January 31, 2005

Hands Off Social Security! v2.0

Below is a revamped version of the Q&A from the beginning of Hands Off Social Security! The whole thing is just about done, and will be available here soon. It will be flogged relentlessly.

In the meantime, I'd very much appreciate feedback on whether this is understandable. I want the book to be something that will make sense to anyone, even if they don't know anything about Social Security or economics to start with. If this part doesn't do that, I need to fix it now.

What is Social Security?

Social Security, founded in 1935, is a government-guaranteed retirement program. (At least, this is what people usually mean when they talk about Social Security. It also provides disability and life insurance.)

45 million of us, or more than one in every seven Americans, receive Social Security benefits. It's the most successful and most popular government program in U.S. history. In fact, it may be the most successful and popular government program in the history of the world.

How does Social Security work?

It's very simple: the government takes 12.4% of every worker's paycheck in what are called "payroll taxes." Then the Social Security Administration sends the money off to current retirees and other beneficiaries. The amount each retiree gets varies. The more you paid in during your working life, the more you get when you're retired.

Today, an average retiree—I'm going to call her Mary, after my grandmother—gets about $15,000 per year in benefits. Mary is guaranteed to get this $15,000 every year as long as she lives. Her savings might run out, the stock market might crash, and her old company might go bankrupt and stop paying her pension. But she will still get Social Security. Just as important, her benefits are protected against inflation. So if prices double, her benefits will automatically double to $30,000.

Once set, a retiree's benefit stays the same but is guaranteed no matter how long he or she lives. That's a lot of the "Security" part of "Social Security." It's almost impossible to get that guarantee, and protection against inflation, from anywhere except Social Security.

Hands Off Social Security! explains the nitty-gritty of how Social Security functions, but for now there are only two more things you need to know:

First, the promised benefit level for each new batch of retirees rises over time. Mary, our average retiree in 2005, receives about $15,000. However, Mary's granddaughter Marianne, who's an average person retiring in 2055, is promised $23,300—in 2005 dollars. This is even after inflation is taken into account; retirees get higher real benefits as time go on. (HOSS! explains why this is possible, and also fair.)

Second, if the Social Security Administration takes in more in taxes than is needed to pay current beneficiaries their promised benefits, the money is used to purchase U.S. treasury bonds. These bonds make up the Social Security Trust Fund. If the Social Security Administration takes in less in taxes than is promised to current beneficiaries, it cashes in some of its Trust Fund bonds to make up the difference. (See "What is the Social Security Trust Fund?", below.)

Is Social Security in crisis?

NO. There is no Social Security crisis. Under the main government projections, Social Security can with no changes whatsoever pay full benefits through 2042—and then continue forever to pay benefits higher than the $15,000 Mary gets today. Under other government projections, Social Security is fine through 2052. Under still others, Social Security is fine indefinitely.

Here's a graph showing this, based on the most recent Social Security Administration projections (full benefits through 2042) and Congressional Budget Office projections (full benefits through 2052). All numbers are in 2004 dollars; that is, higher benefits are higher in real value, not higher because of inflation.

facts_1.gif

Source: "Basic Facts on Social Security and Proposed Benefit Cuts/Privatization" by Dean Baker and David Rosnick.

(For more details, see the questions about Social Security projections below.)

But didn't President Bush just say Social Security is in crisis?

He did. In December, 2004 he said that "the crisis is now."

However... President Bush sometimes says things that aren't 100% true. Perhaps you remember him telling us about Iraq's terrifying weapons of mass destruction.

The Social Security crisis is just as real, and just as terrifying, as Iraq's WMD.

Then why is Bush saying there's a crisis?

Because he wants to dismantle Social Security.

Conservative Republicans have hated Social Security since before it began. In 1935, Republican Senator Daniel Hastings said Social Security would "end the progress" of America. Ever since, conservatives have been claiming Social Security is about to collapse. When people who are now receiving Social Security checks were starting to work in the 1960s, conservative Republicans were telling them they'd never see a dime. Bush himself, when he was running for Congress in 1978, said Social Security would "go broke" within ten years.

However, until now conservative politicians have never made any serious attempt to kill Social Security. That's because Social Security is extremely popular. And as much as conservatives dislike Social Security, they dislike losing elections even more. Social Security has often been called the "third rail" of American politics—touch it and you die.

But things have changed. Not Social Security itself; it's fine. But conservatives think that—after saying since 1935 that Social Security is about to collapse—they've finally gotten Americans to believe it. As a recent internal White House memo put it, "For the first time in six decades, the Social Security battle is one we can win."

The person who wrote this was being honest: conservatives have been fighting against Social Security for 60 years. It didn't have anything to do with a "crisis" in 1945, 1965, or 1985. And it doesn't now.

Now, you may be wondering: why exactly do conservatives hate Social Security? Why do they think something so many Americans like is so terrible?

Here's one answer: $$$$$$$$$$$$$$$$$$$$$$$$

President Bush's plans for Social Security would mean Americans would be required to hand billions and billions of dollars over to Wall Street. As Fortune magazine recently put it, Wall Street is "salivating" over this. Even the Cato Institute, a Washington think tank that has pushed for privatization for decades, says that "financial institutions in particular" would benefit.

Another answer is that conservatives believe getting rid of Social Security would make them more powerful. Their thinking about this is too complicated to go into here. It's interesting, though, and is discussed in Hands Off Social Security!

But... don't people on the news talk about Social Security being in crisis too? Didn't Bill Clinton say we had to "save Social Security first"?

You do see many people on television saying there's a Social Security crisis. But again—you also saw many people on television saying Iraq had weapons of mass destruction. Just because you're on TV doesn't mean you know what you're saying.

In fact, people on TV usually have less idea what they're saying than the rest of us. It's not that they're stupider than we are—it's that being on TV takes up lots of time. For instance, if you're Bill O'Reilly, you have to spend most of each day putting on makeup, coiffing your hair, sexually harassing employees, and so forth. (Well, allegedly sexually harassing employees.) This doesn't leave you much time to learn about Social Security.

Bill Clinton is a different story. Clinton did say, in his 1998 State of the Union address, that we should "save Social Security first."

This was a catchy slogan. But what he actually meant was something different, and less catchy: "Reduce the debt/GDP ratio first, thereby increasing the general solvency of the federal government and reducing the cost if we eventually have to rollover the Social Security Trust Fund debt in private markets."

Confused? That's okay. Hands Off Social Security! explains what Clinton was talking about. (For a little help now, see "What is the Social Security Trust Fund?", below.) But the point is that most of what Clinton said was reasonable at the time, but it didn't mean Social Security was facing a crisis.

Does this mean all the talk about the "Social Security shortfall" is just made up?

It depends on what you mean by "made up."

Every year, Social Security's Trustees are required by Congress to make projections of the program's health over the next seventy-five years. You could argue that this is dumb; no one can predict much that far into the future. No one in 1930 could predict spam email, Christina Aguilera, or spam email about Christina Aguilera. Likewise, we can't accurately predict what the world will be like in 2080. (Except for the killer robots.)

Nonetheless, that's the law. And every year, the Trustees present three different projections of Social Security's health: low cost (optimistic), high cost (pessimistic), and intermediate. When you read news stories about what the Social Security Trustees predict, the stories generally only refer to 2004's intermediate projection. That's the one that shows Social Security running short of money in 2042.

Now, Bush and others often speak of this date as though it's written in stone. But of course it's not; it's just a best guess. The 1996 intermediate projection showed a shortfall occurring in 2029. Because of better economic performance since then, it's continually moved further into the future. 2005's intermediate projection will likely show a shortfall occurring in 2043 or 2044.

Similarly, a recent prediction by the Congressional Budget Office (another part of the government) shows Social Security as fine through 2052. The Social Security low cost projection shows Social Security as fine forever. (Well, at least until the sun explodes. At that point Social Security will admittedly face real problems.)

Which of these projections is correct? No one knows. However, the 2004 intermediate projection—the one showing the shortfall in 2042—is strangely pessimistic. It predicts that over the next seventy-five years the US economy will grow at half the rate of the past seventy-five years.

Some people have begun to wonder whether the Social Security Trustees are pessimistic on purpose, in order to make Social Security's finances look bad. This is probably wrong. However, it is true that the Social Security Trustees (there are six of them) are appointed by the President. And while the Trustees receive professional recommendations from Social Security's non-political actuaries, there's no way to know whether they follow these recommendations. All their deliberations are sealed.

But what happens if the Social Security projections are exactly right?

First, remember that even if 2004's intermediate projection is right, Social Security will not be—as George Bush recently said—"broke" or "flat busted" in 2042.

Bush clearly is trying to confuse people about this, because he often refers to the Trust Fund as going bankrupt. But while it's true the Trust Fund could be out of money in 2042, Social Security is not the Trust Fund. Social Security itself will never be out of money. It will always have payroll taxes coming in to pay some benefits. The question is whether payroll taxes will be enough to pay promised benefits.

As mentioned before, promised benefits rise over time. Mary today receives about $15,000/year, while her granddaughter Marianne retiring in 2055 is promised about $23,300/year. As the graph above shows, payroll taxes are projected to be insufficient to pay the $23,300. But they will be enough to pay more than $15,000. Thus, even with no changes whatsoever to Social Security, under the intermediate projection an average retiree in 2042 would receive more than an average retiree today. This would only be 73% of promised benefits, but it's a lot more than nothing.

However, it's likely that we would decide not to cut benefits. Instead, we would probably raise taxes so that full, promised benefits could be paid.

Social Security's opponents often point to this as disastrous outcome. They say the higher taxes would place a crushing burden on future Americans. However, this is ridiculous.

That's because America will be a much richer country in the future—just as we're much richer now than we were forty or fifty years ago. Per capita GDP in 2005 is $39,450. Under the 2004 intermediate projections, in 2050 it will be $66,580.

