Yglesias, on "bankruptcy":
Every time the President gives a speech claiming the system is heading for bankruptcy, I’d like to see news services report, "Speaking today in Canton, Ohio, the President repeated his misleading claim that Social Security is headed for bankruptcy. In fact, even after Social Security’s trust fund is exhausted (projected by the Social Security administration to happen in 2041, and by the Congressional Budget Office to happen in 2052) tax revenues will suffice to pay seventy percent of scheduled benefits."
Let’s put an end to this canard of the "do nothing" troupe, which has been peddled by folks who should know better for long enough. Bush is absolutely right to say that Social Security is headed toward "bankruptcy"; it’s Yglesias who’s misusing the term. Bankruptcy is not defined by the total absence of income or assets, as Yglesias (and others) implicitly assume when they make this argument. Folks who go bankrupt always have some income or assets — and, sometimes, they have substantial income and assets. The whole point of bankruptcy, after all, is to keep people from being ruined by their debts and to let them keep a couple things (their house, maybe their car) so they don’t end up destitute or on the streets.
Rather, folks go bankrupt because their debts exceed their income or assets, and there is no way for them to repay those debts in light of their current income or assets. That pretty much describes a system that’s taking in "revenues [that only] suffice to pay seventy percent of" its liabilities. In ordinary parlance, such a system is (or soon will be) "bankrupt."* (Ahem.)
But, buck up Young Yglesias. You’re ahead on points in the "Roosevelt is a traitor" v. "Bush is a traitor" debate.
UPDATE: It looks like Jane Galt is thinking along the same lines (and she’s correct that "insolvent" is the better term, tho’ "bankrupt" is fine for informal purposes). Great minds?
*Yes, yes, I’m aware that a government has a much easier time raising revenues than a business or individual — by raising taxes, issuing bonds, etc. But the point is that it’s perfectly correct to call a government program that will not and cannot meet its obligations for decade after decade "bankrupt."
Rather, folks go bankrupt because their debts exceed their income or assets, and there is no way for them to repay those debts in light of their current income or assets. That pretty much describes a system that’s taking in “revenues [that only] suffice to pay seventy percent of” its liabilities.
So . . . given this, explain again in light of the ongoing — and increasing — Federal budget deficit why Bush isn’t jetting around the country taking Fake Town Hall Meetings to discuss the government’s bankruptcy and the need to do something about it now! Now! Now! rather than devoting so much attention to a single piece of it?
Wow Von, does that mean our 500+ Billion dollar deficit proves the US is bankrupt?
i thought that Galt’s thinking was that the trust fund doesn’t exist. If it doesn’t, and the SSA is all just accounting shenanigans, then it can’t declare bankruptcy.
Last I checked, since the USG has the power (a) to print money and (b) to levy taxes, the USG cannot be bankrupt.
Can’t have it both ways. If SSA has independent existence, then the bonds are real and the debate about what happens when the bonds are fully redeemed is real. If not, then not.
I just love dem lawyers! They can make words mean anything.
Hal, if you’re trying to insult me (after all, i am a lawyer who’s a member of the democratic party), you’re going to need to do a better job. Please identify the word whose meaning I have abused.
Hal
Wow Von, does that mean our 500+ Billion dollar deficit proves the US is bankrupt?
No. An entity (government, corporation, person) is not insolvement (or “bankrupt”) merely because their debts exceed their income. F’instance, I was seriously in debt after law school, but I wasn’t insolvent and I didn’t declare bankruptcy.
I just love dem lawyers! They can make words mean anything.
I think Hal was chiding me.
Actually, I’m in complete agreement with you. I was using the word “dem” to be the mispronunciation of “them” to show my bumpkin ignorance with respect to the awesome logic and preternatural semantic ability of Von.
Many apologies for the confusion.
“insolvement”
Umm, I mean “insolvent.” (Although I’d like to think insolvement means something, since it’s such a cool word.)
Well Von, your explanation is *precisely* the same for SS. Pray tell how they are different.
oops. too quick on the draw. apologies.
