Monday, May 16, 2005

I Don't Write the Headlines, Folks

Heck of a headline this week. I certainly wasn't expecting anything along the lines of "Bush Lies Like a Rug on Social Security" from The Tribune, but that's what I got. And, also surprisingly, I haven't gotten a lot of angry feedback; perhaps even diehard Republicans are having a hard time understanding exactly what Bush is trying to prove with his Social Security proposals.

I also made a brief appearance in the Arizona Republic, in what Andy calls a "hamburger helper" article--no meat, only filler. "A Napolitano fan"? Don't I at least get a t-shirt or something? It was the lead article in the Sunday paper, and Slate put it, in the land of the newsless, the feature is king--but the Republic couldn't even bother with a feature, so instead we got aimless political speculation. It's refreshing to get political analysis based on the profile of the "unnamed Republican" which, as we Democrats know, mean that when you finally have an actual candidate, he or she not only has those general negatives, but a bunch of specific ones as well. In politics and in romance, no actual person ever looks as good as a "potential candidate."

The Mark Schmidt essay/post cited in my column is available here. Bob Schuster's piece from last week, which spurred my column, is available here.

East Valley Tribune, May 15, 2005

Last Sunday, Bob “Stop me before I privatize again!” Schuster let himself get bamboozled by Bush on Social Security.

Bob’s first whopper was that Bush proposed means-testing Social Security benefits, to benefit those at the bottom. Wrong. Bush instead proposed “progressive price indexing,” which wouldn’t limit benefits based on means, but rather based on prior wages -- not nearly the same thing.

First, lower-income earners wouldn’t get more; instead, people at all income levels would have projected benefits cut, with those earning less than $20,000 getting smaller cuts, but cuts nonetheless. (That’s the cost of those carve-out “personal” accounts.) That’s because in addition to steeper cuts as a wage-earner’s income increased, the cuts also grow larger over time. The White House calculations were based on average benefits in 2050, which includes people who retired in earlier years when cuts would be smaller; those retiring in 2050 and later, even in the bottom 20 percent, will face larger reductions.

Second, Bush’s sliding-scale reductions are based on lifetime earnings, so it’s not a means test. A worker’s average earnings doesn’t automatically mirror their means in retirement. Just ask any retired United Airlines employee.

A widow or divorcĂ©e with benefits calculated on the earnings of her deceased or former husband would face a large reduction, even if she has few other assets. As Mark Schmidt points out, a worker who averaged $50,000 in annual earnings but never could save much for retirement because of sending multiple kids through college or an expensive medical condition, or a company pension bankruptcy, gets a benefit cut. Another worker who never made more than $30,000 but who receives an inheritance, or sells his house for ten times its purchase price, could be well-fixed for retirement but wouldn’t face a cut.

If you support means-testing, the most efficient method is to use the income tax system. You’d make most Social Security benefits taxable for those making over the threshold levels of incomes in retirement -- which is a far better gauge of means in retirement than prior earnings.

Actually, the 1993 Clinton budget deal did that, making 85 percent of Social Security benefits taxable at levels considerably higher than Bush’s $20,000 threshold ($25,000 for individuals and $32,000 for couples, significantly higher, in constant dollars, than Bush’s $20,000 in 2005 dollars).

As Schmidt noted, partially taxing benefits is progressive and it’s actually related to means. And not a single Republican voted for it. People who actually understand this stuff may be a bit skeptical when conservatives -- and those, like The Tribune, who supported Bush's wildly regressive tax cuts -- now claim that they really, really love progressivity and raising taxes on higher earners by lifting the earnings cap.

Yeah, right. It must be the medication talking.

The second lie is that Social Security is headed for “a fiscal train wreck.” This statement requires you to consider $100 billion annual shortfalls in the Social Security trust funds 30 years out as a disaster, but $300 - $400 billion shortfalls in the General Fund budget last year, this year, next year, and the year after that (et cetera) as mere trifles, not worth worrying about.

It also requires you to project productivity growth over the next decade averaging 1.6 percent when talking about Social Security, but almost twice that (a “conservatively” estimated 2.6 percent) when discussing the General Fund budget, so Bush can pretend the deficit will be cut in half in 5 years.

If we’re living just fine with today’s budget deficit, why is Social Security, a smaller problem we don’t face for 3 decades, a “train wreck?” Why is calling for zero sacrifices today and large cuts in the future evidence of “leadership?”

The final lie is that Democrats should swallow Bush’s dissembling and deceptions and his cockamamie clawback and personal/private accounts out of “bipartisanship.” But Democrats aren’t supposed to have a say on anything else, like judges appointed for life, or tax cuts.

Exactly where else do Republicans care what Democrats think? If Bush’s “plan” for Social Security is such a good deal, then the Republican majority should vote for it. If they won’t, then maybe it isn’t a good deal after all.

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