Though as I said below, I do think Obama's getting short shrift in the blogosphere on key foreign policy issues, the fact does remain that he's wrong on the merits in his Social Security-related attacks on Hillary Clinton. There's no particular reason she (or anyone else) should be offering specific proposals at the moment to close Social Security's hypothetic future fiscal gap. It would make some sense for candidate to talk more explicitly about their views of the current budget deficit (which isn't especially large) or maybe to describe their outlook on budget deficits in general (which is a controversial subject among left-of-center economists) but we didn't need George W. Bush's trumped up Social Security "crisis" and we don't need one from Barack Obama either.
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On the Other Hand
30 Oct 2007 08:27 am
Comments (28)
Withdrawal from Iraq would go a long way towards fixing the deficit problem. Then let Bush's tax cuts expire and presto!
I just watched the dread ad. I disagree with you. I note the text which flashed on the screen IIRC
1. protect benefits
2: no privatization
3: eliminate the FICA ceiling (I don't remember the exact words).
Do you disagree with that proposal. Roughly he said change nothing except increase taxes on richer people. I agree very strongly with Obama about his proposals. I suspect you do to. Also, back in the day, polls showed a solid majority of Americans in favor.
Note the same tax funds medicare which does have a problem (different ceiling but still a ceiling).
Note that the damaging effects of a budget deficit are the same whether or not the social security trust fund is in actuarial balance.
Finally remember Obama is talking about what he would do if he were elected President. In 2005 the Democrats were so weak that all they could do is block change or allow Republicans to do what they wanted. A newly elected President Obama has no need to be in a defensive crouch.
I think that you (plural) have a Pavlovian response to the words social security.
"Do you disagree with that proposal?"
Matthew has bought into the faulty Clinton-spin that when a Democrat says that the first thing to do to guarantee the future of SS is to lift the cap, that means they are spouting Republican talking points.
As with many Beltway Dems, Matthew is buying into a lot of faulty Clinton-spin these days.
1)The roughly 4 Trillion in "assets" held by the Trust Funds for Social Security/Medicare are worthless -- they are Treasury Bonds which have value only if we cough up $4 Trillion in future taxes to pay off the Bonds. If you have a bond which says on its face that you owe yourself $4 Trillion, you have nothing.
2) Social Security has an estimated shortfall over next the several decades of $8 Trillions.
3) Medicare has a HUGE shortfall of over $40 Trillion.
4) Social Security/Medicare are viable only if you assume that young workers/voters will be willing to pay through the nose for a program from which they will never receive benefits.
5) Note that a huge baby boom generation has paid into Social Security/Medicare accounts for 45+ years , have received statements from the federal government telling them that they have deposited hundreds of thousands of dollars into their Account, and how much they should receive in retirement.
6) Even the Democratic leadership has admitted in the past few years that this is basically a lie. A con job. That the benefits promised to those workers are merely that: a promise. On which the government may --or may --not deliver. That those accounts are not real assets.
7) After-tax wealth held by the rich is immune from taxation --under the Fourth Amendment's ban on "taking". By contrast, the 401ks and IRAs of the Middle Class are in "before-tax" dollars and can be taxed at 90% if the government wants.
8) REAL Retirement savings should be in assets that are legally recognized as "wealth" --not in unenforceable promises or trapped into registered accounts that can be confiscated at will.
9) To his credit, George Bush did talk about giving workers accounts that would hold real wealth -- whereupon the Democratic leadership embarked on a campaign of deliberate deceit and lying. Claiming that "there is not a problem". A manifestly FALSE declaration. I know -- I heard the party line in Democracy for America meetings and that's why I left the DFA.
10) One can see the reasoning of the Democratic Leadership , of course. They WANT Social Security to be ..er INSECURE. That way, millions of retirees will discover that their "retirement" is valueless unless they vote Democratic.
11) This cute little political ploy, however, puts those millions of elderly at grave risk. Because the Republicans are not stupid -- in decades to come, the Republicans will "divide and conquer".
12) The Republicans will split the bloc of young voters aways from the Democratic Party by portraying the Democrats as corrupt old men who steal the wages of low-paid young workers in order to buy the votes of greedy, selfish old people who had 45 years in which to save for retirement-- and who instead lived like grasshoppers and partied.
Note that elderly baby boomers have not lived like grasshoppers. One reason they had trouble saving for retirement is that large sums were taken out of their wages as payroll taxes.
However, the Democrats joined with Bush in taking $4 Trillion from the Trust Funds and pissing the money away: (a)A $2 Trillion tax cut for the superrich --much of which went to investments in China (b) A Trillion or so pissed away in Iraq and (c) the rest given to Big Defense --via a hugely bloated military budget that --year after year -- is more than what the rest of the world spends COMBINED.