I’d rather Bush not say “bankrupt” since the US government has the power to not make it “bankrupt”. Insolvent is the better word. Factcheck.org has a good piece on progressive indexing, and Stanley Kurtz has written about the de facto Democrat plan, which is far worse.
I’m not a native speaker, but while your understanding is AFAIK correct on technical terms, I strongly believe that the technical usage does not match the everyday usage in this case. This happens regularly if either regular or technical usage undergoes a change, meaning change and all that …
Plus, it has to be said in MYs favour, that his correction includes an accurate statement of the facts that avoids the loaded term.
I’m also confused…why is a government not insolvent but a program is?
I’m also at a loss as to what exactly are these debts that SS has?
Well Von, your explanation is *precisely* the same for SS. Pray tell how they are different.
Well, for starters, SS “trust fund” has defined revenues and expenditures; the government’s general fund does not.
“Bush is absolutely right to say that Social Security is headed toward “bankruptcy”
…
But the point is that it’s perfectly correct to call a government program that will not and cannot meet its obligations for decade after decade “bankrupt.””
Only under the pessimistic and neutral scenarios. Under the optimistic one, it is not. Since the optimistic one has been generally more accurate over the last few decades, and since we are over a decade away from insolvency under the pessimistic scenario’s assumptions and if the government reneges on the Trust Fund, wait and see and dealing with bigger issues (starting with the overall budget deficit and the trade imbalance) seems more appropriate than slashing benefits.
“Only under the pessimistic and neutral scenarios. Under the optimistic one, it is not. Since the optimistic one has been generally more accurate over the last few decades, and since we are over a decade away from insolvency under the pessimistic scenario’s assumptions and if the government reneges on the Trust Fund, wait and see and dealing with bigger issues (starting with the overall budget deficit and the trade imbalance) seems more appropriate than slashing benefits.”
Not really. If we wait until we run into trouble and then slash benefits, people that had been promised those benefits for years will be left high and dry.
Better to scale back our promises of future benefits, as part of a long-term plan to keep the system in balance; then people can plan accordingly. Under no circumstances are current benefits being cut.
The relevant entries from the dictionary define bankrupt as:
1. Having been legally declared financially insolvent.
2. Financially ruined; impoverished.
Social Security is not bankrupt under those terms, and if you describe it as such, you are misusing the term, unless the term applied to you when you were still in school. At that time your future liabilities far outweighed your assets and there was no way for you to repay them with your current income. Yet you did not apply for bankruptcy. Why did you not take your own advice?
If one assumes the trust fund is a real entity and that the bonds it owns will be repaid, then depending on which assumptions one uses, many decades in the future Social Security may need to increase its income or decrease its liabilites. Under other assumptions, this is not the case. To use bankrupt for such a situation indicates to me an ideological opponent of the system grasping at straws.
Like others on the thread, I wonder why you think the financial condition of Social Security decades in the future is worthy of so much more discussion than the financial condition of the entire government today, when the latter is in far worse shape.
If we wait until we run into trouble and then slash benefits, people that had been promised those benefits for years will be left high and dry.
If we cut benefits now we risk being unneccesarily stingy. Wouldn’t a more prudent course be to take steps to end the current general defecit, perhaps by rescinding the recent tax cuts for the rich? That makes much more sense to me than focusing on one program that may or may not need changes 30 or 40 years from now.
why is a government not insolvent but a program is?
Good question. Why isn’t the Defense Department insolvent, or bankrupt, or whatever term you want to use, while Social Security, allegedly, will be?
More questions:
Who carved that 2041 date in stone? Please pay attention. That is based on a very very conservative set of projections. Even by the definition being used, it is quite likely that Social Security will never be “bankrupt.”
Are you seriously maintaining that it is possible to be absolutely right about an event so uncertain as the path of the finances of Social Security over the next 36 years. Bear in mind that CBO predicts the date the trust fund runs out as 2051, and the SSA prediction has changed often, generally being pushed further out into the future.