Thus, even if we raised payroll taxes to pay full promised benefits to retirees, everyone working would still have a much higher after-tax income than everyone working today. This can be seen in the graph below.

facts_1.gif

Source: "Basic Facts on Social Security and Proposed Benefit Cuts/Privatization" by Dean Baker and David Rosnick.

And in fact, raising payroll taxes is exactly what's been done before to keep Social Security solvent. Workers in 1955 paid lower payroll taxes than workers today. But despite this, no one ever would choose to go back to the standard of living of 1955. No one ever says: Geez—I wish I had lower taxes, plus a tiny black and white TV, no VCR or cell phone, and a much smaller house.

What is the Social Security Trust Fund?

As mentioned above, most Social Security benefits are paid from payroll taxes. However, payroll taxes and promised benefits don't always match. When Social Security takes in more than it pays out, it uses the money to buy US savings bonds. When it pays out more than it takes in, it cashes in the bonds and uses the money for benefits.

Until recently, the Trust Fund wasn't that big. However, in the early 1980s it became clear Social Security would have to be changed to provide for the baby boomers when they started retiring in the 21st century. In 1983 Congress took the advice of Alan Greenspan (now head of the Federal Reserve and a conservative hero) and raised payroll taxes to their current rate. This was (and still is) far more than is needed to pay full Social Security benefits for current retirees.

For instance, in 2002 Social Security took in $516 billion in payroll taxes, while only paying $455 billion in benefits. As usual, this extra revenue was used to buy Treasury bonds. By now the Trust Fund holds bonds worth about $1.5 trillion.

Under the 2004 intermediate projections, payroll taxes will exceed benefits until 2018. Until that date, the Trust Fund will increase. From that point forward, the Trust Fund will be drawn down to pay promised benefits. There will be enough in the Trust Fund to do this until 2042, at which point it will be empty.

But isn't the Trust Fund just meaningless IOUs?

No. ABSOLUTELY NOT. Anyone who suggests the Trust Fund is "meaningless IOUs" is someone you cannot trust. Either they don't understand this issue, or they're trying to trick you.

This part of the Social Security picture is somewhat complicated. But hopefully this explanation will be clear:

The Trust Fund holds US Treasury bonds. They're the safest investment on earth. That is, among other reasons, why the Trust Fund holds them. In the entire history of the US, the government has never failed to pay off its bondholders. That's why Americans and people from all over the world buy them. Millions of people have bonds besides the Social Security Trust Fund. In fact, George Bush's financial disclosure forms show he personally holds lots of US bonds. No one is suggesting George Bush won't get paid back.

Now, it's true the money to pay off the Trust Funds bonds—like all other bonds—won't come from Mars. It will come from Americans. But the important issue is which Americans.

Payroll taxes fall most heavily on poorer Americans. It's a flat tax. And only your salary is taxed. (See "How does Social Security work?", above.)

By contrast, income taxes are paid mostly by richer Americans. Income taxes are progressive; that is, the more money you make, the higher a percentage of your income you pay. And your entire income is taxed. While the income of most Americans comes from working, richer Americans have lots of non-work income from stocks, bonds, real estate, etc.

Thus, the richest 1% of households in the US pay about 37% of all federal income taxes. The richest 5% pay about 59%. And the money to pay off the Trust Fund will mostly come from income taxes.

In essence, the plan in 1983 was a promise: younger, poorer workers would pay higher taxes during their working lives. In return, a chunk of their retirement would be paid for by richer people in the future. Not honoring the Trust Fund would break this promise.

Of course, breaking the promise would be good for some people. Economist Dean Baker, one of America's foremost experts on Social Security, estimates it would transfer $1 trillion from the poorer 95% of Americans to the richest 5%. Each household in the top 1% would receive about $730,000.

Thus, the Trust Fund is not meaningless IOUs. The only people who say it is do so because they don't like the fact that it is meaningful. They don't want to pay.

This is a neat trick. Everyone would like to borrow lots of money and then, when the time came to pay it back, start claiming you didn't have to. But only if you are very rich can you pay other people to go on TV and say this for you.

But hasn't the Trust Fund all been spent? Shouldn't it have been invested in something real?

Again, anyone who says this is confused.

Whenever you make any kind of investment—government bonds, corporate bonds, stock, or real estate—the money you pay for it is spent. For instance, if you buy a bond issued by General Electric, they take your money and spend it. Certainly the CEO of GE doesn't take your money home with him and stick it underneath his mattress. In fact, if GE weren't going to spend it, they wouldn't sell you the bond in the first place. Getting your money and spending it is the whole point.

But what you get in return for buying a General Electric bond is not a meaningless IOU. It's a claim on GE's revenue in the future. This is a real, smart investment: GE is a stable company that's consistently profitable. By buying their bond, you're investing in GE's future productive capability. You're betting that in the future, they'll make enough money to pay you back, with interest.

It's the same thing when you buy a US Treasury bond; the government takes your money and spends it. What you get in return is an even safer bet than a GE bond: a claim on the future productive capability of the entire economy of the US, the richest country on earth.

This is as real as investments get. Rather than investing in one American company like GE, you're essentially investing in all American companies. If GE goes bankrupt, GE bondholders may never get their money back. But US bondholders will, because there are many other American companies. However, it doesn't work the other way around. If things get so bad the US government can't pay you back, it's extremely unlikely GE will have money to pay its bondholders.

To understand this in terms of the Trust Fund, imagine that the Trust Fund was used to buy lots of stocks and corporate bonds. (I.e., what supporters of privatization call "real" investments.) When it came time to cash the Trust Fund in, the Trust Fund would sell these stocks and corporate bonds. The money the Trust Fund made from the sales would go to retirees.

Investing the Trust Fund in US Treasury bonds only changes the process slightly. The stocks and bonds the Trust Fund would have owned will still exist. However, they will be owned by individuals. When it comes time to cash in the Trust Fund, the individuals will be taxed. They will sell stocks and bonds to pay their taxes. The money the government gets from the taxes will go to pay off the Trust Fund's bonds. The money the Trust Fund makes from the bonds will go to retirees.

What does President Bush want to do to Social Security?

As of February 1, 2005, he hasn't formally proposed specifics. However, during his first term Bush appointed a commission, and has endorsed one of its proposals. His plan will clearly be quite close to this.

Each person working today pays 12.4% of their salary in payroll taxes for Social Security. (See "How does Social Security work?", above.) Under the plan Bush endorses, a big chunk of this would be diverted into a private account in each person's name. Probably Bush will eventually propose that this chunk be 4% of each worker's salary (about a third of their payroll taxes) or 6% (about half).

At the same time, promised benefits would be cut deeply over time. Someone born today would see their benefits cut almost in half.

Why is Bush's plan such a bad idea?

Eh. Where to start? It's such a bad idea in so many ways I'll only go into a few of them here. The rest will be found in Hands Off Social Security!

The most important thing to understand is that private accounts will not make up for the cuts in promised benefits. Everyone pushing privatization talks about the wonderful return people would get investing their private accounts in the stock market. Over the past 75 years, they'll tell you, the return on stocks averaged 7% per year. Whenever privatizers calculate returns under their plans, this is the number they use.

And it's true that was the return on stocks in the past. But remember that the Social Security Trustees project that over the next 75 years, the US economy will grow at half the rate of the past 75 years. That's why there's a shortfall in the first place. (See "Does this mean all the talk about the "Social Security shortfall" is just made up?", above.)

And if the US economy is growing at half the rate of the past, it's impossible for stocks to produce returns like in the past. It simply can't be done.

Now, hopefully the Social Security Trustees are wrong. Hopefully the economy will grow like it did in the past. Then there could be similar returns on stock investments. But then there would be no problem whatsoever with Social Security.

In other words, the privatizers want it both ways. They want to claim the economy will be terrible for decades. But their proposed "solution" assumes the economy will be doing great.

Their dishonesty is shocking, if you're the kind of person who gets shocked. No one knows for sure whether the Bush administration was lying about Iraq and WMD, or whether they're just completely incompetent. With Social Security, it's different: they're very consciously lying. As HOSS! explains, there's no question about this at all.

And it's not just that Bush's plan would be worse for Americans than what they're promised today, under the supposedly unsustainable current rules. Without the impossible stock returns, Bush's plan would be significantly worse than what will happen with no changes to Social Security whatsoever. In other worse, Bush says there's a crisis—yet his proposed solution does nothing but make things for retirees worse than that.

This can be seen in the below graph. It's taken from an analysis of Bush's plan by the Congressional Budget Office. "Current Law Expected" is what's projected if nothing is done to increase Social Security revenue over the next hundred years. (The big drop around 2054 is when the Trust Fund runs out.) "CSSS Plan 2 Expected" is what Bush wants to do. The line represents the total benefits retirees would receive under Bush's plan—not just their reduced Social Security benefits, but also the returns from their private accounts. The numbers on the left signify percent of GDP.

In dollar terms, it works out like this: Mary's granddaughter Marianne, an average person born in 1990, is promised $23,300 per year when she retires in 2055. According to the CBO, if the "crisis" hits and nothing whatsoever is done over the next fifty years, Marianne will receive only $18,100. Under Bush's plan, Marianne gets—from Social Security and her private account—$14,500.

And yet this makes Bush's plan look better than it is. After all, Marianne has exactly average luck in the stock market. Margaret, Madeline and Matilda—in fact, half of all retirees—will have worse luck in the stock market. They'll have even less money coming in.

Finally, there's a small but real chance Bush's plan would cause a gigantic financial meltdown during the near future. I'm not kidding. It's complicated, so I won't go into it here. But all the terrifying details can be found in HOSS!

There is a bright side, however. No matter what, under Bush's plan, his big contributors on Wall Street would make billions of dollars. That's worth any number of old ladies eating dog food.