Robert Waldmann, the problem is that Obama isn't keeping it very simple by promising to honor the Social Security Trust Fund. For some one like me who graduated from college in 1982 and started paying more payroll taxes beginning in 1983 into said trust fund so I could (as Ronald Reagan himself promised) have Social Security there for me when I retire in the 2020s, I'm not going to settle for anything less. Obama's implying that it's Social Security itself that has a problem, with the fact is that it's the current payroll tax surplus going into the SSTF that's papering over the considerable federal deficit caused by Bush's irresponsible tax cuts.
That Obama is putting Democrats on the defensive by saying there's a problem with Social Security that Hillary Clinton isn't addressing is not only stupid, it's a mistake. Because Clinton is right in saying that she won't put anything on the table until some fiscal responsibility is restored to the overall federal budget first. It's not a "Pavlovian response" to care about my own personal security in my retirement, nor want to see the taxes I've paid into the system for the past 25 years amount do little more than enable Bush's tax cuts.
To the extent that there is any SS problem, it's decades in the future and could be solved by minor payroll tax increases, cap raises, or allowing more legal immigration. Meanwhile the health care crisis is real and now and will require new revenue to provide universal overage in the short term. It's insane for Obama to be proposing tax increases to fix what is currently a non-problem when it will take enormous political capital to get the tax increases needed for health care, a real problem. This shows he and his political team are just plain stupid and would get murdered by the GOP in the general election. Fortunately, he seems to have virtually no shot at winning the nomination at this point.
Petey is showing his Clinton hatred again. Obama attacking Clinton on Social Security is almost choregraphed by the Clinton team. It will basically turn away all of Obama remaining liberal supporters while he struggles to hang onto that important homophobe vote he seems to be working on.
Robert-
Obama (who I'm almost certainly voting for in the primary) has, in order to make something of a non-issue, made use anti social-security framing about how everyone in Washington is mistakenly too afraid to make changes to it and how he's the one dealing with the problem (I haven't noticed him using the word crisis, which is good). I say it's a non-issue because Hillary has publicly taken stands on two of the three prongs you (and the Obama ad) mention, and they're the same stands. She won't commit either way on moving the FICA cap, but that's the only real issue as far as I can see, and if they both agree that there isn't really a social security problem it's hard to see why Obama is putting out an ad about it.
"it's hard to see why Obama is putting out an ad about it."
It's easy to see why he's putting up an ad about it - the senior vote in Iowa.
However, as with pretty much everything that comes out of Obama's political shop, it's not particularly good strategy for winning the nomination.
All that said, this comes back to the Russert question from the debate: if there is a SS shortfall, how would you start addressing it. All the Democrats except Clinton said that they'd raise the FICA cap first. Clinton wouldn't say that.
All the Democrats except Clinton are right. Clinton is wrong.
This seems like a misguided attempt by Obama to win the Russert/Hiatt primary. I'd be much happier if one of the candidates (preferably Edwards) made a firm stand that Social security is not a crisis. The millions of Americans without health insurance is a crisis, Millions of Americans in poverty is a crisis, Iraq is a crisis, Bush is pushing Iran into a crisis, global warming is crisis. We don't need to invent one for Georgetown parlor games.
End rant.
Petey, the point is that as long as the Social Security Trust Fund is honored there won't be a Social Security shortfall until 2042. So Russert's question is bogus, unless you buy into the Republican's spin on the subject. That's why Obama's criticism of Hillary Clinton is off-base.
"Petey, the point is that as long as the Social Security Trust Fund is honored there won't be a Social Security shortfall until 2042. So Russert's question is bogus, unless you buy into the Republican's spin on the subject. That's why Obama's criticism of Hillary Clinton is off-base."
I was alive during 2005. I do understand the issue.
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The question as it popped up in the debate was framed as 'what would be your first step to take to close any possible SS shortfall'.
That's a perfectly reasonable question that Democrats should be prepared to answer.
Here's how they did answer:
Richardson - We should grow our way out of the problem.
Clinton - I'd go into negotiations and put everything on the table.
All the other Dems - Raising the FICA caps is the first step.
It seems pretty obvious to me given the regressive nature of the FICA cap that "All the other Dems" had the correct answer and Clinton had the wrong answer.
That's what Obama was trying to hit at with his ad, even if the Axelrod shop is going about it in their normal inept manner.