Why do we need drastic changes? Let’s, just for the sake of argument, assume that we know the 2041 date is correct. Even then, the problem can be solved by a number of small changes. Diamond and Orszag (a pdf) have proposed one such set of changes, and there are others. Now, they don’t have the drama of proclaiming the system bankrupt, or providing great sound bites, but against that it has the advantage of being a sensible plan.
Well, for starters, SS “trust fund” has defined revenues and expenditures; the government’s general fund does not.
And another thing. Is it a trust fund or isn’t it? It appears to me that those looking for major changes are perfectly happy to talk about the trust fund as a separate entity when they want to talk about the system’s bankruptcy or whatever. But when it’s convenient for their argument the trust fund somehow morphs into “worthless IOU’s” and “the money has been spent,” and so on.
The scare quotes give it away, von. You’re trying to have it both ways. If the trust fund is a fiction then SS is a general revenue program, and payroll taxes go into general revenues, and SS can no more “go bankrupt” than the Defense Department can.
And if it’s not a fiction then there really is no need for all this panic. Instead of throwing rhetoric around let’s deal with honest arithmetic.
There isn’t anything incorrect about saying that the Trust Fund is an accounting fiction but if you insist on pretending that Social Security is a separate entity, it is an entity heading for bankruptcy.
No. An entity (government, corporation, person) is not insolvement (or “bankrupt”) merely because their debts exceed their income. F’instance, I was seriously in debt after law school, but I wasn’t insolvent and I didn’t declare bankruptcy.
Then you should rewrite the original post to make clear what the determiner of bankruptcy is since this is at odds with what you’ve written there.* Specifically, the following need to be addressed:
1) What is the definition of bankruptcy that you’re using? You carefully say what bankruptcy isn’t but never what it is, except insofar as you think SS qualifies because “it’s perfectly correct to call a government program that will not and cannot meet its obligations for decade after decade ‘bankrupt,'” a claim that cannot be supported in the absence of a definition.
2) Under this definition, why were you as a graduate of law school not bankrupt?
3) Under this definition, why is the government not bankrupt? More pointedly, why is it incorrect — incorrect, mind, not unfair or anything else — to say that the Bush Administration’s fiscal policies have bankrupted the federal government?
4) Under this definition, why is the DoD not bankrupt?
5) What exactly are the statistics and projections that you’re using that allow you to declare that Bush is “absolutely right”, and in bold no less, that SS is headed towards bankruptcy?
* It’s not actually contradictory since you formulated this principle — “folks go bankrupt because their debts exceed their income or assets” — as a necessary-but-not-necessarily-sufficient condition. The fact that you didn’t actually complete the conditions is the problem.
Well, for starters, SS “trust fund” has defined revenues and expenditures; the government’s general fund does not.
In what way does the general fund not? By my read both its revenues and expenditures are perfectly well-defined, they’re just not constant.
Our deficit is a non sequitur to Vons’s argument. However, we would not be a country today if Alexander Hamilton didn’t realize we needed to run a ‘deficit’ to survive. It’s the spending, stupid (not you!). And it’s on both sides of the aisle because we want OUR congresspeople to bring home the bacon. As ye reap…
And actually, I believe the war will finally be won in the Governors’ offices.
Bernard: Now, they don’t have the drama of proclaiming the system bankrupt, or providing great sound bites, but against that it has the advantage of being a sensible plan.
Charles already “addressed” this by linking the Stanley Kurtz editorial upthread. Any article from an NRO economist citing Mickey Kaus as an expert on Social Security has got to be good.
I was under the impression that Social Security would automatically adjust its payout if it were unable to continue to pay at a greater rate. It would go back to pure pay-as-you-go if the current trust fund is exhausted. That is neither insolvent nor bankrupt, though it might be profoundly inconvenient for those who suffer a benefit cut if such a cut is required.
OT, After not looking for a couple of days I noticed that The Corner was linking to The Huffington Post and that ObWi got Bloglist love from Huffington. Congrats!
I believe the war will finally be won in the Governors’ offices.
