Monday, March 07, 2005

Look! Over There! Thirteen Years from Now! It's a Crisis!

I worried that Social Security was becoming passé as an issue, but then the morning I filed we learned about Bush's 60-stops-in-60-days tour, and I'm relevant again! My column didn't run on Sunday but rather today so that the editor could pair it with a column by Rep. John Shadegg. You can read the newspaper version of me here, and of Shadegg here.

Note that Shadegg repeats the well, lie, that the opponents of Bush's attempt to phase out Social Security have no plan to propose. (There are plenty of Democratic plans, incidentally: Diamond-Orzag; Drum; lifting the wage ceiling and bringing state and local employees into the system; each pretty much fixes the worst-case (high-cost) shortfall and any of which would be far superior to whatever Bush will eventually actually propose.) But try calling up Shadegg's office and asking for a copy of Shadegg's actual, numbers-on-paper plan. He's not listed as a co-sponsor of any of the actual bills (of which there's just Kolbe-Boyd, apparently.) He's got positions and principles and beliefs, but there's no actual plan that you can check what you get under the current system and what you'd get if he had his way.

And that's purposeful. It's like the Toles cartoon: Bush won't tell you the details until he has your support. These guys want credit for bringing up tough issues, except they don't give anybody any bad news, and what they disclose of their plan is "if people invest in stocks, that magically takes care of any shortfall!" In other words, borrow our way to riches. The tooth fairy will give us more money and less taxes. So simple, anybody could do it. Sheesh. These guys make Fife Symington look honest.

Social Security
Current Debt Crisis is Bigger Concern

East Valley Tribune, Mar. 7, 2005

George Bush is very, very worried because beginning in about 2018, the federal government could spend more on benefits than it receives in Social Security taxes. But he presides over a government that’s running far bigger deficits right now, which bothers him not a whit.

Let’s use Congressional Budget Office numbers, which are rosily optimistic projections because, by law, they must assume (1) no spending for war in Iraq and Afghanistan, and (2) expiration of tax breaks that the Bush administration wants to extend, and (3) tax revenues swelled by millions of middle-class taxpayers paying Alternative Minimum Tax, and (4) unrealistic cuts in popular programs, and (5) no other “supplemental” spending between now and 2009 that swamps any regular budget “savings.” Thus, Bush’s actual numbers will be worse.

According to CBO, under the budgets prepared during Bush’s presidency, the government will spend $2.3 trillion more than it takes in. That’s what’s happening right now. The Social Security “shortfall” for the 8 years beginning in 2018, some 13 years distant, is only a fraction of that total.

And $2.3 trillion actually understates the deficit, because during Bush’s 8 years, we’re paying $1.5 trillion more in Social Security taxes than required for current benefits. The actual “on-budget” deficit, reflecting spending fully approved by the GOP Congress and President Bush, will be $3.8 trillion.

In other words, Bush currently is drowning the nation in a swimming pool of red ink, Medicare and Medicaid are gushing money at rapidly increasing rates, but Bush instead worries that 13 years from now, actuaries project that under pessimistic assumptions, we’ll add a bathtub more to the water level.

If the country can survive 8 years of annual deficits averaging nearly $400 billion a year, why is a much smaller gap between Social Security revenues and benefits more than a dozen years from now -- when the economy will be that much larger -- a bigger deal?

Why, exactly, are Republicans (and The Tribune) so wrought up over the smaller problem down the road -- that’s the “crisis,” we’re constantly told -- but the much bigger chasm between what our leaders are spending and what money we give them to spend right now is merely a problem occasionally to be mildly deplored, but only in the most general and namby-pamby terms?

You true believers know you must never criticize any sitting GOP members of the Arizona congressional delegation, who apparently are innocent bystanders restrained at gunpoint from accomplishing anything constructive in Washington.

Also, when Bush uses the 2018 date, he’s saying something very interesting. Between when he took office and then, we’ll have paid about $3 trillion more in Social Security taxes than needed for benefits. Those extra funds were invested in special Treasury bonds -- those “IOUs” or “mere paper” you keep hearing about. The idea of the big Social Security tax hikes during the Reagan administration was that the boomers would pay more than needed during their working years, so that the trust funds could redeem those bonds when the demographic bulge retired and limit the benefit cuts (not politically likely) or tax hikes (not politically likely either) needed to handle the large boomer cohort’s retirements.

Bush (and other Republicans) may be talking about those Treasury bonds as if they weren’t real obligations of the government. But those trust fund bonds won’t be the only Treasury bonds coming due starting in 2018. There are trillions of dollars of other government bonds held by investors, domestic and foreign, maturing starting in 2018. Bush seems to be saying that we’ll repay the banks, the Saudis, and the Koreans, but not American workers who paid extra into the Social Security trust fund.

Somehow, our bonds (and only our bonds) are “mere IOUs.” Gee, thanks, Alan Greenspan!

Add it up, people. Why is a smaller, future, contingent problem a crisis, but worse numbers today aren’t? Why are your bonds “mere IOUs” but the Chinese Central Bank knows it’ll be repaid? Why are Social Security taxes on lower- and middle-class taxpayers helping fund tax breaks for the richest?

It’s a scam, folks. Don’t say we didn’t warn you.

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