Petey, given that it's the rest of the federal budget that's the problem, not Social Security, Hillary Clinton's answer is absolutely correct. Why raise payroll taxes yet again when it's Bush's irresponsible tax cuts that should go?
Looking for solutions on the Social Security side will just be another papering over of the real issue, and as I recall back in 1998 when Bill Clinton said something to the effect of saving Social Security first (when we had a budget surplus) and Al Gore making that lockbox a campaign issue back in 2000.
Enabling Bush's 2001 tax cuts by hiking FICA just makes the tax system that much more regressive, and the Democrats shouldn't want to go there. That's why Obama's tack on the issue of Social Security is a big mistake.
"Enabling Bush's 2001 tax cuts by hiking FICA..."
Methinks you aren't too familiar with the issue.
Petey, raising the cap on FICA (which *is* hiking it) is still raising a regressive, payroll-based tax. There's plenty else that should be on the table that goes first tax-wise.
Don Williams has it wrong on every possible point.
1. The OASDI Trust Fund does not have $4 trillion in whatever you want to classify them. Don's figure is for total intragovernmental debt, the real total for OASDI is about $2.1 trillion.
2. Social Security does not have a debt over the next 'several decades of $8 trillion. The unfunded liability over the next 75 years is $4.7 trillion, unfunded liability over the Infinite Future is $13.6 trillion. Leaving aside the fact that Infinite Future is a gimmick, where the hell are you getting your numbers? Not from the SS Trustees
http://www.ssa.gov/OACT/TR/TR07/IV_LRest.html#wp267528
3. I don't have my copy of the 2007 Medicare Report at hand, but I suspect that $40 trillion is also Infinite Future.
4. Never see benefits. Dude that is so awesomely stupid you don't know what to do with it. Payroll tax continues after 'Depletion', under Intermediate Cost assumptions Social Security will be able to pay out 75% of a benefit currently scheduled to be 160% in real terms at depletion in 2041 compared to today. Well 75% of 160% is 120%, not only will you see those benefits they will be better than the one my mom gets today.
5 & 6. A point which is true for all future government spending. It is all just a promise, one that is backed for the threat of being thrown out at the next midterms.
7. Your first point is I think wrong. The second ignores the fact that many IRAs are in post tax dollars.
8. You need to thinks a little harder about the nature of 'money' and 'wealth', the value of everything you have is determined by the willingness or not of the Administration, Congress and Federal Reserve to hold the line. They can hyperinflate those 'real assets' anytime they choose.
9. Bush never had a plan, instead he indirectly endorsed Posen which on examination left poorer workers worse off and required to annuitize their entire account, that is they ended up with no actual ownership or control of their assets at any time while they were alive and the accounts lapsed at death.
10-11. Are drivel. Meaningless polemic.
12. Sorry boy, Hope is not a plan.
You'll have to do a little better than this.
Seems to me the point of the ad, wasn't about Social Security at all. It was about being willing to talk to the American people and answer their questions. The Social Security issue just happens to be the subject that best demonstrates Hillary's unwillingess to have a conversation/answer a question, even if there is no crisis.
Plus, HRC just went up with a SS ad in New Hampshire ("There for You"). So, for whatever it's worth, apparently there is enough of an issue that she felt the need to remind us that she's there for us. I don't know what she's going to do, but she'll be there for us. Comforting...
Petey actually Richardson gave the right answer. People who say we can't grow ourselves out of this either one, don't know the numbers, or two are people who know the numbers and are simply lying, or three people who know the numbers and simply don't believe in America over the long term.
Intermediate Cost assumes that Real GDP will sink to 66% of 2006 levels by 2012 (3.3% to 2.2%) and then slide to 2.0% and stay there forever. No one has given a good explanation as to why this prolonged 75 year slump should actually be the median, we haven't had a five year period of growth that low since at least 1960.
2007 Social Security Report: Additional Economic Factors On the other hand we have another model supplied by the Trustees that calls for an average Real GDP of 3.3% over the 2007-2012 and then allows a slow slide to 2.8% and still totally funds Social Security with no changes in benefits, retirement age, cap or taxes. Its called Low Cost and it or something close to it is perfectly achievable.
Unless you can give a principled argument as to why Real GDP will permanently slump to levels never seen in recent decades, why the future is so economically dismal that we will all need floodlights, I'll just assume you never bothered to examine the tables and figures for yourself.
Seems to me the point of the ad, wasn't about Social Security at all. It was about being willing to talk to the American people and answer their questions. The Social Security issue just happens to be the subject that best demonstrates Hillary's unwillingness to have a conversation/answer a question, even if there is no crisis.