Though there’s the possibility of snark, I want to honestly pose the question: If the struggle on SS is war, what exactly are the sides?
BBM could be talking about the war against government spending, but given that Bush is governing as a big government conservative, then I’m really confused as to who is on which side.
“and Stanley Kurtz has written about the de facto Democrat plan, which is far worse.”
It is “far worse” only if you believe that tax increases are uniformly evil and must be avoided, even if the general budget deficit is at levels not seen in a generation and growing all the time. In other words, only if you hold the views of the Bush Administration.
In Matt Y’s article he quotes Russ Mitchell of CBS as saying, “By 2041 the system will be totally broke.” The president may not have said “totally broke” but he has said “See, starting in 2017, the system goes into the red, and it gets worse every year — 2027, $200 billion; about 2030-something it’s $300 billion, and eventually 2041 it’s broke.”, along with using “going bankrupt” expression. The White House web page says SS will “go broke”.
Broke has two relevant definitions in the dictionaries I consulted. The first is “without money” the second is “bankrupt”. Totally broke is simply wrong. The other usage is ambiguous, but invokes an image of not having any money, not just insufficient funds. This is misleading.
Additionally, bankruptcy implies a solution to insolvency that means paying less (generally much less) than is due and ending the debt obligation. The obligation to continue paying SS recipients would continue, even at reduced rates, under current law. This is not bankruptcy as I understand it.
Bush doesn’t seem to be particularly concerned about any programs that are ‘bankrupt’, after all Medicare will run into funding problems in about a decade and he’s not talking about it, nor does his proposal to transfer some Social Security revenue to private accounts deal with the insolvency issue.
We know what he will do with any program that is labelled welfare, he will cut it, as he did with Medicaid. I think that the states and federal government deserve each other with their games on the Medicaid disaster, but cutting funding only harms those who rely on Medicaid and those who provide Medicaid services.
It may be fine with the Bush Administration if the poor die and the old starve, but I think there are still a few Republicans who really don’t want that to happen. I await such evidence.
one explanation for von’s failure to declare bankruptcy after completing law school is that school loans are not dischargeable in bankruptcy.
the dictionary definition is really pretty useless in that, like “marriage”, only the state has the power to declare that an entity is “bankrupt”. if von refused to pay his loans on the grounds he was bankrupt, the lenders would have (a) ruined his credit rating and (b) likely pursued him all the way to his employer and seized part of his salary.
SH, since you appear to see the future more clearly than the rest of us, care to share some investment advice? When should we start shorting the dollar?
(i thought conservatives were generally bullish on rising levels of productivity. i also thought rising levels of productivity would ensure ss’s long-term financial viability. please enlighten.)
speaking of cutting entitlements, did anyone hear the NPR story this morning regarding medicaid cuts in Missouri? It seems that the state wants to force its citizens into utter destitution before qualifying. anyone here know more?
“Well, for starters, SS “trust fund” has defined revenues and expenditures”
Oh, and assets? Like IOUs? Sebastian would like the accounting fiction/real line item controversy to bind supporters of Social Security, but it does the opposite. If it’s an arbitrary subset of US government assets, then it cannot go bankrupt or insolvent for the same reason the US government can’t (or won’t allow itself to). If it is a distinct accounting entity, then it has some big IOUs as assets.
von,
“An entity (government, corporation, person) is not insolvement (or “bankrupt”) merely because their debts exceed their income.”
True. It becomes insolvent when its expenditures exceed its income and it does not have assets to make up the difference. So in what way is Social Security insolvent when the federal government as a whole isn’t (especially in light of Social Security’s current expenditures being less than its current income, since the Trust Fund is still growing)?
“Well, for starters, SS “trust fund” has defined revenues and expenditures; the government’s general fund does not.”
Neither does. Social Security’s revenues and expenditures have both changed in the last 2 decades, revenues by increasing taxes and expenditures by postponing the retirement age. Both can be done again (and likely should as part of a solution).
No matter how you hair split the definition, the president’s use of “bankrupt” is misleading. Particularly since his basis for using the word applies far more to his crazed fiscal policy than anything having to do with Social Security.