A Short, Possibly Unfair, Story About Michael Crichton

I love Michael Crichton's writing. I've read almost all of his books. In particularly, I reread Travels (a collection of autobiographical essays) all the time. He is one genuine malcontent freakazoid, and these are my favorite kind of people.

But I'm not going to read State of Fear. Not if this Slate review, this one at Real Climate and this one by Chris Mooney are anything to go by. And I bet they are.

Crichton is obviously an extremely talented novelist and all-around brainiac. God knows he can do all kinds of things most people (including me) never could. That said, he likes to dress up his exciting tales in scientific mumbo-jumbo that has little to do with scientific reality.

I don't think this because I'm Mr. Scientist. I'm not. I know barely anything about science. But... I can tell this even by the little bit I do know.

For instance, I love The Andromeda Strain. I read it a billion times when I was a kid. But the climax of the story depends on something that couldn't happen, at least not in this branch of reality.

If you haven't read it, The Andromeda Strain is about a tiny organism that a satellite picks up in outer space. The satellite malfunctions and crashes back to earth. And it turns out the organism kills people within seconds. A whole small town in Arizona dies.

As the books nears the finish, the organism seems poised to kill all humanity. But it suddenly mutates into something benign. Phew! The End.

Fine. But outside of novels, organisms don't mutate like that. For instance, today there are cats with fur, and creepy weirdo cats with no fur. At one point they shared a common ancestor that had fur. One day, the genes of one of the ancestor's offspring mutated so that the offspring had no fur. (Apparently this happened very recently, in 1966.) Both the offspring with fur and the mutated offspring with no fur have reproduced and passed along their genes. So now we have both kinds of cats, the creepy and non-creepy.

But when the no-fur mutation happened, it didn't simultaneously happen to ALL CATS EVERYWHERE. It just happened to one kitten. If mutations happened like in The Andromeda Strain, then every cat alive in 1966 would suddenly have lost all their fur. And every cat alive today would be fur-less. (Yikes.) Conversely, if The Andromeda Strain were like the real world, just one of the tiny alien organisms would have mutated into something benign. The other seven billion would have remained deadly and wiped out the human race.

I don't think it's a crime that Crichton messed with reality this way. It's just part of telling a story. But it does show he's willing to misrepresent science, even while giving his stories a heavy veneer of science to make readers feel "this could really happen!"

Furthermore, the science-veneer—even when not glaringly wrong—is much more shallow than it appears. When my father read Jurassic Park, he said, "It's sounds like his knowledge of chaos theory comes from reading the Science section of the New York Times every week for two months."

I think this is exactly right, and that Crichton realizes this himself. That's the subject of my very short story about him:

I once met someone who worked on the movie version of Jurassic Park. I mentioned my father's "Science section of the New York Times" comment.

The person I met was the son of one of the prominent people involved in making Jurassic Park. So when Crichton was on the set, he had the opportunity to talk to him. And so in response to my father's comment, the prominent-person's-son said: "Yeah... I talked to Crichton about how much he really understood about all the stuff in the book. And he told me, 'I usually just do enough research to make it sound like I know what I'm talking about.'"

And really, that's fine. Crichton has written books having to do with biology, fancy math, genetics, airplane design, computer science, paleontology, nanotechnology, global warming and more. People can spend their whole lives learning about just one of these subjects, and still not know all there is to know. There's no way Crichton could write the books he does and deeply understand the science involved in each one.

I don't even mind him giving the impression he knows more than he does. It's part of his genius as a storyteller. And by making science seem exciting and compelling, he's probably inspired many youngsters to be scientists, and many others to be more generally interested in science. That's a very good thing.

But it's also why I'm not going to read State of Fear. When Crichton's books are great, it's not because the science is great. It's because he's using his amazing storytelling ability to its fullest. (In fact, as with The Andromeda Strain, good science could get in the way of the story.)

Unfortunately, it sounds like with State of Fear he's given up entirely on telling a story. It's just a creaky vehicle for a strange ideological jeremiad. And while I'm all for strange ideological jeremiads, the correct vehicle for them is not expensive hardback novels. Strange ideological jeremiads should stay where they belong, which is on small websites named after things said by George Orwell.

And when you launch your jeremiads, you have an obligation you don't have when telling a story: being accurate. It's fine to be inaccurate if your story is good. But without a story, you need to make sure you know what you're talking about. No story and no accuracy is a bad combination.

The Fourth Annual Wergle Flomp Writing Contest

Adam Cohen of the Wergle Flomp Writing Contest suggests readers of this site might be interested in Wergle Flomp. It's a competition to see who can write the worst poem that is still accepted by other poetry writing contests. Previous winners can be found here, here, and here.

This seems unkind, but unkind in a way I enjoy.

CLARIFICATION: The unkindness here is to silly/scam poetry contests, not poets. See here. Any poems submitted to Wergle Flomp are submitted by the authors themselves.

A Tiny Revolution's official position on poets is: we like them a lot. We have seriously considered setting up an official Poetry Day of the Week, in which we will weekly post a good poem. This may still happen.

Indeed, sometimes we ourselves... uh, never mind.

I Would Like To Be Happy But It's Not Working

In 1996, Madeline Albright was asked about the deaths of hundreds of thousands of Iraqi children under sanctions. She famously replied, "We think the price is worth it."

This was a statement of almost berserk cruelty. But it was the norm as far as Iraq goes: berserk cruelty has been continually visited on Iraqis over the past forty years, both by other Iraqis and by outsiders. I sometimes think of writing a book called "The Price Is Worth It": How Bill Clinton, Saddam Hussein, Ronald Reagan, George W. Bush, Leonid Breshnev, George H.W. Bush, and Helmut Kohl Crucified The People Of Iraq.

And I don't just pull that list out of my ass. I think if you made a list of the seven people responsible for killing the most Iraqis, it would be them, in that order. Killing Iraqis in volume has been a group effort, and wouldn't have been possible without everyone pitching in.

The circumstances of the massive bloodletting have varied, but the ultimate reason has remained the same: oil. Oil has been a terrible curse for Iraqis—even more than it's been for Saudis and Iranians and many others.

Anyway, this is all to say I can't feel optimistic about yesterday's elections. I wish I could. And I'm truly moved to see Iraqis trying to do what they can to improve their circumstances. But I doubt the elections will change anything whatsoever. As long as they have that oil, I suspect life in Iraq will continue to be horrible.

Still, that certainly doesn't absolve outsiders—particularly Americans—of trying to change that. There's an interesting interview with Naomi Klein here in which she proposes some things we might do.

January 30, 2005

Washington Post's Demagogue-Detection Device Continues To Function Perfectly

Today the Washington Post editorial board got very angry about purported "ill-informed demagoguery" by Terry McAuliffe about Social Security. Meanwhile, it praised Bill Thomas and similar politicians for being "responsible."

The specific issue was... oh, man. I don't even have the energy to explain it. You can read about it for yourself. But from what the Post quotes, McAuliffe wasn't being a demagogue.

In any case, this made me curious. Clearly the Washington Post is constantly on guard for demagoguery in politics, and eager to salute anyone who's responsible. So they must be deeply angry about one of the most shameful episodes of demagoguery in American history: the Bush administration's lies about Iraq and WMD.

And yet, when I searched their archives, I found the Post wrote about Bush being a demagogue or engaging in demagoguery on Iraq a grand total of zero times. Huh. Well, maybe the way they show their anger is by maintaining an icy silence.

To be fair, they did publish a column by Richard Cohen before the invasion of Iraq, slamming one politician for being an "indomitable demagogue" on the subject. That politician was, of course, Dennis Kucinich.

January 29, 2005

The Tonight Show With Jay Leno Is A BRAND NEW FORM Of Talk Show!

Perhaps you saw the story today about Bill Gates betting the value of the dollar will continue to fall. Fair enough. But I'm not so sure about some of his other insights:

Gates described China as a potential "change agent'' for the next two decades. "It's phenomenal,'' Gates said. "It's a brand new form of capitalism.''

Uh, right. Because as Billmon points out, the world has never before seen capitalism that involves slavery, corruption, union-breaking and workers locked into factories that burn down.

January 28, 2005

The Bush Administration Is Even Crazier Than You Imagined

I just wrote something about the Social Security Trust Fund. The point was that a default on the Trust Fund would be a massive transfer of money from the poorer 95% of Americans to the richest 5%.

Because that's so, it's easy to assume the Bush administration's privatization plans would involve such a default. I know I assumed it. And Matthew Yglesias assumes it here.

Interestingly enough, though, this assumption is wrong. (I didn't figure this out myself; someone explained it to me.) Bush's plan would not require a default on the Trust Fund. On the contrary, in fact; the Trust Fund would be redeemed and then some.

If you want details (including exciting graphs!), they're below. If not, the point is that in this instance the Bush administration is not wholly driven by crazed greed. They're also driven by crazed ideology.

The Congressional Budget Office recently compared the current Social Security system to a privatization plan endorsed by Bush (called "CSSS Plan 2").

Under current law, the CBO projects outlays (ie, benefits) won't overtake revenue (ie, payroll taxes) until 2019. When that happens, the Trust Fund kicks in. This will entail either lowered government spending elsewhere, rolling the Trust Fund debt over in private markets (ie, increased federal deficits), higher income taxes, or some combination of the three. The CBO projects the Trust Fund will be exhausted in 2052.

Under CSSS Plan 2, the revenue coming into the Social Security system would be reduced immediately, because a big chunk of payroll taxes would be diverted into private accounts. Thus, the Trust Fund would be needed just about as soon as the plan is enacted... meaning lowered government spending, higher deficits, and/or higher taxes.

Benefits would also be cut, but slowly at first. So the CBO projects the Trust Fund would be exhausted by 2036. At that point, the rest of the government would have to come up with more money for Social Security... meaning more cuts in government spending, increased deficits, and/or higher taxes. It would only be after 2050 that benefit cuts would be large enough so that outlays would be lower than revenues.

