Furman and Social Security

The LA Times reports:

Labor union officials and some liberal activists were seething Tuesday over Barack Obama's choice of centrist economist Jason Furman as the top economic advisor for the campaign. The critics say Furman, who was appointed to the post Monday, has overstated the potential benefits of globalization, Social Security private accounts and the low prices offered by Wal-Mart -- considered a corporate pariah by the labor movement.

Furman has definitely taken stances on Wal-Mart and trade policy that are at odds with what "labor union officials and some liberal activists" tend to want to hear (I do, too). But what I remember from the Social Security fight was that there were a number of wonks who anti-privatization journalists and activists were leaning heavily on to beat back the tide of pressure from the White House and the press. I require Furman as having been one of the very most effective such wonks. Here's one example of many. I'm not sure exactly what the LA Times is referring to, but anyone who thinks Furman was or is a supporter of Bush's privatization plan is badly mistaken.

John McCain, on the other hand, is a person like that and yet somehow I haven't seen any press coverage of his plan to destroy America's largest and most popular domestic program.

Comments

I realize the topic at hand is media coverage, but I don't like social security described as "America's largest and most popular domestic program." Most popular by what measure?

Social Security is popular among those who have already paid in and now seek to collect. And I'm sure its popular among poll respondants when the question is phrased in particular ways.

But imagine if Social Security did not exist and the current system were proposed in a referendum today. Would it be popular? Would people want to vote for this?

Posted by Steven | June 11, 2008 3:49 PM

I realize the topic at hand is media coverage, but I don't like social security described as "America's largest and most popular domestic program." Most popular by what measure?

Social Security is popular among those who have already paid in and now seek to collect. And I'm sure its popular among poll respondants when the question is phrased in particular ways.

But imagine if Social Security did not exist and the current system were proposed in a referendum today. Would it be popular? Would people want to vote for this?

Posted by Steven | June 11, 2008 3:51 PM

Yeah Steve,

I cant wait 'til they get rid of that god dang social security. Me, you, and are generation dont need no social safety net. Im just gonna strike off on my own and make me a fortune!

Posted by jeff | June 11, 2008 4:03 PM

I don't know if this will help, but the comments link on the Bloomberg entry is not working (404 error). I'd post there, but it's not working. Maybe a sys/admin guy will read this and help us out.

Posted by fostert | June 11, 2008 4:06 PM

matt writes :"I require Furman as having been one of the very most effective such wonks."

how "remember" becomes "require" between the brain and the keyboard i'll never know.

i don't think mccain really pays any attention to social security 'cause it's not like he and cindy really have to count on it being there later in life.

Posted by dj spellchecka | June 11, 2008 4:24 PM

I sure do hope that Obama has properly vetted this Furman dude. We wouldn't want the media distracted from more susbstantive issues like Phil Gramm's involvement with the McSame campaign.

Posted by Mikelx | June 11, 2008 4:37 PM

Speaking as an an Angeleno, as a general rule, you should fact check pretty much anything you read in the LA Times. As a news organization, they've disenegrated into a city embarrassment.

Posted by Cj | June 11, 2008 4:43 PM

Anyone with an actual understanding of economics and finance and the least bit of sympathy for using the government to make life better for everyone can see that social security is an awesome program. Could means' testing it make it better? Possibly, but that's not really different than progressive taxation, so why bother? It is not only popular, but also a great program.

Posted by mpowell | June 11, 2008 4:51 PM

Possibly, but that's not really different than progressive taxation

I think it is different. Over the years means-testing will undermine the program. People will believe they are being treated unfairly and will agitate against the program.

And dishonest conservatives will argue that we should scrap the program b/c it's treating different people differently.

Progressive taxation has to do with taxes, not an entitlement program. Means testing the program will be handing conservatives ammo.

Posted by Peter K. | June 11, 2008 5:02 PM

I think it is different. Over the years means-testing will undermine the program. People will believe they are being treated unfairly and will agitate against the program.

And dishonest conservatives will argue that we should scrap the program b/c it's treating different people differently.

Progressive taxation has to do with taxes, not an entitlement program. Means testing the program will be handing conservatives ammo.

I agree pretty much 100%. Means testing is bad politics. I was just pointing out that even to the extent that it might be bad policy it can be 'corrected' through an appropriate level of progressive taxation.

Posted by mpowell | June 11, 2008 5:06 PM

Furman has definitely taken stances on Wal-Mart and trade policy that are at odds with what "labor union officials and some liberal activists" tend to want to hear (I do, too).
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Hell, Hillary Clinton served on Walmart's board.

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I sure do hope that Obama has properly vetted this Furman dude. We wouldn't want the media distracted from more susbstantive issues like Phil Gramm's involvement with the McSame campaign.

Posted by Mikelx | June 11, 2008 4:37 PM

================================================

Too late. Media's already too busy chewing up on the non-vetted Jim Johnson

http://latimesblogs.latimes.com/washington/2008/06/obama-johnson.html

Posted by Campesino | June 11, 2008 5:16 PM

Furman is a 'centrist' Democrat. I heard it on NPR today.

He doesn't have a clue. Nobody in the entire political class has a clue.