Bush says the US government is bankrupt! What is going to be done? Dig the hole deeper.
Personally, I think Diamond/Orszag is a lot better than Kurtz does, and also better than what we can infer about the President’s sketchy ideas from the dribs and drabs he has seen fit to share with us. But I love this part of his article:
So why, exactly, is D/O “the only conceivable alternative the Democrats can offer? He doesn’t say. Offhand, there are lots of ways to address the shortfall if it materializes. But since Kurtz has asserted that this is the Democrats’ only option, I guess we all have to follow his advice and start referring to it as “the Democrats’ plan”, even though congressional Democrats haven’t actually, you know, endorsed it or anything.
But hey: since Bush’s vague gestures, so far, only close 50% of the shortfall, I guess I can make up some set of steps to close the other 50%, and start referring to them as “the Republican plan”.
On bankruptcy: I agree with everyone who has asked: why, exactly, isn’t the DoD bankrupt already? But I also think that the more important point is this: there are a lot of ways of dealing with any shortfall that arises. Cutting benefits is one; raising either the payroll tax or its income cap is another. But there’s also the possibility of raising other taxes, cutting spending enough to leave a surplus that could be dedicated to funding SS, and all the other means at the disposal of the Federal government. Bush is treating these as off the table, and I can’t see why they should be.
Isn’t bankruptcy a legal status? Just because your obligations exceed your income does not make you bankrupt, it just puts you in a financial squeeze. To be bankrupt, you have to file with the court and that application has to be accepted by the court. How would the Social Security Administration apply for bankruptcy? Would it get to keep its car?
But there’s also the possibility of raising other taxes [etc]
There is also the very real possibility that the pessimistic assumptions being made when discussing a shortfall in the 2040’s will be too conservative, and we can then discuss the possibility of raising benefits, lowering the retirement age, lowering payroll taxes, etc., depending on what the people paying the payroll tax would prefer.
Is there a similar possibility with, say, the Department of Defense? If not, which problem deserves immediate attention?
Apply any amount of Clinton-like parsing to the terms that you desire, President Bush is still trying very much to mislead the people of this country, and his apologists, Von included, think that’s just fine.
Suppose you have agreed to pay your elderly parents a certain amount every month, but some less than ideal circumstances force you to write smaller checks for a time. Would you then declare yourself bankrupt? Insolvent? Really?
In any case, even if “bankrupt” or “insolvent” were technically correct, they are still, as Matthew wrote, misleading. Especially in conjuction with the “totally broke” language, these phrases are clearly designed to imply The End.
Something like “only partially solvent” might be accurate, but it’s not nearly apocalyptic enough to provoke the rash action Bush wants…
Also, if you think running low on money and being forced to write smaller checks to your parents is bankruptcy, then how, pray tell, would telling your parents that you’re going to send them less money count as a fix?
Bush is still trying very much to mislead the people of this country
he’d never do such a thing. he’d be called out on it, and his political demise would be imminent !
“But hey: since Bush’s vague gestures, so far, only close 50% of the shortfall, I guess I can make up some set of steps to close the other 50%, and start referring to them as “the Republican plan”.”
Ooh ooh. . let’s. The Republican Plan, also known as The United Plan, is to make up the shortfall by allowing workers to gain higher returns by investing in private pension plans. When those plans default, we’ll blame the economy, which is Clinton’s fault! Awesome.
I’m sure no one under 35 minds being ‘profoundly inconvenienced’ with a 30% drop in retirement compensation at the time they retire. That would make a great stump speech. Are you listening Hillary?
Just to recap, according to Von, Sebastian, et.al.: if I have income that is beyond my current expenditures, and being the thrifty “ant-like” boy that I am I invest them into rock solid government bonds because I expect my income to wane over time, I am headed for bankruptcy. Never mind the fact that the predictions of whether my income will wane over time are accurate or not, the mere fact that someone who wants me dead is predicting that I’m eventually going to be taking in less than I’m paying out is proof that I’m heading into bankruptcy.