So to summarize, here are the dates the CBO projects:

CURRENT LAW
2018 Social Security outlays exceed payroll tax revenues; Trust Fund kicks in
2052 Trust Fund exhausted

CSSS PLAN 2
2007 Social Security outlays exceed payroll tax revenues; Trust Fund kicks in
2036 Trust Fund exhausted; additional revenue from general fund required
~2050 Social Security benefits lower than payroll tax revenue, so additional general fund transfers no longer required

This can be seen in Figure 1B from the CBO report, below. In both graphs, "Outlays" is higher than "Revenues" for many years. When this is true, the difference has to be made up by the Trust Fund (or for CSSS Plan 2, additional revenue when the Trust Fund is exhausted).

Under CSSS Plan 2, the difference made up by the Trust Fund is somewhat smaller than under current law. But this is because the Trust Fund is smaller under CSSS Plan 2, because contributions cease in 2007 rather than in 2019. It is not because of a partial default on the Trust Fund. (Again, not only is the Trust Fund completely redeemed, more money is required for CSSS Plan 2 after 2036.)

The CBO has also helpfully provided this graph, which compares the effect on total government finances of changing to CSSS Plan 2 from current law.

As you can see, CSSS Plan 2 actually makes the government's finances somewhat worse from now through 2064. And this bill would mostly be picked up by richer households. That's how crazy the Bush administration is.

You are now encouraged to take a short nap to recuperate.

Post edited for clarity.

Yet More Reading Again

Via Peknet, here's an excellent interview with David Kay Johnston about his book Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else.

Peter Karman, proprietor of peknet, wonders whether these statements by Johnston about Social Security are valid:

CP: Another complex topic you render understandable in your book is how Social Security has been used to underwrite cuts for the wealthiest taxpayers. Given how hard Bush leaned on Social Security to finance those tax cuts during his first term, is his plan to privatize it going to come back to haunt him?

Johnston: None of the news coverage of social security is addressing how it is a subsidy program for the super rich, none of it is addressing that President Bush is not being internally consistent when he says I want you to have more of your own money. Why isn't he simply proposing that we reduce social security taxes by the amount of money he thinks younger workers shouldn't pay, and then they can choose whether they want to spend it, which would stimulate the economy, or save it, which would stimulate long-term investment? Instead, why is he proposing to create a massive, new government program that will funnel fees to Wall Street? None of the news coverage is stepping back and asking that. It's all reactive to what the president is saying. I think that's in good part because the Democrats don't have a clue. The Republicans have an agenda and the Democrats don't have a clue.

Now, the reason the president would not propose letting younger workers pay a reduced social security tax in return for smaller benefits is that it would immediately expose that the financing of his tax cuts depends in good part on middle class workers paying excess social security taxes so that rich people can have lower income taxes. It would bring it right to the front of the budget debate. So they would never propose that.

The answer is: sort of. Johnston is saying two things here:

1. Social Security is "is a subsidy program for the super rich."

Well... hopefully not. What he's talking about is the Social Security Trust Fund. In 1983, there was a big bipartisan compromise to put Social Security on sound footing for the baby boomers' retirement.

Before then, Social Security had been paid just by payroll taxes. Payroll taxes fall most heavily on lower income workers: everyone pays (for SS) a flat 12.4% of their salary up to about $90,000/year. Thus, someone making $90,000/year pays exactly the same amount (NOT percentage) of payroll taxes as Bill Gates. And someone making $12,000/year pays exactly the same percentage as someone making $90,000/year.

By contrast, the income tax is progressive; that is, the more money you make, the greater a percentage of your income you pay. Plus, both salaries and non-salary income is taxed. (Rich people usually have lots of non-salary income—from bonds, the stock market, etc.) So, richer people pay most of the income tax. I believe the top 1% of households pay 30% of the total income tax take, and the top 5% pay 50%.

The 1983 compromise included a BIG hike in the payroll tax—so much that the SS payroll taxes were bringing in much more in revenue than was being paid out to current retirees. This is still true today, and is projected to be so through 2018. The surplus revenue is lent to the federal government. In return, Social Security gets government bonds, which it puts in the Social Security Trust Fund.

What happens in 2018? If the projections are right, that will be the year that payroll taxes will stop bringing in enough money to pay current retirees. At that point, Social Security will begin to redeem the bonds from the trust fund.

This is what (lying) people mean when they the Trust Fund is just a "promise to ourselves." Money to pay off the Trust Fund won't come from outer space—it will come from Americans. But the important part is this: the money to redeem them will come from the income tax, not payroll taxes. That is, it will come mostly from the most affluent people in America. This is the reason (lying) people also call the Trust Fund "meaningless IOUs." They say this because they're not meaningless. The Trust Fund is IOUs from richer Americans to poorer Americans. Thus, they're called "meaningless IOUs" because richer Americans don't want to pay them.

In other words, the 1983 compromise was in essence a promise: America's poorer workers would pay higher taxes through their working life. In return, America's richer people would contribute to their retirement.

But what Johnston means is that both Reagan and Bush II have been able to cut income taxes for America's richest people because the surplus payroll taxes made the government's overall position look better than it is. For instance, in 2002 the government spent $158 billion more than it took in in taxes. In the scheme of things, that's doesn't seem so bad.

BUT -- without the surplus Social Security payroll taxes, which were $162 billion, the deficit would be $317 billion. (158+160=317 [with rounding]. You can see the numbers here in Table 8.)

And this is really the right way to count it. The Social Security surplus is actually a liability for the government, because the SS surplus will have to be repaid, unlike other taxes.

So, if the promise made in the 1983 compromise is kept, then Johnston is pretty much wrong. Taxes were cut on richest Americans by Reagan and Bush II, but will have to be raised again to pay for the redemption of the Trust Fund. But if the US somehow defaults on the Trust Fund bonds (and there are sneaky ways to do this), then Johnston will have been right. Conservatives will have jacked up taxes on poorer people, and massively cut taxes on the wealthy.

As I've mentioned before, the economist Dean Baker has calculated that such a Trust Fund default would transfer over a trillion dollars from the bottom 95% of households to the top 5%. A household in the top 1% would gain an average of $730,000.

For the record, I don't think this will happen. But just the fact that people discuss it as a possibility is an ominous sign.

2. Johnston also says "President Bush is not being internally consistent when he says I want you to have more of your own money."

This is completely right. Bush doesn't mean what he says. If he did, he'd just call for the abolition of Social Security. Then people could do whatever they wanted with their money.

Instead, Bush wants to force people to put their money in private accounts. A big chunk of this money (probably 10-30%) will go to Wall Street money managers. Thus, Bush wants to force Americans to give lots of their money to Wall Street.

Let me know if any of this isn't clear.

Post edited to eliminate embarrassing arithmetic error.

Things I've Been Reading

"Condoleezza Rice Arrives Just in Time to Supervise US Decline" at Black Commentator.

"Bush's Unaccountability Moment" by Nat Parry at Consortium News.

Andrew Schamess' thoughts on yesterday's anniversary of the liberation of Auschwitz.

Doug Ireland on "Why US Media Dismissed the Lancet Study of 100,000 Dead."

January 27, 2005

I Finally Stop Being An Incredible Jerk

I've had this website for eons. Yet until now I haven't had the basic good manners to set up a b__groll.

Even now, the lists to the left—while better than nothing—are by no means complete. If you belong there, please don't hesitate to get in touch. I'm particularly anxious not to miss anyone who linked to this site during the early days of mid-2004.

ABOUT THIS SITE

The name of this site is explained here.

My name is Jon Schwarz; I'm a writer and have contributed (often with Michael Gerber, author of the bestselling Barry Trotter parodies) to many publications, including the New Yorker, New York Times, Atlantic, Wall Street Journal, Slate, Mother Jones, Esquire, Village Voice and McSweeney's. Mike and I have also written material for Saturday Night Live and National Public Radio. Our pieces have appeared in numerous anthologies, including Fierce Pajamas, a collection of the best humor from the first 75 years of the New Yorker. When I get around to it, I'll put up links to pieces of ours/mine that are online.

I often appear on radio across the US to discuss the only two political subjects I know anything about. These are Iraq's non-existent WMD (I bet someone $1000 Iraq had nothing) and Social Security.

Despite my fear and hatred of politics, I've worked for a few political organizations, such as the 2004 Kucinich presidential campaign and After Downing Street.

Since fall, 2007, mathematician/troublemaker Bernard Chazelle also posts here.

[A penguin-themed joke that used to be here has been removed because I got tired of it.]

Posted at 10:28 AM | Comments (15)

It's "Inside Comedy" Thursday

I wish I had had something to do with the video I mentioned recently. I did not. However, I'm informed by some who did that it's now been downloaded over 75,000 times. If you are not responsible for even one of these downloads, there is still time. Please: allow yourself to experience happiness.

(Also, deep horror.)

In other comedy news, I recommend this interview with master funnyman Stephen Colbert of the Daily Show.

Not surprisingly, Colbert turns out to be an extremely serious and thoughtful guy. While discussing Strangers with Candy (soon to be a movie), Colbert tells a truly appalling story about the parochial high school he went to:

GROSS: Who was the most ridiculous teacher you had when you were in high school?

COLBERT: The most ridiculous teacher I had in high school wasn't actually comedic in any way. I had a teacher at my high school who later went to jail and now is no longer living. He had affairs with fifty students -- many of my friends, it turns out. He was a man, and he was having sex with young boys at my school. And everyone at the school knew he was an odd bird. He was the team trainer, and if you got hit on the head with a baseball, he'd ice your groin.

You can't help but laugh at that, which is sort of the nut of Strangers with Candy. That's a terrible thing, and yet there's something funny about the obviousness of that behavior that never got caught. And he was obviously a twisted individual. And we made jokes about how Mr. Fisher would ice your groin at chapel. We would get up and make speeches and talk about crazy Mr. Fisher.

