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October 01, 2007
There Is No Crisis
Can a major national newspaper engage in concern trolling? Because that's really the best description of The Washington Post's hand-wringing editorial over Hillary Clinton's unwillingness to propose a program to "fix" Social Security. Forget, for the moment, that no other candidate has offered such a program, yet only Clinton comes under this attack. Even if they all had Social Security plans, such plans are unnecessary. The graph below tracks predicted expenditure costs over the next 50 years. See if you can spot which lines race up, and which slowly rise in a perfectly absorbable fashion:
More useful would be editorials demanding the Democrats came out against war with Iran, which is a politically risky move, but deeply necessary on the merits. Sadly, the paper has done rather the opposite...
October 1, 2007 | Permalink
Comments
The people who claim that Soc Sec is broken and needs to be fixed are the people who want to get rid of SocSec. The Post has been beating this drum for the last few years. Just last week on the business page they trotted the fact that after about 2017 the system will be paying out more than it takes in, as if that were an unforeseen disaster. By this time you'd think the business reporters would know that the system was designed this way, in order to take in a large amount from baby boomers in their working years in order to pay it out to them after they retire. The people who claim this won't work are the ones that want to loot the Social Security surplus in order to pay for the Bush tax cuts.
But the Post doesn't know this because it doesn't want to know it. It's a friend of the Bush tax cuts, which makes it an enemy of Social Security, on the news pages and on the editorial page.
Posted by: Bloix | Oct 1, 2007 10:34:28 AM
Just another variation on 'doing nothing' is not an alternative.
I have discovered that all human evil comes from this, man's being unable to sit still in a room.
- Blaise Pascal
So far as we are human, what we do must be either evil or good: so far as we do evil or good, we are human: and it is better, in a paradoxical way, to do evil than to do nothing: at least we exist.
- T.S. Eliot
Posted by: racrecir | Oct 1, 2007 10:56:08 AM
Clinton has, of course, offered a health care plan that holds some hope of wrestling those lines into a more manageable direction.
Ezra,
Wow.
Clinton's proposal does little on cost control. I pointed this out at the time of the proposal. You admitted as much saying something along the lines of "only so much can be put into one proposal" and cost control wasn't part of it.
The NY Times editorial last week also agreed that cost control isn't really part of the proposal. Most other health policy folks that I've discussed with have said the same thing.
Let's just be honest and clear on this issue.
Posted by: wisewon | Oct 1, 2007 11:05:02 AM
To answer Ezra's question about Hillary as the sole target you have to understand that the news is a business and has to make money. What better way to do that then to push Hillary as the sole Democratic presidential candidate so they can continue to offer their panty sniffing journalism and sell papers from now till November. Haircuts and hope just haven't cut it as salable memes on the Democratic side.
Posted by: Ricky | Oct 1, 2007 11:05:27 AM
Ummmm, yeah.... The WaPo is a right-wing, pro-business rag.
the system was designed this way, in order to take in a large amount from baby boomers in their working years in order to pay it out to them after they retire.
Ummm, actually... no. When Soshsecurity was started, current soshsecurity tax receipts went to pay current beneficiaries. Baby Boomer tax receipts went to pay for current beneficiaries. Gen Xers & Yers will pay for boomer retirees.
Thanks to our improving standards of living, health conditions, etc, retirees are living longer and their "guaranteed" benefits exceed what was anticipated back in the 1930s.
saving & investing the soshsecurity tax receipts is the only way to make the program solvent. The question is whether people are given the freedom and choice (something the Left proclaims they are for) to save & invest that money or whether the government does it for them.
Frankly, I think I have a more vested interest in the quality of my retirement than the Feds. Hey, if you trust the Feds more, you can make that choice! I'm all for choice, dude. Why aren't you?
Posted by: stwendeler | Oct 1, 2007 11:06:17 AM
And who's really "conservative" and inflexible on this issue?
The Left, which is hanging on to a 1930s era program that (incidentally) was originally envisioned as a temporary program?
Or the Right which is looking to modernize the system for the 21st century economy?