Again, I stand in stunned awe at the combined logic and semantic abilities of Von, Sebastian and that paragon of reasoning Jane Galt.
Humpty Dumpty has nothing on you, Von.
“he’d never do such a thing. he’d be called out on it, and his political demise would be imminent !”
According to Ms. Galt (as a significant part of her rationalization of voting for Bush last year) all politicians lie, and they cannot be held to the same standards as the rest of humanity. When she wrote that, I stopped taking any of her pronouncements seriously.
I feel about Social Security’s needs much the way I did about the justifications for war with Iraq: accepting all of the criteria for action as true, it still raises the question “Why not apply these same standards to these other related cases?” President Clinton figured out how to submit balanced budgets; I don’t see why President Bush can’t manage to do the same, particularly given a broadly cooperative Congress, and surely the best first step in forestalling possible long-term problems is getting the present in order. I just finished reading Kurt Eichenwald’s Conspiracy of Fools, about Enron, and was favorably struck by the advice offered by one of the lawyers or PR guys who specialize in crisis situations: he said there are three As for businesses in trouble. Acknowledge, Apologize, Act. Be clear and open about what’s wrong, be frank in accepting responsibility and wishing to make amends, and then do soemthing obviously useful to fix it. If the Bush administration did that with, well, anything, I would be much more inclined to trust them on this particular issue.
“Rather, folks go bankrupt because their debts exceed their income or assets, and there is no way for them to repay those debts in light of their current income or assets.”
Folks go bankrupt when they can no longer service their debts. As long as they pay the interest on their loans, the debt-to-assets ratio does not matter, nor does the question of whether they could ever become debt-free.
Social Security itself cannot go bankrupt, as it is not at all a person with legal responsibilities. The American state, however, is obviously able to service Social Security almost indefinitely, be it by raising its income (from either growth or higher taxes) or by redistribution of funds within the budget.
Re: the federal deficit:
“And it’s on both sides of the aisle because we want OUR congresspeople to bring home the bacon. As ye reap…”
Posted by: blogbudsman
Uh, no it’s not on both sides of the aisle. The US has conducted what auto engineers called an ‘A-B-A test’, where the suspicious component is swapped in an out of an assembly. If the trouble followes one component, it’s the culprit. In the case of the USA since 1980, it’s been the GOP.
Uh, no it’s not on both sides of the aisle. The US has conducted what auto engineers called an ‘A-B-A test’, where the suspicious component is swapped in an out of an assembly. If the trouble followes one component, it’s the culprit. In the case of the USA since 1980, it’s been the GOP.
You’re my new hero!
It looks like Jane Galt is thinking along the same lines (and she’s correct that “insolvent” is the better term, tho’ “bankrupt” is fine for informal purposes). Great minds?
Don’t be so hard on yourself, von. I disagree with many of your posts, including this one, but I would never stoop to putting you on Galt’s level.
I do not think that word means what you think it means
i’d like to call for a moratorium on that phrase and its close relations.
So why, exactly, is D/O “the only conceivable alternative the Democrats can offer?
Because the Party of No refuses to offer its own plan, once again passing up the opportunity to be the Party of Better Ideas. So much easier to snipe than to lead.
Charles: funny, that’s what I think about President Bush and his refusal to
offer a plannegotiate with himself. We Democrats have a plan: it’s to deal with the budget deficit and Medicare now, and wait a few years to see if there actually is a Social Security shortfall to worry about. We’re not the ones who have spent millions in taxpayer dollars barnstorming the country urging reform without offering a plan.in that last, ‘offer a plan’ was supposed to be struck through. Oh well.
Maybe this sort of rhetoric had some effect on the president’s lack of success with saying we are bankrupt and can’t pay social security:
Or will be bankrupt and won’t ba able to pay social security, rather.
Me:
“Uh, no it’s not on both sides of the aisle. The US has conducted what auto engineers called an ‘A-B-A test’, where the suspicious component is swapped in an out of an assembly. If the trouble followes one component, it’s the culprit. In the case of the USA since 1980, it’s been the GOP.”