And yet nothing was ever done about him. And it turned out the administration must have known that he was the baddest of bad eggs. Because just a few years ago when this all came out, when the headmaster was to be deposed, the day before he was to be deposed about what he knew about it, he killed himself. So that's sort of the high school I look back at. And that darkness translates into the writing of Strangers with Candy...

Selfishness is always funny to me. People who are supposedly in authority who turn out to be selfish is particularly funny to me. Because it's the worst type of hypocrisy.

As some jerk once said, "The secret source of humour itself is not joy, but sorrow. There is no humor in heaven."

January 26, 2005

Frank Luntz's Descent Into Madness Continues

As I just mentioned, Republican pollster Frank Luntz was on the Al Franken Show yesterday with Josh Marshall. Luntz explained that it's unacceptable for the media to use "privatization" or "private accounts" to refer to Bush's plans for Social Security.

Now, this is completely insane. But it actually wasn't the MOST insane thing Luntz said. Check this out:

Luntz had declared that the term "private accounts" is "pejorative." When asked why, this was his answer.

LUNTZ: ...if someone uses "Israel," I know that they're most likely to be a supporter. If someone uses the phrase "State of Israel," I know that they are creating a distance (dissonance?). If someone uses the phrase "private accounts" or "privatization," I have an idea of where they stand on Social Security.

I think I speak for everyone here when I say: what the fuck?

Seriously. What the fuck is Luntz talking about? If referring to the "State of Israel" is pejorative, then many more people are anti-Israel than I suspected.

For instance:

The Judicial Authority of the State of Israel
Copyright (c) 1997-1998, The State of Israel. All Rights Reserved.

The Israel Government Gateway, which is the "one point entry to [Israeli] Government sites"
The State of Israel. All Rights Reserved © 2004.

The Israeli Ministry of Foreign Affairs
Copyright ©2004 The State of Israel. All rights reserved

Natan Sharansky, hard right Israeli politician
To be a good Zionist for me means to have a strong connection with the State of Israel.

In addition, according to Google, there are another 1,780,000 references to the "State of Israel" online. I don't think they're all by Hamas.

January 25, 2005

"Diarrhea" Polled Badly, So Now The President Refers To It As "Freedom"

Josh Marshall was on the Al Franken Show today with Republican pollster Frank Luntz. They had a brief debate about terminology, which you can listen to here.

It used to be that everyone -- Republicans, Democrats and the press -- used the same word for what Bush wants to do with Social Security. That word was "privatization." And if you privatized Social Security, everyone would end up with a "private account."

This was true up until very recently. But then people like Luntz realized these terms didn't poll well. So now Bush has started talking about "personal accounts." (As far as I know, he hasn't said he wants to "personalize" Social Security.)

Today Luntz explained that because the president has changed terminology, the media must change too. If they don't -- if they continue using "privatization" or "private accounts" -- they are showing a disgusting left wing bias.

I agree. The press must call everything on earth exactly what the president chooses to call it. So if "private accounts" start to poll badly too and the president switches again, then the press must also immediately switch.

So just in case, I've come up with some possible replacements for "personal accounts." I know Frank Luntz joins me in looking forward to hearing these used by every news outlet in America.

• Freedom Accounts
• Liberty Accounts
• Delicious Donut Accounts
• Free Lear Jets For Everyone Accounts
• Accountable Accountant Accounts
• Michael Moore Hates America Accounts
• Hillary Clinton Is A Lesbo Accounts
• (Osama Bin Laden Calls These) Private Accounts
• 个人帐户 *
• Frank Luntz Is A Huge Douchbag Accounts

* According to Babelfish, 个人帐户 means "personal accounts" in Chinese.

Further suggestions for new terms are appreciated.

If It's All The Same To You, I Prefer My Consciousness Un-Seared

When I read that Peter Wehner Social Security memo, this section reminded me of something:

Our strategy will probably include speeches early this month to establish an important premise: the current system is heading for an iceberg... That reality needs to be seared into the public consciousness; it is the pre-condition to authentic reform.

But what? I couldn't remember what it was.

But now I can. It was a statement by Moshe Ya'alon, the chief of staff of the Israeli military. A few years ago, Ya'alon declared his aim was to "sear deep into the consciousness of Palestinians that they are a defeated people." That was a pre-condition to authentic reform.

Anyway... all of this makes me hungry. Because you know what else is good seared, besides American and Palestinian consciousness? Salmon! Pan-seared salmon is delicious!

Now, salmon may prefer to remain un-seared, just like your consciousness does. But I'm afraid your consciousness has no more choice than the fish.

January 24, 2005

I Am Encouraged By Bill Thomas' Lies

In all seriousness, I find the recent transparent lie of Rep. Bill Thomas (R-CA) about Social Security to be quite encouraging.

It's very similar to what happened after the absence of WMD in Iraq became embarrassingly clear. All of a sudden the hive mind started producing what was perhaps the stupidest lie in American history: the Bush administration never said Iraq was an imminent threat! Donald Rumsfeld took this lie even further, and claimed he'd never said Iraq was an immediate threat.

Now, Bill Thomas is doing the same thing: George Bush never said Social Security is in crisis! But this time, they've been forced to tell this fall-back lie BEFORE they've accomplished their goal. It's like them telling the "never said imminent" lie before the invasion of Iraq... which of course would have made the invasion much less likely.

As it happens, I made some money off the moronic "never said imminent" lie. I don't think this one will be as profitable, though.

Bill Thomas Flies In Emergency Supply Of New Lies

If there's one thing everyone agrees on, it's that American politicians don't lie enough. Sure, the Bush administration launched a war based on hundreds of lies. But we're a big country. With a population of 293,027,000, even a thousand lies means every lie has to be split between 293,027 Americans. There's simply no excuse for this in a nation as rich as ours.

Fortunately, Social Security is an opportunity for public-spirited politicians to produce many more lies. For instance, here's Rep. Bill Thomas (R-CA), chairman of the House Ways and Means Committee, yesterday on Meet the Press:

MR. RUSSERT: President Bush has said Social Security is in a crisis. Democrats say hold on, not so fast, it's not a crisis. Is it?

REP. THOMAS: Well, couple of weeks ago, the president had one of his forums in Washington, and if you'll look at what he said actually at that Washington forum, he used the term "problem" 27 times. He used crisis zero.

The forum to which Thomas is referring is the White House Economic Conference last December 16. This is from Bush's closing remarks:

The problem with that when it comes to a modernization of Social Security is, is that the longer we wait, the more expensive the solution becomes. And so one of my jobs, one of my charges is to explain to Congress as clearly as I can, the crisis is now.

The best part of Thomas' lie is its brazenness. Usually when politicians lie, they leave themselves some kind of out, like "To the best of my recollection..." Here, Thomas says he knows the number of times Bush said "problem." So he can't really claim he didn't read the speech at all. This is worth ten of the low-quality "the British government has learned..." lies to which we've grown accustomed.

Kudos also to Tim Russert for letting the lie go by unchallenged. A lie challenged is often a lie destroyed, which leads to the kind of lie-shortage we've faced in the past.

So: thanks, Rep. Thomas! And thanks, Tim! Every lie-hungry American salutes you!

January 23, 2005

I Didn't Realize I Could Hate Donald Rumsfeld More

From the Stars and Stripes:

Pentagon police on Wednesday turned away family members of troops killed in Iraq who wanted to confront Secretary of Defense Donald Rumsfeld on the reasons for the war in Iraq.

It was snowing hard in Washington on Wednesday. Here's a picture of Cindy Sheehan of California, standing in the snow, holding a picture of her dead son Casey and crying:

Afshar

Stars and Stripes:

“I wanted them to see my son,” she said, weeping. “I wanted them to see the consequences of his actions... I have the feeling they feel he was a dispensable asset to them.”

Of course, her feeling is correct. Her son was a dispensable asset to Rumsfeld. Nothing could show that more clearly than Rumsfeld's willingness to lie to millions of Americans and then refuse to meet with the parents of children killed by his lies.

I had thought I couldn't hate Donald Rumsfeld any more, just like I used to think I couldn't hate Osama bin Laden more. In both cases, I was very wrong. I need to stop underestimating these people.

The Social Security Crisis Is Very Real

The Social Security Administration projects that seventy-five years from now in 2080, the US Gross Domestic Product will be 40 trillion dollars. If they're right about this and everything else, it means taxes might have to be raised somewhat to keep paying full benefits.

However, I have my own projections. They show that in 2080, the US GDP will be 37 dollars. Not 37 trillion dollars, but 37 dollars. And I can't deny this will cause very real problems with Social Security.

I made these projections after reading this article. It says Bush's own hand-picked environmental lackey believes that without immediate action on global warming, "We are risking the ability of the human race to survive."

If Bush's own lickspittle says this -- he was installed in his present position because his predecessor was disliked by Exxon -- then that's probably the optimistic scenario. The pessimistic scenario would be that even with immediate action, it's too late. So, my "37 dollars" projection is playing it right down the middle.

I therefore realize that I've been wrong all along on Social Security, and the Bush administration and the Cato Institute have been right. We must trust them to fix things.

January 22, 2005

The Funniest Thing There Is

This is probably the funniest thing I've seen in five years. It's also quite alarming.

I'm not going to say anything about it, so you can experience it with no preconceptions. Windows Media Player plug-in is required.

Here.

UPDATE: mk in comments points out that you can also copy this link and paste it directly into Windows Media Player. I recommend this -- then you can watch it at 200% for all the graphic detail.

January 21, 2005

Our Brilliant Leaders' Brilliance Continues Brilliantly

Seymour Hersh's recent New Yorker article about Iran shows that our leaders are just as brilliant as ever. It's demonstrated most clearly when a government consultant tells Hersh this:

...the hawks in the Pentagon, in private discussions, have been urging a limited attack on Iran because they believe it could lead to a toppling of the religious leadership. “Within the soul of Iran there is a struggle between secular nationalists and reformers, on the one hand, and, on the other hand, the fundamentalist Islamic movement,” the consultant told me. “The minute the aura of invincibility which the mullahs enjoy is shattered, and with it the ability to hoodwink the West, the Iranian regime will collapse”—like the former Communist regimes in Romania, East Germany, and the Soviet Union. Rumsfeld and Wolfowitz share that belief, he said.

