made a fundamental challenge to the contributor's post (the appropriate conceptual framework for Social Security and related policy choices and debate), and that contributor responded with an explicit refusal to respond, coupled with personal attacks and an implication that my arguments were clearly wrong, yet a repeated refusal to offer any refutation of my arguments whatsoever. That's just super lame. Don't you agree?
Brooks | 05.07.08 - 6:34 pm | #
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The way you see yourself is not the way readers see you. They see you as overwhelming the discussion, whether you consider you are answered or not, or whether you consider yourself unanswered on any thread.
That is hijacking...you could be agreeing, the quantity is hijacking. You have asked, and over the next week can read and gain an answer.
So no, I do not agree.
rdan | 05.07.08 - 7:15 pm | #
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There are no aggrieved parties here, and it is not an echo chamber based on comments from many. No more warnings. Advancing the discussion is the goal.
rdan | 05.07.08 - 7:20 pm | #
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ok, I'll try (yet again) to advance the discussion.
Bruce writes in his post: "cutting benefits or increasing revenues by such measures as raising the cap are counterproductive, they simply increase the amount of accrued interest without actually benefitting anyone today."
If by "counterproductive" he means that it wouldn't reduce our overall fiscal imbalance -- which is the big picture here -- then that is incorrect. Even if you assume that SS under current SS FICA taxation would be eternally "solvent", the "benefit" of cutting SS benefits or eligibility at some point is to reduce our long-term fiscal imbalance. This would be accomplished if we reduced projected SS spending, reduced SS FICA taxation accordingly, and offset that tax reduction with tax increases elsewhere. The result would be lower total spending, no change in revenues, hence a reduction in fiscal imbalance.
Bruce, do you agree? If not, why not?
------------------------------------------
WE ARE NOT SOLVING THE WHOLE BUDGET QUESTION TODAY.
Edited By Siteowner
Brooks | 05.07.08 - 7:35 pm | #
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Bruce,
Just curious:
Was that edit -- "WE ARE NOT SOLVING THE WHOLE BUDGET QUESTION TODAY" -- by you?
Brooks | 05.07.08 - 8:04 pm | #
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Brooks,
No. Go home and rest tonight.
rdan | 05.07.08 - 8:08 pm | #
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