Posted by: stwendeler | Oct 1, 2007 11:08:30 AM
I'll say it differently Ezra-- you know I've been concerned about the Hardball effect on the objectivity of your analysis-- this is the first example that seems to be that you're starting to get pulled in.
The parsing of the language required in the point above to remain technically true: "holds some hope" "manageable" while being actually false (it doesn't really offer cost control) is Washington DC MSM-like scary.
Stick to the "wonk" Ezra, the analysis written here isn't the real you (I hope).
Posted by: wisewon | Oct 1, 2007 11:09:12 AM
Or the Right which is looking to modernize the system for the 21st century economy?
Maybe the Right can get Poochy to promote this new, pro-active plan to change the paradigm of Social Security!
Posted by: Tyro | Oct 1, 2007 11:15:55 AM
Stop taking yourself so seriously, Wisewon: Because it's your opinion, doesn't mean it's mine. As I've made clear to you before and in other analyses, I believe plan's like Clinton's are the necessary first step towards serious cost controls because they create public competitive pressure, more integration, and take the first steps towards heavier cost regulation. That such plans aren't explicit in the press release doesn't mean they don't exist. But don't tell me what my opinions are, or assume I'm so impressed with yours as to have adopted them.
Posted by: Ezra | Oct 1, 2007 11:28:10 AM
As I've made clear to you before and in other analyses, I believe plan's like Clinton's are the necessary first step towards serious cost controls because they create public competitive pressure, more integration, and take the first steps towards heavier cost regulation.
I had forgotten that argument of yours on Clinton's plan-- fair enough. I'd argue that most people that I've spoken with on the topic don't agree that Clinton's proposal lays sufficient groundwork on cost control-- and as I wrote before, the NY Times felt similarly enough to write an editorial pretty much on this point.
But don't tell me what my opinions are, or assume I'm so impressed with yours as to have adopted them.
I'm not telling you what your opinions are, I'm responding to my interpretation/recollection of them-- and I can make a mistake as above-- calm down, my friend.
As for being "impressed with mine"-- as I've written similarly on the VA quality question-- don't listen to me alone, talk to others in the field and see if you still have the same view. To me, this looks like another DC think tank-type view that sounds great in theory, but the on-the-ground reality suggests its wrong. Ezra, I'm coming from the other end (i.e. being involved in health care day-to-day rather than DC-types that just talk about it) and suggesting that there are other data points closer to the field of health care (including my own) that merit some exploring as well.
Posted by: wisewon | Oct 1, 2007 11:47:29 AM
It's worth remembering that there is a substantial constituency who stand to make out like bandits in the event of various schemes to "privatise Social Security" being implemented.
That constituency is a set of people on Wall Street who well get to administer all the private account options etc. and charge a nice commission for each transaction and each time you want to change your address on the account, etc.
These people have a lot of influence with the business press and that translates into a lot of pressure to keep the "privatise Soc Sec" bandwagon going.
Posted by: Meh | Oct 1, 2007 12:08:19 PM
cost controls would be great... rent controls certainly don't have any unintended consequences on housing, right?
No impact on quality, reinvestment rates, supply, demand, or fraud.
And why is it that we don't have universal food insurance? I mean, everyone has a right to nutrition, am I right?
Posted by: stwendeler | Oct 1, 2007 12:09:05 PM
I absolutely agree that Medicare is a greater issue than Social Security. The question is: who's addressing it? Sure, the Democrats are all talking about healthcare reform and UHC, but I doubt those programs, if implemented, will have any substantive affect on the cost-growth of Medicare (they don’t address the root cause).
Posted by: DM | Oct 1, 2007 1:43:31 PM
will have any substantive affect on the cost-growth of Medicare
An excellent point.
Ezra mentions that there are several things necessary before getting to cost control, i.e.
I believe plan's like Clinton's are the necessary first step towards serious cost controls because they create public competitive pressure, more integration, and take the first steps towards heavier cost regulation.
But which of those doesn't Medicare already have? It is already public, is fully integrated as a payer, has as much scale of efficiencies as many European countries already... ah-- the hard part-- "heavier cost regulation."