Edward:
“You’re my new hero!”
Thank you, Edward. If you want, charter membership in my fan club is available for a low, low price, if you act now. Just send my your credit card number….
So much easier to snipe than to lead
And your comment is what, other than sniping? Oh, nothing.
SocSec isn’t in any crisis other than the one cooked up by Bush as a pretext for eliminating SocSec.
Anyone who’s been paying attention knows that. For once, it seems that most Americans are paying attention. They know Bush is peddling a lie; that’s why they’re not supporting it.
Why should Democrats buy into the lie, or ask the American people to do so?
Charles Bird: When your house is on fire, it’s not an act of cowardice or irresponsibility to say that it’s not the right moment to talk about what color the carpet in the new place should be, or where to go on summer vacation next year. It’s not even cowardly or irresponsible not to talk about your retirement prospects right then. It’s important to get the fire out and deal with the immediate aftermath, and then turn to longer-term issues. They taught us this when I took lifeguard training: knowing what not to bother with is as important as knowing what needs immediate attention.
In this case we have several fires and possible fires: sustained huge deficits and demonstrable lack of interest in addressing them, this war in Iraq and the difficulties of establishing what might ever constitute victory in a “war against terror”*, much more imminent deficits in other programs, lack of real improvement in national security, and a bunch more. Social Security will need attention, but ought to get it against a backdrop of a much more stable and sound present.
* One of the things I always admired and agreed with in the conservatives I knew growing up was the importance of criteria for success and failure: every venture ought to have some standard you could check and say “it’s working” or “it’s a failure, time to stop”. This survives in the libertarian interest in sunset provisions in legislation, but seems to have vanished from conservatism as a serious concern. As with the conservating ceding of interest in paying as you go to liberalism, this is a shame for the well-being of civic discourse. Someone ought to always be asking “Under what circumstances would you admit that no matter how noble your intentions, it isn’t working and you ought to give up that particular effort?”
Because the Party of No refuses to offer its own plan…
Remember last week when we were talking about how all those Democratic plans would be put on the table and how all y’all were saying that this would finally put the kibosh on the whole “the Democrats have no plans”? And remember how I said that would never happen? Good times, people. Good times.
But FTR Charles: repeating a lie — and at this point it is a lie, since it’s been proven wrong time and time again — does not make it any more true. Can I suggest that, in future, you refrain from such calumnies and try to actually engage the issues?
“We Democrats have a plan: it’s to deal with the budget deficit and Medicare now, and wait a few years to see if there actually is a Social Security shortfall to worry about.”
The reason you deal with Social Security now is because it is important to have a long phase in period so that people who are nearing retirment are not surprised by a sudden change in benefits.
And the Democrats have a plan to deal with Medicare now? I know I haven’t been reading as much as usual, but I totally missed that one. Last I heard the Democrats were complaining that Bush needed to double the expenditures on the drug benefit. That doesn’t mesh well with dealing with the deficit.
The Democratic plan for the deficit strikes me as eminently sensible. From time to time I’ve done the technical support gig, and one of the basic measures is just this: restore the last working configuration. Go back to what you know did work, and then take it from there. We have budgets that generated actual surpluses not many years ago, and even with allowances for a war, it should be straightforward to get to about breaking even, or somewhere close to it. Of course, that would require an adjustment that the Republican Party simply won’t condone. So…
Is there an actual Republican plan to restore fiscal sanity? That is, any set of budget aims that can be said with a straight face to lead to surpluses and the opportunity to pay off debt? If not, I really don’t see how Republicans can criticize Democrats for failing to take action on things that may (or may not) be issues decades away, not when there’s this situation right now that the Democrats did deal with and the Republicans aren’t.