Answers that dovetail with Republican spin on an issue that was about the only thing that held Democrats together in 2005 are not useful. Given the Russert's bogus question, Clinton's was in fact the best answer. You don't solve a non-existent problem by implicitly agreeing with the Republican premise that a future shortfall in the Social Security Trust Fund (that is, when that fund starts being drawn down by 2018-2020) should be made up with an increase in payroll taxes. No, you put everything on the table, including Bush's 2001 tax cuts.
David W
Answers that dovetail with Republican spin on an issue that was about the only thing that held Democrats together in 2005 are not useful
That may work for Senator Clinton's campaign, but it doesn't get any traction with me. You may believe that Senator Clinton's was the best answer, but apparently EVEN she didn't think it was a great answer--since she gave an answer similar to Edwards' position to the guy who asked her the same question at one of her rallies in Iowa (personally; her answer during the rally was substantially similar to the answer at the debate).
Keith, allowing for Bruce Webb's excellent point about Richardson's answer to Russert's question, what doesn't get any traction with me personally is how Obama's tack on Social Security makes a deficit problem caused by Bush's tax cuts into a problem that's best addressed by an increase in payroll taxes. Please, let's not have Democrats even go remotely close to there.
David W:
Is it an increase in payroll taxes to those earning under $97.5M this year? I'm one of the people that would be hit with this "increase in taxes" and, quite frankly, I'm okay with it. What is the rationale for taxing all of the income of those earning 'x' amount, but only a portion of the income earned by those making over 'x'?
This issue, to me, is all about framing. You've chosen to frame this issue as an increase in taxes. I believe that, without a rationale to support the drawing of an arbitrary line, everyone should be treated EQUALLY vis-a-vis FICA.
Stop operating out of fear.
Is it an increase in payroll taxes to those earning under $97.5M this year? I'm one of the people that would be hit with this "increase in taxes" and, quite frankly, I'm okay with it. What is the rationale for taxing all of the income of those earning 'x' amount, but only a portion of the income earned by those making over 'x'?
Concerning why there's a cutoff of payroll tax at "x", it's because there's a maximum Social Security benefit payment at that point. But that's not the real issue, which is that since 1983 the surplus in payroll taxes not paid out as benefits has gone into the Social Security Trust Fund, ostensibly to cover the retirement of the Baby Boom generation. Then what happened, thanks in part to former Federal Reserve chair Alan Greenspan's "framing" of the issue as a budget surplus being a threat to the U.S. economy, is that after 2001 Bush's tax cuts started sucking big time off that surplus. Bush's tax cuts of course immensely benefited the top 1/10th of 1% of Americans, and contributed more to the growing class inequality in the U.S. An increase of the payroll tax just serves to help perpetuate that overall tax inequity by resorting to what is a regressive tax, even if it's one that would apply to those making over $100K.
This issue, to me, is all about framing. You've chosen to frame this issue as an increase in taxes. I believe that, without a rationale to support the drawing of an arbitrary line, everyone should be treated EQUALLY vis-a-vis FICA.
My rationale is not merely one of an increase in taxes, but of how fairly the overall tax load is distributed. I favor a more progressive tax system and a roll-back of Bush's huge cuts favoring the true "ownership" class in America.
Here is the latest Trustees report for Social Security and Medicare: http://www.ssa.gov/OACT/TRSUM/trsummary.html
Those who argue that "there is not a problem" are similar to those who stood on the deck of the Titanic and argued that the ship is big and it hasn't sunk yet.
While refusing to acknowledge that:
(a) there's a big hole in the hull and
(b) a large chunk of the ship belowdecks is flooded with millions of gallons of water and
(c) millions of gallons more are gushing in and (d) nobody's sealing the hole --much less pumping water out.
Actually, I think those who argue that "there is not a problem" are doing what the Titanic's officers did -- locking all of the third class passengers belowdeck while assuring the passengers "there is not a problem --the ship's unsinkable".
That's how the Titanic's officers ensured that (a) the passengers wouldn't turn on the officers and punish them for their incompetence and (b) that there would be enough room in the lifeboats for the Titanic's offiers.
Don the Summary is essentially a political document. It constitutes the first 16 pages of a 200 page Report. If you get beyond it into the professional portions of the Report you get an opportunity to form an unmediated opinion based on actual data points. I highly recommend it.
Comments closed November 13, 2007.
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Heads in the Sand
What changed about budget deficits in the last year or two that made them so much better?
I always thought a big part of the issue was that without getting the deficits under control now, the social program costs down the line--Medicare, not Social Security--will become far worse. Has that changed, too?
Posted by Brian | October 30, 2007 8:57 AM