No matter how bad you think the economy might get your wrong. It's going to be far far worse. The candidates economic 'plans' are an irrelevancy in the face of what's coming.

The political system will not necessarily survive the coming problems. It won't if Obama and the Democrats are not prepared. It seems they aren't. Furman doesn't have a clue.

Posted by rapier | June 11, 2008 5:21 PM

re: Social Security is popular among those who have already paid in and now seek to collect.

And also among their children and grandchildren most of whom would find supporting their elders an impossible burden. Want to crash the American birth rate? Reduce or get rid of Social Security with the result that few people with living parents or grandparents can afford to support children as well. (SS works now because it captures money from people whose parents and grandparents may have died young, and from people wealthy enough that they can afford to both support the older generation and children).

Posted by JonF | June 11, 2008 5:23 PM

The knee-jerk progressive fear of means-testing social security is one of the many depressing legacies of the Democrats long sojourn in the wilderness. Means-testing makes intuitive and financial sense; there's just no reason for the government to be giving rich people money to support themselves in their old age. Social Security is not the worst off social program we've got, but in the long run something needs to happen with it (later retirement? lower benefits?) Of those options, means testing is the fairest and the most progressive. Maybe if Obama wins we can finally stop cowering before what the Republicans might or might not argue, and instead actually make a case for a smart progressive policy.

Strategizing out of fear doesn't work any better domestically than in foreign affairs.

Posted by NoahB | June 11, 2008 8:06 PM

The combination of the payroll' cap and the current formula for calculating benefits means any means test for Social Security would have to happen at a low enough income level to gut middle class support for the program to begin with.

Ask them for numbers. From my perspective all proposals for cap increases and/or means testing fail on encounter with the actual numbers. Under current law the very wealthy and ultra wealthy neither contribute to or or draw from Social Security in numbers big enough to matter, though certainly I am happy to examine some real numbers. The key is that returns on capital are not subject to FICA to start with.

Posted by Bruce Webb | June 11, 2008 8:24 PM

Means testing combined with taxation of social security (which we already have, since about 1996 (or so?)) could lead to very high marginal rates. If your marginal tax rate is 25%, and your social security phases out at 30% per dollar earned, then you're looking at 55% margianl taxation. One needn't be a supply sider to think that 55% effective marginal tax rates might not be a good idea.

One might give other numbers for phaseout rate, of course, but ultimately, what's wrong with just taxing income and leaving SS non-means tested? If you go with a low enough phaseout rate, then you won't save much money, and if you go with a higher one, you will create high effective marginal tax rates. Naturally, one could save some money with means testing -- but one could also raise more revenue with higher marginal tax rates in general. Means testing isn't really a terrible idea, but I don't really see much to recommend it.

Posted by Julian Elson | June 11, 2008 8:49 PM

Furman has definitely taken stances on Wal-Mart and trade policy that are at odds with what "labor union officials and some liberal activists" tend to want to hear (I do, too).

And not only that, he's also argued against the "middle-class living standards have stagnated" tripe that is the conventional wisdom among many liberals.

Posted by Mixner | June 11, 2008 9:18 PM

Furman is a REALLY good juggler... seriously, he's a friend of a friend of mine.

Posted by mike | June 12, 2008 1:12 AM

Are there any youtube videos of Furman juggling?

I would support Furman just on that.

Posted by thehova | June 12, 2008 2:45 AM

Just so there's no confusion, here's Furman clearly stating that privatization is a "good plan."

KUDLOW: Jason, what's wrong--what's wrong with--what's wrong with personal savings accounts, IRAs, plus a higher retirement age? That would save a lot of money.
FURMAN: IRAs, in fact, you know, Larry, the last I checked, I think we have IRAs today. And I'm in favor of them. I think we can keep them.
KUDLOW: Diverting Social Security surpluses to IRAs?
FURMAN: You know, some of this accounts debate is a little bit misplaced. We had a great discussion at the American Enterprise Institute last week of a bipartisan plan. This plan had accounts in it. It's a good plan because the plan recognized that we needed to bring more revenue into Social Security to maintain the type of replacement rates and retirements that people are expecting. It brought benefits down but it brought new money in and it brought that money in through accounts. Thought it was a good start on the plan. CNBC, 6/27/06

Posted by Phil Berman | June 12, 2008 1:48 PM

Just so there's no confusion, here's Furman clearly stating that privatization is a "good plan."

KUDLOW: Jason, what's wrong--what's wrong with--what's wrong with personal savings accounts, IRAs, plus a higher retirement age? That would save a lot of money.
FURMAN: IRAs, in fact, you know, Larry, the last I checked, I think we have IRAs today. And I'm in favor of them. I think we can keep them.
KUDLOW: Diverting Social Security surpluses to IRAs?
FURMAN: You know, some of this accounts debate is a little bit misplaced. We had a great discussion at the American Enterprise Institute last week of a bipartisan plan. This plan had accounts in it. It's a good plan because the plan recognized that we needed to bring more revenue into Social Security to maintain the type of replacement rates and retirements that people are expecting. It brought benefits down but it brought new money in and it brought that money in through accounts. Thought it was a good start on the plan. CNBC, 6/27/06

Posted by Phil Berman | June 12, 2008 1:50 PM