That's the point. Ezra is right in saying that the Best Practices Institute proposed by Clinton (and variants proposed by the others) could serve as a precursor for NICE-style control. But that's all it is. A precursor. The tough choices on cost control continue to get punted down the road under the guise that other reform is needed first. Medicare has all of those other things. Its costs, like the rest of the US system, continues to spiral out of control.
Posted by: wisewon | Oct 1, 2007 2:22:51 PM
Privatization of social security has been a hobbyhorse or the upper middle class for quite a while because "it just makes sense" to them.
That the editorial board of the Washington Post would echo the viewpoints of their own professional class is not too surprising.
We went through this process in early 2005, and the white collar workers who make up most of the beltway journalists seemed genuinely stunned to realize that most everyone else in the country thought that privatization was a really, really bad idea. This thanksgiving, my whole extended family will get together, and everyone, all of us upper middle class businessowners or white collar workers with bulging retirement accounts, will agree that privatization is a good idea. As none of us is a low-income worker in the service/retail industry without a pension plan, no one will raise any objections, and the cycle of cluelessness will continue, even after their favorite republican candidate, running on a "privatize social security" plaform, gets shot down in the polls.
Posted by: Tyro | Oct 1, 2007 2:35:03 PM
stwendeler, you're incorrect.
The Social Security system we have today is not a program from the 1930's. It's a program from the 1980's.
In 1983, a bipartisan plan - Democratic congress, Republican administration - was put into place to deal with the problems of longer life spans, fewer children per family, and the baby boom generation. In 1983, Reagan signed the Social Security reform bill, which took SocSec off the pay-as-you-go model that it had run on for forty years. With a hefty increase in the payroll tax, the plan was and is that the babyboomers would pay for current retirees and also for a big chunk of their own retirements. Thus from 1983 to 2017, social security will accumulate a surplus, and from 1017 or so to 2040 or so it will pay that surplus down. At that point, the system will return to pay-as-you-go, with the increased payroll tax rates of 1983 no longer needed to pay babyboomers and used instead for higher pay-outs.
No, it's not calculated to the penny, but the 1983 actuarial projections are working like a charm. There is no need to adjust anything for another couple of decades - if then.
People who hate Social Security try to forget the 1983 amendment. The Post will never tell you about it - they don't want you to know.
Posted by: Bloix | Oct 1, 2007 3:58:28 PM
stwendeler, you're incorrect.
The Social Security system we have today is not a program from the 1930's. It's a program from the 1980's.
In 1983, a bipartisan plan - Democratic congress, Republican administration - was put into place to deal with the problems of longer life spans, fewer children per family, and the baby boom generation. In 1983, Reagan signed the Social Security reform bill, which took SocSec off the pay-as-you-go model that it had run on for forty years. With a hefty increase in the payroll tax, the plan was and is that the babyboomers would pay for current retirees and also for a big chunk of their own retirements. Thus from 1983 to 2017, social security will accumulate a surplus, and from 1017 or so to 2040 or so it will pay that surplus down. At that point, the system will return to pay-as-you-go, with the increased payroll tax rates of 1983 no longer needed to pay babyboomers and used instead for higher pay-outs.
No, it's not calculated to the penny, but the 1983 actuarial projections are working like a charm. There is no need to adjust anything for another couple of decades - if then.
People who hate Social Security try to forget the 1983 amendment. The Post will never tell you about it - they don't want you to know.
Posted by: Bloix | Oct 1, 2007 3:59:28 PM
Social security cost controls:
1. Remove the cap. Tax all income. Alternatively end the payrol tax and fund SS from the general fund.
2. SS is welfare, the rich, though they paid in more, should not get more than the poor!
3. Raise retirement age to 70 and index to life expectancy.
Problems gone.
SS and Medicare are about stupidest programs imaginable.
Posted by: Floccina | Oct 1, 2007 4:28:26 PM
Excellent comment, Bloix. Well worth reading twice. And SS isn't welfare, it's social insurance. I don't have anything against its being welfare, but it seems to work pretty well as is. If you can't imagine stupider programs than SS and Medicare, all you have to do is look around; there are plenty of stupider ones in place. Ag subsidies, for instance.