Hersh then quotes a "Middle East scholar" saying this is "extremely illinformed."

But is it? I think the neoconservatives clearly have history on their side here.

For instance, everyone remembers how the collapse of the Soviet government in 1991 followed our massive, unprovoked attack on the USSR. This worked so well we then bombed Romania and East Germany, with the same outstanding results.

But we don't even have to look overseas to see how unprovoked attacks on a country always weaken the country's government. I mean, think of the 9/11 attacks on the US! As everyone knows, they shattered the aura of invincibility of the Bush regime. Bush immediately became massively unpopular, and his domestic opponents, lead by Jim Hightower, went on the offensive and overthrew the government. And US foreign policy became much less aggressive.

I mean, sure, we can discuss this. But first we must accept the hawks have a very strong argument indeed.

January 20, 2005

Screaming & Social Security & Screaming About Social Security

Now that I've finished screaming, here's some good radio and TV on Social Security:

1. Max Sawicky will be talking about Social Security on Radio America's News You Can Use with Jane Silk in just a few minutes, at 1:30 p.m. EST. You can listen online here.

2. Dean Baker was on C-Span recently (along with other experts like Jason Furman) to talk about Social Security. You can watch it online.

3. Baker also was one of the guests on "Talk of the Nation" on Monday to talk about Social Security.

January 19, 2005

Sign Up For The Social Security Reporting Review

For many years, economist Dean Baker has written a weekly email called the Economics Reporting Review. ERR examines the (occasional) good and (frequent) bad reporting on economic issues in the Washington Post and New York Times.

If you're at all interested in this kind of stuff (and you should be, if you ever eat and/or spend money), you should sign up to get it.

You'll end up much, much better informed. One of things you'll be better informed about is the regularity with which the Times and Post spew drivel all over the US populace.

However, ERR does have one drawback: Dean Baker is extremely intelligent, well-informed, and fair-minded. So he isn't given to the childish jeering and crass insults which are my stock in trade.

ANYWAY: the point is, Baker has started a new project, the Social Security Reporting Review. This is just like ERR, except it focuses solely on Social Security, and examines reporting all across the media (not just the New York Times and Washington Post). You can sign up for it at the same place as ERR.

January 18, 2005

Another Question For Lyin' Donald Rumsfeld (Non-Funny)

Via The Poorman, I see that family members of soldiers killed in Iraq are going to try to meet with Donald Rumsfeld tomorrow. They have some questions for him:

a.. Why were our loved ones sent to war in the first place, given that there was no threat to the U.S. from Iraq?
b.. When they were sent, why were they not supplied with proper training, planning, armor or equipment?
c.. How did our loved ones die?
d.. Why are there troops in Iraq who still lack the proper training, armor and equipment; and what are the plans for immediately furnishing them with these items?
e.. What are the plans for ending the war and bringing the troops home?

These are all excellent things to ask. But I have questions that should be added to this list:

Secretary Rumsfeld:

On November 14, 2002, during an interview with CBS Radio, you stated that UN inspectors found weapons of mass destruction in Iraq in 1995. You further stated this occurred because they received information from Iraqi defectors, and that this demonstrated UN inspectors could only find hidden WMD with the help of such defectors. As you said, the significance of this episode was it indicated that in 2002 Iraq could be hiding WMD, but without the assistance of defectors the UN would never find them.

In reality, the UN did not find WMD in Iraq in 1995. Indeed, no WMD were found in Iraq after 1991. Moreover, the defectors to whom you referred -- including Husayn Kamil, Saddam's son-in-law and the head of Iraq's WMD programs before 1991 -- could not have told the UN that Iraq still had WMD. This is because Kamel told the UN and CIA that Iraq had no WMD -- and hadn't since 1991.

This was basic information about the WMD issue. Indeed, much of it was publicly available on the UN website.

Therefore, our questions to you are these:

Why did you make this obviously false claim? Were you lying, or are you incompetent? Furthermore, why did you not inform CBS's listeners that the sources you cited actually had said Iraq had no WMD whatsoever?

BACKGROUND:

Secretary Rumsfeld Live Interview With Infinity CBS Radio, November 14, 2002

Kroft: U.N. weapons inspectors are preparing to go to Iraq very shortly and begin searching for evidence of Saddam Hussein's weapons of mass destruction. What do you expect them to find, and what happens if they don't find anything? Is Saddam Hussein off the hook?

Rumsfeld: Well, we know that Saddam Hussein has chemical and biological weapons. And we know he has an active program for the development of nuclear weapons. I suppose what it would prove would be that the inspections process had been successfully defeated by the Iraqis if they find nothing. That's what one would know if that turned out to be the case...

They have dispersed these things throughout the country, they've got so many underground facilities, they have things that are mobile, and the only way it will ever be found, in my view, effectively is if you find people who have been involved in it who are willing to come and talk to you about it, and tell you where they are. The last time the inspectors were in, that's how it happened. Two sons in laws of Saddam Hussein defected, went into Jordan, and the word came out and they told where these inspectors could go look, they went and looked, and they found weapons of mass destruction.

The "sons in laws of Saddam Hussein" to whom Rumsfeld referred were Husayn Kamil and his brother Saddam Kamil. (They were both married to daughters of Saddam.) For general background on Husayn Kamil, see "Realizing Saddam’s Veiled WMD Intent" in the "Regime Strategic Intent" section of Volume I of the Comprehensive Findings of the Special Advisor to the Director of Central Intelligence on Iraq's Weapons of Mass Destruction (also known as the "Duelfer Report," released September 30, 2004).

For public information on UNSCOM inspections during the nineties, see official UN chronology. Note no WMD were located in Iraq after 1991. Note further the statement that Kamil's 1995 defection led to Iraq providing "documentation" about Iraq's pre-91 WMD programs, but no weapons of any kind.

For background on Husayn Kamil's defection, see this briefing paper by Cambridge professor and Iraq expert Glen Rangwala. The paper includes a link to the notes from Kamil's UN debriefing, which includes Kamil's statement that "All weapons -- biological, chemical, missile, nuclear were destroyed."

For further background on Kamil, including the decision to "hush up" his statements that Iraq had no WMD, see this Newsweek story. (The Newsweek story was published before the Iraq invasion.)

Taken together, the information available to anyone -- not just a Secretary of Defense, but anyone with an internet connection -- showed that Rumsfeld's statement was false in its specifics, and in its implications. Rumsfeld could honestly have used the Kamil story to argue that Iraq might still, in 2002, be hiding documentation about its pre-91 programs; ie, pieces of paper about WMD programs that had ended 11 years previously. However, it was glaringly dishonest to claim the Kamil story indicated Iraq still had weapons -- particularly since Kamil had said precisely the opposite.

Why Isn't The Media Reporting On All The Iraqis That Allawi HASN'T Shot?

God bless the New Yorker. Like any institution, it has flaws. But they are doing some outstanding work on Iraq.

Just for instance... did you know Jon Lee Anderson has likely confirmed Iyad Allawi RECENTLY SHOT SEVEN PEOPLE?

This was first reported by Paul McGeough in July. Here's the New Yorker article, via The Raw Story, via this comment at the Washington Monthly.

Anderson writes this:

... there have been persistent rumors that, a week or so before he took office, Allawi shot and killed several terrorist suspects being held prisoner at a Baghdad police station. When reporters asked him about the rumors, Allawi denied that he had shot anyone, but added that he would do "everything necessary" to protect Iraqis. I was in Baghdad at the time; although most Iraqis I spoke to believed the rumors, journalists and diplomats speculated that Allawi had spread them himself, in order to bolster his stern reputation.

In late June, however, I sat in on an interview, conducted by Paul McGeough, a reporter for the Sydney Morning Herald, of a man who claimed to have witnessed the executions. He described how Allawi had been taken to seven suspects, who were made to stand against a wall in a courtyard of the police station, their faces covered. After being told of their alleged crimes by a police official, Allawi had asked for a pistol, and then shot each prisoner in the head. Afterward, the witness said, Allawi had declared to those present, "This is how we must deal with the terrorists." The witness said that he approved of Allawi's act, adding that, in any case, the terrorists were better off dead, for they had been tortured for days.

In the ensuing months, the story has lingered, never having been either fully confirmed or convincingly denied. (Allawi did not address the incident with me.) During my visit to Jordan, a well-known former government minister told me that an American official had confirmed that the killings took place, saying to him, "What a mess we're in—we got rid of one son of a bitch only to get another."

HANDS OFF SOCIAL SECURITY!

As I've mentioned before, I'm just about done with a short book on Social Security and its non-existent troubles. It will be called, appropriately enough, Hands Off Social Security! There may be a picture of a grandmother on the cover, wearing boxing gloves and glaring belligerently.

What I want to do with HOSS! is provide an easy to understand, funny explanation of the whole Social Security issue. Nothing like it currently exists. And despite my previous protestations, the truth is Social Security is an extremely interesting subject. There's a lot to it by itself, and its implications for politics overall in the US are huge. That's why the Bush administration is going after it.

Indeed, as bad as you think the Bush administration's lies about it are, I guarantee you they're worse. They're using a non-existent problem as an excuse to do things that wouldn't solve the problem even if it existed, in order to take us back to the 19th century. I hope very much we can avoid this. From what I've heard the 19th century wasn't much fun, what with all the poorhouses and cholera.

Soon it will be possible to pre-order the book at a special low price. (Very low -- like $5.) In the meantime, here's a draft section from the beginning that explains the Social Security basics. I would greatly appreciate any thoughts you may have about this -- either about what I say or anything I've left out.

