Wednesday, November 01, 2006

Duckworth, Bean & AARP Dance the Social Security Two-Step

One of my favorite lines from post-Sorkin West Wing comes in an episode about the policy and politics surrounding Social Security. In a one-on-one conversation, Bartlet tells Toby:

“you can't save Social Security without cutting benefits or raising taxes, and this is the largest meeting in Washington where anyone's ever admitted it."
Though the show is fiction, that statement couldn’t be any truer. The only other option is to reform Social Security, and fundamentally change the structure of the program, as President Bush proposed doing last year.

If only today’s real Democrats were as honest in public as their fictional standard-bearers are in private. Tammy Duckworth is vehemently opposed to reforming or structuring the program; and, according to a recent press release, she is also opposed to raising taxes or cutting benefits. So how exactly does she plan to save it? According to her website, by “solving the nation’s exploding federal budget deficit.”

I’m sorry, but can someone please explain how that – as unquestionably worthy and necessary a step as that may be – will solve the fundamental problem facing Social Security, which is that more money will soon be going out than will be coming in to replace it. Yes, we must pay back the money borrowed from the Trust Fund. But that is an oversimplified, temporary solution that only delays the inevitable.

Given that, I’m inclined to say that, when the AARP asked in their candidate questionnaire "will you support a balanced Social Security plan to continue the program's guaranteed benefits for future generations?” Tammy Duckworth lied by answering yes. She doesn’t seem to support any such plan.

You would think that the AARP might be angered by a candidate answering yes and then renouncing any plan that resembles their own stated definition of “balanced” (which according to their website, includes “additional contributions from high income workers with modest adjustments in future benefits can maintain guaranteed Social Security benefits for future generations"). Instead, they have assisted Duckworth, and her 6th District counterpart, Rep. Melissa Bean, in backpedaling their responses - explaining how answering yes to that question doesn’t necessarily mean that they support raising taxes or reducing benefits.

With their own positions sufficiently mirky, both Duckworth and Bean, with the help of AARP are hoping that they can shout "we're for saving it and the Republicans are for dismantling it" loud and often enough to avoid giving the voters of the 6th and 8th District the straight answers they deserve before Election Day.

Cross Posted at Grand Old Partisanship


steve schnorf 3:34 PM  

At the time he was trying to sell it, I failed to see how what President Bush was suggesting would do anything to solve our current SS dilemma. His proposal would obviously have changed the dynamics of the problem when todays 25 year olds were retiring, but, between now and then; as you said there ain't enough money going in and too much coming out.

As you also pointed out, "repaying" the "trust fund" is at most a diversion from the real problem. It's a pay-as-you-go system that isn't and can't.

I need to have someone explain to me how the current problem can be solved by any other means than some combination of increased contributions and reduced future benefits. I'm serious; someone educate me.

grand old partisan 3:49 PM  

Steve – the President’s solution was far from perfect, granted. But, as I understood it, we would have been paying more (or borrowing more) upfront to bail out the system (unpleasant, but necessary), in exchange for structural reforms in the program that would help make financially stable indefinitely into the future – similar to a corporation taking the hit on current pension obligations while converting to a defined contribution 401(k) for their employees.

steve schnorf 9:02 PM  

If that part was there, I didn't see it. The contribute substantially more in the short term piece would have to be there. Was that going to be paid for out of general funds?
Corporations pay for the hit by taking it against earnings and funding the shortfall (or by going bankrupt and voiding their obligations). If we were going to pay for the shortfall, wouldn't that require a tax increase?

Mark,  12:27 AM  


The primary fiscal problems facing the US today are our General Fund deficit and our trade decifit.

Next on the list comes exploding healthcare costs, which are causing both private and public health insurance programs to raise premiums.

The SS trust fund's future net deficit (as in 30 odd years from now) pales in comparison to the above fiscal problems.

markg8 8:43 AM  

Mark is mostly right.

A little history. Ronald Reagan proposed fixing Social Security back in 1982 (when it really did need fixing) by means testing i.e. making it a welfare program for poor seniors only. That earned him and the Republican party a whipping in the 1982 elections.

A commission to solve the problem headed by Alan Greenspan brokered a bill between Tip O'Neill the then powerful Dem Speaker of the House and Reagan who signed it into law in 1983.

This new law responsibly raised the amount we pay in FICA taxes in order for baby boomers to not only pay their parents benefits, the greatest generation's beneficiaries but also stoke the Trust Fund with trillions of dollars to keep the system solvent thru their own retirement without bankrupting their kids or grandkids.

In 2000 Al Gore promised to protect the Trust Fund, with his vaunted "lockbox". George Bush did the same. Bush broke that promise in 2005 claiming the US Treasury Bonds in the Trust Fund, that "lockbox" are "worthless IOUs".

Since the 1970s the SS acturaries do three projections every year on the future solvency of the system based on good, medium and terrible overall long range predictions of the US economy. While long range predictions of the economy are shaky at best past history shows the most optimistic of these projections has been the most accurate. The most recent set of projections show the Social Security Trust Fund going broke in 2040, 2070 and never.

But let's say the worst case scenario actually happens even though it never has. Let's say no changes are made and the Trust Fund goes broke in 2040. Social Security will still pay 73% of current benefits out of then current taxes. Congress also won't be carving money out of general revenues to pay off those Treasury Bonds cashed out of the Trust Fund because it'll be empty. To replenish the Fund and pay the difference Congress can sell new Treasury Bonds to restoke the Trust Fund or it can pay the difference out of general revenues. That's why Tammy Duckworth says we need to stop running huge deficits and running up the debt as we have consistently under borrow and spend Republicans since 1980.

Social Security is a government program that works. It costs 2% in overhead to administer the program and it's invested in the safest monetary instruments known to man: US Treasury Bonds. Ever heard of a Wall St. broker or banker who's happy with a 2% profit? Right now we sell hundreds of billions of dollars a year of those Treasury Bonds to the Red Chinese, Japanese and Saudis to finance our deficit. What does it say to them when the President of the United States insists on calling them worthless IOUs not safe enough for our own people's retirement?

The Republican SS plan like their college loan plan, Iraq and Katrina plans, Medicare drug plan, US military logistics plan and almost everything they do privatizes government functions and outsources their responsibilites to add an extra layer of bureaucracy and profit for his cronies with no oversight whatsoever. This costs taxpayers and beneficiaries much more than it should even if Jack Abramoff style corruption wasn't endemic to all of them and has to stop.

Medicare unlike Social Security will be a real problem in 10 years. The way to fix it to adopt a universal healthcare system like every other industrialized democracy on the planet. Enough said.

grand old partisan 9:36 AM  


you are right, those are serious problems that need to be addressed. But simply doing that won't ensure the solvency of Social Security, which is what Tammy Duckworth seems to be claiming.

Milton 6:37 PM  

The problem was that when Reagan took his meat axe to our tax code, he produced mind-boggling budget deficits. Voodoo economics didn't work out as planned, and even after borrowing so much money that this year we'll pay over $100 billion just in interest on the money Reagan borrowed to make the economy look good in the 1980s, Reagan couldn't come up with the revenues he needed to run the government.

The actuaries at the Social Security Administration now say there is a problem along with conseratives running aganist democrats.

  © Blogger template The Professional Template by 2008

Back to TOP