Posted by: cerebrocrat | Oct 1, 2007 4:41:28 PM
This is a little off-topic, but I'm curious to see if Ezra has read a new article in this issue of Health Affairs that demonstrates a pretty strong argument for moral hazard in universal mental health and prescription drug insurance. As a frequent skeptic of moral hazard in medicine myself, I was surprised to see such skewed outcomes, with whites and richer patients consistently over-utilizing services. Universalizing costs and services in this case is essentially a heavy regressive tax.
http://content.healthaffairs.org/cgi/content/full/26/5/1345#SEC4
Posted by: Alex | Oct 1, 2007 6:02:21 PM
Cerebrocrat wrote:
“If you can't imagine stupider programs than SS and Medicare, all you have to do is look around; there are plenty of stupider ones in place. Ag subsidies, for instance.”
OK I retract my statement the ethanol program is absurd.
But SS and Medicare IMO are poorly designed the very rich get more money from SS than the Joe lunch box. This is compounded by the fact that the rich, on average, live longer. Medicare collects money from young people, some of them poor, to pay for people who have one foot in grave and have already live a long life (and also therefore are richer than average). Much better to pick up the care of poor infants and children. I think that most intelligent people if they had the power would not design the SS and Medicare systems as they are.
Posted by: Floccina | Oct 1, 2007 9:02:26 PM
BTW do old people get SS and Medicare becuase they vote more or do they vote more becuase they get SS and Medicare and so can vote themselves money?
Posted by: Floccina | Oct 1, 2007 9:07:11 PM
looks like the two existing healthcare plans, Medicare and Medicaid are the ones in the most trouble. What makes anyone think that if these are so fucked up that Hillary's, or for that matter anyone's, proposed universal healthcare plan will not also be a financial disaster?
No one ever talks about the finacial end of these things.
Posted by: El Viajero | Oct 2, 2007 8:25:30 AM
Floccina, you don't have your facts right.
The moderately well off get more than the poor because they paid more in. Moreover the benefit is actually mildly progressive, the working poor getting more than their contributions would merit. This isn't a direct transfer from the current moderate well off to the working poor, instead it is a progressive redistribution of the gains of future real wages.
The idea that the very rich are getting a better deal is off base as well. If your income after retirement is high enough a portion of your Social Security benefits are taxable and this tax on benefits brought in $17 billion dollars in 2006.
http://www.ssa.gov/OACT/TR/TR07/VI_cyoper_history.html#wp96419
Um and old people get Social Security because they paid into it all their lives. And they get medical care because some Americans have a sense of social responsibility and don't have rocks where their hearts should be.
__________
El Viajero. Medicare and Medicaid are in trouble for the same reasons the contract negotiations between GM and the UAW revolved around shifting responsibility for retiree health insurance from the company to the union. There is exactly nothing broken about Medicare and Medicaid that fixing the medical system as a whole wouldn't address. Your point is ass backwards.
___________
There is not enough time in the world to address the inanities in Stwendelers series of posts so let me put it in bullet points.
1) Social Security was never intended to be temporary. This is a right wing myth.
2) No private plan out there provides a better deal for the worker at or below the median.
3) We have universal food insurance. Its called 'Food Stamps'
________________
If you actually examine the financials of Social Security and the economic and demographic assumptions that go into the models you will find that the system as a whole is more likely over than underfunded going forwards. And before you start saying "Everyone knows-----" ask yourself when the last time you actually consulted the tables and figures of the Annual Report of the Trustees of Social Security. I know my answer, I consult them just about every day. (If you Google 'Bruce Webb Social Security' you get 111,000 hits). There are a number of new sheriffs in town, those who would mindlessly repeat wingnut talking points on Social Security are simply going to embarrass themselves. We have got the numbers and we are not afraid to use them.
2007 Social Security Report http://www.ssa.gov/OACT/TR/TR07/trTOC.html
Posted by: Bruce Webb | Oct 2, 2007 1:56:27 PM
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