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October 12, 2007

Their Is No Crisis, There Is No Such Program

Ah, right. TIme for my bimonthly reminder that there's no such program as socialsecuritymedicareandmedicaid. And so far as fiscal dangers go, there's no such threat as medicareandmedicaid. Instead, there's the American health care system, which charges you a lot of money no matter whether you're from the government or the insurance industry. Graphical representations of all this can be found here.

October 12, 2007 | Permalink

Comments

But... and I'm just throwing it out there... won't it help the Democrats to say they're (their/there... argh!) "concerned" about SocialSecurityMedicareMedicaid to win voters who get scared about that stuff... and then announce, upon winning, that we've discovered there is no crisis? I mean, I'm just guessing... but really, wouldn't that work?

Posted by: weboy | Oct 12, 2007 2:28:30 PM

Yay! Nothing to see here. Nothing to worry about. Move on. Besides there will always be rich people to tax if it does become an issue!

Posted by: abw | Oct 12, 2007 2:36:39 PM

Yeah, I noticed the WaPo gave Fred Thompson an attaboy this morning for his "bravery" in facing up to the potential long-term Social Security deficit, even if they didn't like his approach.

In terms of Big Long-Term Problems We Must Deal With, of course, Social Security is no better than fourth, behind (1) global warming, (2) health care costs (whether you just want to look at Medicare and Medicaid, or the whole deal), and (3) the big hole we've left in the center of the Middle East by removing Saddam from power and replacing him with...well, whatever it is that's there now.

If we ignore Social Security between now and 2025, say, it'll be no big deal. But we definitely need to deal with all three of the above in that interval.

Posted by: low-tech cyclist | Oct 12, 2007 3:07:25 PM

abw

What you said was a sarcastic expression of disbelief. A mere expression of disbelief, no matter how sarcastic, is not, in and of itself, an argument. The fact that I say "suuuuuurre.... there's no space alien in my refrigerator" does not make it more likely, or tend to demonstrate, that there is in fact a space alien in my refrigerator. Notice that the phenomenon remains the case no matter how many "u's" I put in the word "sure." Try it for a while. But not too long, because you have to do it with your refrigerator door open, and eventually your yogurt will go bad.

"The Trustee's Report and a graph from the Brookings Institution demonstrate a slow rate of growth of Social Security outlays" is an argument. It has a claim and a warrant. The claim logically advances the reader toward the point intended by the author. The warrant advances the claim -- if scholarly institutions don't believe that social security outlays are growing very quickly, it becomes more likely that they, in fact, are not growing very quickly. Further, if Social Security is not growing unsustainably, it is less likely that we need to cut benefits or otherwise alter the system. The warrant does not conclusively prove the claim, and the claim does not conclusively prove that social secruity reform is a bad idea, but it is a functioning argument of some kind.

This has been another installment of "argument not an argument."

Posted by: RW | Oct 12, 2007 3:25:47 PM

Actually weboy is on the right track. I periodically throw up a diary at MyDD show the potential power of Social Security as a political weapon.

Because the Right is in a bind and some of the sharper ones know it. Because the issue is not really quite captured by 'There is No Crisis'. If you look at the Social Security Reports in sequence over the last 11 years you can reach two conclusions. One the outlook is marginally improving year over year, the trend shown in this chart being probably irreversible EPI: Changes in Trustees Projections over time. Not only is depletion steadily being pushed back in time, you also see the payroll gap shrinking. Basically privatizers are on a budget, because we know precisely what it would take to deliver 100% of all benefits under Intermediate Cost assumptions, the Trustees say 1.95% of payroll does the whole thing and if you do the math that doesn't individually work out to a lot of dollars. But the numbers squeeze them a second way. If you examine the economic assumptions of the Reports from year to year you see that they get steadily more pessimistic or resort to undermotivated changes (why change Assumed Interest from 3.0% to 2.9% in 2006? Is there really a reason to assume the cost of money will decline going forward?) But there really isn't any difference whether the changes have been made in good faith or not, they act together to make any plan based on equity returns all that more difficult. Which puts privatizers on another budget. 'Crisis' such as it is, requires accepting a model that puts ultimate GDP at 2.0%. Well there has not been a five year period back to 1960 with GDP growth less than 2.4% and only three less than 3.2% Table V.B2; Additional Economic Assumptions and if you stick 3.0% into the model the gap vanishes.

So not only they are faced with a problem that is slowly but discernably going away on its own, they are stuck with a low growth economic model that make a mockery about a private account solution. Moreover that model creates problems on the tax cut front, 2.0% ultimate GDP not exactly being proof of the magic of supply side economics.

Social Security 'crisis' will not survive a Democratic Presidency, it will have great difficulty surviving a Democratically controlled House. As an example of the squeeze the Privatizers are in you can examine the LMS: Non-partisan Social Security Reform Plan. It proposes an increase in payroll tax for everyone of 1.5%, it lifts the cap for an additional 1% of payroll equivalent, it raises retirement age gradually for .62% of payroll, and changes the benefit formula for 2.02%. They propose a combined 5.2% solution to a 1.95% problem and don't promise current workers any better results. Well that is simply nutty. And I suspect there economic model relies on better numbers than Intermediate Cost anyway.

The same thing is true in a smaller way for Medicare Part A, Trust Fund Depletion has been receding at a rate of more than a year per year since 1992, in 2007 it went from 2018 to 2019. And the reason is simple and admitted by the Trustees. Both their Income and Cost models are too pessimistic.

It is my opinion that the economc and demographic models have been systematically suppressed and that when that pressure is released not only will we see that There is no Social Security Crisis, but that the outlook for Medicare will suddenly look if not bright, at least much less dark. And the clear political message to be had here is "They were lying to you about Social Security like they lie about everything"

Posted by: Bruce Webb | Oct 12, 2007 4:58:48 PM

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