What is Social Security?

Social Security has several parts. The main one, founded in 1935, is a government-guaranteed retirement program. This is what people usually mean when they talk about Social Security.

Today, an average retiree -- I'm going to call her Mary, after my grandmother -- gets about $15,000 in benefits. Mary is guaranteed to get this $15,000 every year as long as she lives. Her savings might run out, the stock market might crash, and her old company might go bankrupt and stop paying her pension. But she will still get Social Security. Just as important, her benefits are protected against inflation. So if prices double, her benefits will automatically double to $30,000.

In addition, Social Security provides disability and life insurance. It pays benefits to workers so sick they have to retire young, and to the children and spouses of workers who die.

45 million of us, or about one in every six Americans, receive Social Security benefits. It's the most successful and most popular government program in U.S. history. In fact, it may be the most successful and popular government program in the history of the world.

How does Social Security work?

It's very simple: essentially the government takes 12.4% of every worker's paycheck in what are called "payroll taxes." Then the Social Security Administration sends the money off to current retirees and other beneficiaries. The amount each retiree gets varies. The more you paid in during your working life, the more you get when you're retired.

As I say, once set, a retiree's benefit stays the same but is guaranteed no matter how long he or she lives, and is protected against inflation. That's a lot of the "Security" part of "Social Security." It's very hard to get that anywhere except from the US government.

Hands Off Social Security! explains the nitty-gritty of this, but for now there are only two more things you need to know:

First, the promised benefit level for each new batch of retirees rises over time. Mary, our average retiree in 2005, receives about $15,000. However, an average person retiring in 2040 is promised $20,500 -- in 2005 dollars. This means that, even after inflation is taken into account, retirees get higher real benefits as time go on.

Second, if the Social Security Administration takes in more in taxes than is needed to pay current beneficiaries, the money is used to purchase U.S. treasury bonds. These bonds make up the Social Security Trust Fund. If the Social Security Administration takes in less in taxes than is promised to current beneficiaries, it cashes in some of its trust fund bonds to make up the difference. (See "What is the Social Security Trust Fund?", below.)

Why is Social Security in crisis?

Actually, it's not. There is no Social Security crisis. Under the main government projections, Social Security can pay full benefits through 2042 -- and then continue forever to pay average retirees benefits higher than the $15,000 Mary gets today. Under other government projections, Social Security is fine through 2052. Under still others, Social Security is fine indefinitely, until the sun explodes. (Admittedly, there are some problems at that point.)

Here's a graph showing this, based on the most recent Social Security Administration projections (full benefits through 2042) and Congressional Budget Office projections (full benefits through 2052). All numbers are in 2004 dollars; that is, higher benefits are higher in real value, not higher because of inflation.

facts_1.gif

Source: "Basic Facts on Social Security and Proposed Benefit Cuts/Privatization" by Dean Baker and David Rosnick.

(For more details, see the questions about Social Security projections below.)

But didn't President Bush just say Social Security is in crisis?

He did. In December, 2004 he said that "the crisis is now."

However... President Bush sometimes says things that aren't 100% true. Perhaps you remember him telling us about Iraq's terrifying weapons of mass destruction.

The Social Security crisis is just as real, and just as terrifying, as Iraq's WMD.

Then why is Bush saying there's a crisis?

Because he wants to dismantle Social Security.

Conservative Republicans have hated Social Security since before it began. In 1935, Republican Senator Daniel Hastings said Social Security would "end the progress" of America. Ever since, conservatives have been saying Social Security is about to collapse. When people who are now receiving Social Security checks were starting to work in the 1960s, conservative Republicans were telling them they'd never see a dime.

However, because Social Security is so popular, Republicans have always been scared to make serious moves to kill it. Social Security has often been called the "third rail" of American politics -- touch it and you die. While conservatives believed it was extremely important to get rid of Social Security, it wasn't so important they wanted to lose elections.

But things have changed. As a recent internal White House memo put it, "For the first time in six decades, the Social Security battle is one we can win." The person who wrote this was being honest: conservatives have been fighting against Social Security for 60 years.

In other words, it's not that Social Security is "in crisis" any more than it was in the past. The only thing that's changed is that now conservatives think they can finally get rid of it.

Now, you may be wondering: why exactly do conservatives hate Social Security? Why do they think something so many Americans like is so terrible?

Here's one answer: $$$$$$$$$$$$$$$$$$$$$$$$

President Bush's plans for Social Security would mean billions and billions of dollars for Wall Street. As Fortune magazine recently put it, Wall Street is "salivating" over this.

Another answer is that conservatives believe getting rid of Social Security would make them more powerful. Their thinking about this is too complicated to go into here. It's interesting, though, and is discussed in Hands Off Social Security!

But... don't people on the news talk about Social Security being in crisis too? Didn't Bill Clinton say we had to "save Social Security first"?

You do see many people on television saying there's a Social Security crisis. But again -- you also saw many people on television saying Iraq had weapons of mass destruction. Just because you're on TV doesn't mean you have any idea what you're talking about.

In fact, people on TV usually have less idea what they're talking about than the rest of us. It's not that they're stupider than we are -- it's that being on TV takes up lots of time. For instance, if you're Bill O'Reilly, you have to spend most of each day putting on makeup, coiffing your hair, sexually harassing employees, and so forth. (Sorry; allegedly sexually harassing employees.) This doesn't leave you much time to learn about Social Security.

Bill Clinton is a different story. Clinton did say, in his 1998 State of the Union address, that we should "save Social Security first."

This was a catchy political slogan. But what he actually meant was something different, and less catchy: "Reduce the debt/GDP ratio first, thereby increasing the general solvency of the federal government."

Confused? That's okay, it's confusing.

Hands Off Social Security! explains what Clinton was talking about. (For a little help now, see "What is the Social Security Trust Fund?", below.) But the point is that most of what Clinton said was reasonable at the time, but it didn't mean Social Security was facing a crisis.

I still don't get it. Is all the talk about the "Social Security shortfall" just made up?

It depends on what you mean by "made up."

Every year, Social Security's actuaries are required by law to make projections of the program's health over the next seventy-five years. For reasons too economic to go into, these 75-year projections have usually shown a shortfall. In fact, the projected shortfalls in the 1950s, 1960s and 1980s were much bigger than the one now. And yet retirees have never missed a check. (An explanation for all this appears in HOSS!)

This isn't the fault of the actuaries -- it's very hard to predict the future. No one in 1930 could predict spam email, Christina Aguilera, or spam email about Christina Aguilera. Likewise, we can't predict much about 2080. (Except for the killer robots.)

The following questions have been taken into the shop for repair, and will be returned shortly.

But what happens if the Social Security projections are exactly right?

What is the Social Security Trust Fund?

What is Social Security privatization?

What does President Bush want to do?

Why is Social Security privatization a bad idea?

There Is So Much Funny About Social Security

Via the Daily Howler, here's something from an appearance by Sen. Mitch McConnell (R-KY) on CNN:

...younger people are very, very excited about the possibility of having at least a small portion of the Social Security taxes that they already have to pay anyway go into a personal retirement account... that they could leave to their heirs.

I laughed out loud when I saw this.

Maybe you didn't, though. Let me explain.

Right now Social Security is an "annuity." Annuities guarantee you will receive a certain benefit for as long as you live. This is a great deal if you live longer than average, because you keep getting that cash. It also provides enormous peace of mind, because you know you won't outlive your money. But it's not a great deal if you die early -- not for you, and not for your heirs. Of course, being dead, you have other things on your mind. But perhaps your grandchildren get upset they can't inherit your Social Security checks.

If Bush and McConnell succeed, this would change. You would continue to get a (greatly reduced) annuity from Social Security. But you'd also have money in a personal retirement account. When you retire, you'd depend on your (greatly reduced) Social Security annuity, plus the money in your PRA.

But here's the deal: if you live longer than average, you would likely outlive your money. That is, you'd spend all the money in your PRA. Then you'd have to depend solely on the much smaller Social Security annuity.

Or to put it another way: you'd only have something left in your PSA to leave to your heirs if you die earlier than average... and the closer to "average" you got, the less you'd have.

Thus, McConnell was essentially saying this:

...younger people are very, very excited about the possibility of dying young.

January 17, 2005

Martin Luther King Day

Bob Harris beat me to just about everything I was going to say about Martin Luther King.

It's no accident that everyone talks about King's "I Have A Dream" speech, while throwing "Beyond Vietnam" (also known as "A Time to Break Silence") down the memory hole. I don't expect George Bush will mark the holiday by telling us, "As Dr. King said, the greatest purveyor of violence on earth today is the American government."

UPDATE: NTodd at Dohiyi Mir has links to Democracy Now!'s audio of "A Time to Break Silence."

Why We're Not Going To Eat Our Grandchildren

I often putz around at Matthew Yglesias' site. In the comments to this post, I was inspired to a frenzy of back-of-the-envelope calculations.

My frenzy was an attempt to estimate total US expenditures on the elderly, as a percentage of GDP -- both in 2004, and as projected for 2054. My assumptions were that total expenditures would be the sum of (1) Social Security, (2) money the elderly get from other sources (pensions, savings, etc.), (3) Medicare, and (4) other spending on elderly health care.

It's important to note here that, in the present, US public expenditures on the elderly (Social Security plus Medicare) are just about the same size as US private expenditures on the elderly (pensions, savings, etc. plus private health care). Thus, if this holds true in the future, the private sector side will be just as much a "problem" as the public side. Yet we only hear about the public side, and the private sector side is treated as though it doesn't exist.

I hope Matthew didn't mind my use of his bandwith. In any case, I'm also going to stick my frenzied calculations here as well. For the short Social Security book I'm working on, I'll actually get real numbers rather than these rough estimates. And I'll add graphs! But in the meantime, if anyone wades through this and sees anything wrong, please mention it. (You may also have to read the whole thread on Matthew's site first to understand it.)