Addendum: It’s worth noting as follow-up that Clinton got surpluses at the cost of things he and many other Democrats would like to have done. To put it mildly, the latter ’90s were not a time in which Democratic agendas prevailed unchecked. Nonetheless, there was a widespread thought that a financially healthy government would eventually be able to take up good worth doing but not gettiing done now. I haven’t seen any comparable interest in sacrificing immediate rewards on the Republican side at the top, nor indeed much among the rank and file – I can point to worthy exceptions, and appreciate them, but they do seem to me exceptions.
“go bankrupt because their debts exceed their income or assets, and there is no way for them to repay those debts in light of their current income or assets.That pretty much describes a system that’s taking in “revenues [that only] suffice to pay seventy percent of” its liabilities. In ordinary parlance, such a system is (or soon will be) “bankrupt.”
The problem with the construction of bankruptcty as it is outlined in this post, it seems to me, is that to the extent that our overall fiscal condition is one of bankruptcy. Therefore single out this particular component, social security, as headed towards a condition of “bankruptcy” decades hence when all around at this very moment bankruptcy is extent, well, that just seems disingenuous.
You slam social security just because the budgetary laws governing it are more meticulous than those governing the budget as a whole. It may in fact technically be correct to use the term “bankrupt” in this light.
But to use the phrase bankruptcy in a way that implies something other than the status quo (which already is bankruptcy as you define it) implies to most of us that the President means something worse than bankruptcy as you define it.
May I recommend DeLong’s recent post on Social Security to those who wonder why some of us don’t regard the problem as quite the highest priority around. Pay particular attention to his coments on the calculation of the SS deficit.
A relevant excerpt:
how serious is Social Security’s long-run financing problem? The 2005 Social Security Trustees’ Report reduced its estimate of Social Security’s 75-year deficit from 0.7% to 0.6% of GDP. Using the same accounting methods, the 75-year deficit of the U.S. government as a whole under current law plus extension of the Bush tax cuts and an AMT fix is 4.8% of GDP. The Social Security Trustees assume, for their intermediate run, that productivity growth in the economy will average 1.6% per year. They justify this assumption by writing that:
And the average of 2.2, 1.2, 1.3, and 1.6 is 1.6, hence their 1.6% per year assumed growth rate–the same growth rate they assumed in 2004, and 2003, and 2002. In 2003 the Trustees learned that the previous year’s rate of productivity growth had been 3.2%, but this good news did not lead them to increase the assumed productivity growth rate. Ditto for 2004, when they learned the previous year’s rate had been 3.5%. Ditto for 2005, when they learned the previous year’s rate had been 3.3%. Past groups of Social Security Trustees have not been hesitant to lower estimates of productivity growth when bad news comes in; this group of Trustees is extremely eager to throw away all of the good news about the underlying productivity trend of the American economy we have had since 2000. I cannot think of a defensible economic rationale for such a forecast construction procedure. Nobody else I have talked to–not Democrats, not Republicans, not Independents–has been able to think of a defensible rationale either.
Taking account of the three places where I think the Trustees’ forecasts are clearly awry–productivity growth, life expectancy, and also immigration–if I were running the Social Security Trustees, I would be forecasting a 75-year deficit of 0.2%-0.3% of GDP.
So whatever you want to call the problem that may await us, it’s far from the most serious fiscal problem we face, and it is perfectly reasonable to think it won’t be here, if it shows up at all, until well after 2041.
I would like to point out, for the record, that “Let’s not mess with what’s not broken, while we try to fix the things that are,” is a plan. And a good one, when things are working, like Social Security is.
The saddest part is the large percentage of the “liberal media” that have taken up the “If they don’t have a plan to destroy Social Security, they’re bad!” meme.
Last time I looked, most people were better off getting 73% of their current scheduled benefit as compared to what they would get under Bush’s “plan.”
Isn’t it interesting how many commentators think Bush should get credit for achieving “solvency” by proposing large cuts in people’s benefits, but Democrats get endlessly criticized for saying “let’s see how things go for a few years, and worst-case scenario is we will have large cuts in people’s benefits for a period of time.”
I am working on a social security post, but for now just let me say that Bush’s vague gestures in the general direction of a plan do not in fact achieve solvency. They reduce the projected SS deficit by about half.