But the point of all this is that the whole "old age crisis" is bullshit. America is not going to turn into a nation of youngsters crushed under the unbearable weight of their grandparents. Here's why, according to my rough figures:

With no changes to Social Security or Medicare or anything, the per capita GDP for everyone under 65 will be 68% HIGHER IN 2055 THAN TODAY... THAT IS, AFTER THE ELDERLY HAVE TAKEN THEIR SHARE IN SOCIAL SECURITY, INVESTMENTS, AND HEALTH CARE.

Those are the consequences of the "demographic tidal wave" we face -- the per capita share of GDP going to 2055's youngsters (ie, those under 65) will be 68% higher than the per capita share the under-65 get today. (And this is under pessimistic assumptions.) Wow, what a massive injustice.

Again, my book will have non-rough numbers by people who actually know what they're talking about. But in the meantime, here are my calculations

P.B. Almeida,

Here's my attempt to put some numbers on this. Of course, it's extremely rough. Plus, I'm tired right now, and not as familiar with the health cost numbers, so I might have made some errors. Still, it should be good enough for a blog comment.

Of the total amount of increased economic output that will flow to old people over the next half century or so, a portion of that (20%? 25%?) will be in the form of Social Security checks.

My best guess is 15.5%. (This is under the SS and Medicare intermediate assumptions.)

2004 SS % of GDP
4.33

2054 SS % of GDP (same page)
6.49

SS increase 2004-2054
2.16

If we assume 2004 and 2054's retirees have the same proportion of asset income, pensions and "other" as 2001's retirees (95% of SS), the asset income, pension and "other" % of GDP come to:

2004 Other Over-65 Income % of GDP
4.11

2054 Other Over-65 Income % of GDP
6.17

Other Over-65 Income increase 2004-2054
2.06

2004 Medicare % of GDP
2.68

2054 Medicare % of GDP (same page)
10.03

Medicare increase 2004-2054
7.35

Medicare currently accounts for about 50% of health care spending for those over 65. Because of the new prescription drug benefit, let's make a generous (from your perspective) assumption that this will increase to 66% in the future. Thus:

2004 over-65 non-Medicare health care % of GDP
2.68 (2.68 X 1.00)

2054 over-65 non-Medicare health care % of GDP
5.02 (10.03 X .5)

over-65 non-Medicare health care increase 2004-2054
2.34

2004 total elderly consumption
4.33 + 4.11 + 2.68 + 2.68 = 13.80% of GDP

2054 total elderly consumption
6.49 + 6.17 + 10.03 + 5.02 = 27.71% of GDP

total % of GDP elderly consumption increase 2004-2054
27.71 -13.80 = 13.91

% of increase attributable to Social Security
2.16 / 13.91 = 15.5%

% of increase NOT attributable to Social Security
84.5%

% of increase attributable to health care
(7.35 + 2.34) / 13.91 = 69.7%

There are many ways of looking at this. Here are two.

1. Let's say we slice SS benefits (both guaranteed benefits and returns from any personal accounts) in half from 6.49% of GDP to 3.25%. This is a gigantic cut, to a level far below that of today. But it would only reduce the % of GDP going to the elderly by 11.73% (3.25 / 27.71).

By contrast, we could achieve exactly the the same thing by reducing health care costs by only 21.59% (3.25 / (10.03 + 5.02)).

So, in terms of total elderly consumption in 2054, every percentage point of reduction of health care costs gives us 2.3 times as much as an equivalent percentage point of reduction in Social Security benefits. ((10.03 + 5.02) / 6.49)

2. It's probably more sensible to look at the increase from today's levels, rather than the absolute projected amounts in 2054.

If we hold SS benefits steady at today's level of 4.33% of GDP, in 2054 costs would be 2.16% of GDP lower than with scheduled benefits.

Under these projections, health care costs are assumed to increase by 9.69% of GDP (7.35 + 2.34), from the 2004 level of 5.36% to 15.05% total (10.03 + 5.02).

Thus, if health care costs for the elderly only rise 240% in GDP terms ((15.05 - 2.16) / 5.36) instead of 280% (15.05 / 5.36), then we're in just as good shape as if Social Security increases by 0%.

Put another way: the increase in health care costs is four and a half times as large a problem as the increase in Social Security costs (9.69 / 2.16).

Again: I may well have made a mistake, in arithmetic or otherwise. If so, I'd appreciate it if you'd point it out. But as it stands, I see no reason -- particularly with proven incompetents running the country -- to tinker with America's most successful government program ever. Not when the increase in health care costs is four and a half times as large a problem. (Although there is one thing I'd endorse re SS -- raising the payroll cap to cover 90% of wages. That in itself would eliminate much of the shortfall, according to the CBO's projections.)

And now, I will go truly crazy. It would be much more efficient to just search for a good study of this, rather than estimating it myself. But who cares?

Let's assume that nothing whatsoever is done, and the percent of GDP going to the elderly DOES rise from 13.80% of GDP today to 27.71% in 2054. That seems pretty bad. So what are the consequences of that for the non-elderly, according to the SSA intermediate projections?

(I'm fading on this, so again: please let me know if you see any mistakes.)

2005 population
301,935,000

2005 over-65 population
36,739,000

2005 under-65 population
265,196,000

2005 GDP
$11,911,330,000,000 (12,090 / 1.05)

2005 GDP going to elderly
$1,643,764,000,000 (2005 GDP X 0.138)

2005 GDP going to under-65 population
$10,267,570,000,000 (2005 GDP X 0.862)

2005 per capita GDP for under-65 population
$38,720.85 ($10,267,570,000 / 265,196)

2055 population
388,938,000

2055 over-65 population
83,105,000

2055 under-65 population
305,833,000

2055 GDP
$27,528,190,000,000 (109,843 / 3.9902)

2055 GDP going to elderly
$7,628,061,000,000 (2055 GDP X 0.2771)

2055 GDP going to under-65 population
$19,900,130,000,000 (2055 GDP X 0.7229)

2065 per capita GDP for under-65 population
$65,068.62 ($19,900,130,000 / 305,833)

AND SO:

With no changes to anything, under the intermediate Trustee assumptions -- which of course, seem likely to be pessimistic -- plus my assumptions, the per capita GDP for everyone under 65 would be 68% HIGHER IN 2055 THAN TODAY (65,068.62 / 38,720.85 = 1.68).

So, if nothing is done, in 2055 people under 65 will suffer the crushing burden of having 68% more per capita GDP than those under 65 today. Of course, it seems quite likely we'll find a way to slow down health care cost inflation, making the 2055 picture even brighter for 2055's under-65s -- even under the intermediate projections.

Speaking of which, you ask:

if you've got some ideas [re health care costs] I'm all ears

Okay: how about we switch to a health care system like Sweden's?

In 1995, 17.3% of Sweden's population was over 65, and they spent 7.2% of GDP on health care (for everyone, elderly and non-elderly).

We're a younger society than Sweden. The SSA projects that we won't get to 17.3% over 65 until 2025. Yet we spent 14.2% of GDP on health care in 1995.

So, if we switched to a system like Sweden's, we could theoretically cut our health care % of GDP in half by 2025 -- while providing coverage for all citizens, including the increased percentage of elderly. This saving of 7% of GDP would be more than three times the scheduled increase in Social Security costs.

Sounds like an incredibly sweet deal to me. What do you say?

And finally, you write:

I question your logic here. A bigger pool of financial assets in 2050 implies more growth along the way (than otherwise would be the case) and higher overall standards of living for everybody.

You're not questioning my logic. You're questioning the logic of the Social Security Administration and the Congressional Budget Office. None of their projections show increased economic growth anywhere near high enough to allow retirees to get higher benefits from individual accounts while also allowing non-retirees to have a higher per capita GDP.

Also, when I suggested raising taxes on the asset income of the elderly, you said:

Um, yeah, we could do that. And your point is?...

My point is that this would reduce the % of GDP going to the elderly just as cutting SS benefits would. Yet you speak of the "voracious and growing appetite" of SS while not speaking of the "voracious and growing appetite" of the elderly's asset income. It's either both or it's neither.

Whew! Well, that was exciting. As I say, I've posted this on my own website here. In the near future I'll doublecheck this, while also looking for a good study on it done by people who actually know what they're talking about.

January 16, 2005

Some Shockingly Competent Journalism By The New York Times

The New York Times, on Social Security, is almost acting like a newspaper. Not a great newspaper by any means -- just a competent one. Still, given their normal tendencies, even competence is genuinely shocking.

Maybe it shouldn't be, though. The New York Times essentially represents America's non-crazy rich people. And America's non-crazy rich people have always supported Social Security. In fact, they were essential to the creation of Social Security during the Depression. The non-crazy rich realized you couldn't have a modern, industrial economy without it.

Unfortunately, the percentage of America's rich who are crazy has steadily increased since then. Indeed, the New York Times is one of the last strongholds of the non-crazy rich.

These articles are all worth reading:

"The Conservative New Deal"
A primer on what's happening with Social Security.

"Social Security Bashing: A Historic Perspective"
Excellent history of how the crazy rich have, since the 1930s, ALWAYS claimed Social Security was about to go "bankrupt"

"Social Security Agency Is Enlisted to Push Its Own Revision"
An appalling look at the Bush administration's use of the Social Security Administration to lie to Americans... just like they used the CIA to lie to Americans about Iraq's terrifying WMD.

No One Is Expertly Wrong Like The Experts Of The Brookings Institution

Via Josh Marshall, here's an expert quote about Social Security from Stephen Hess of the Brookings Institution, a Washington think tank:

"Nobody denies that it's a serious question and future train wreck."

Now, here's something from Hess's Brookings Institution webpage:

Expertise: Elections, media, political campaigns, political parties, politics, presidency, White House organization

And here's something from the webpage of Kenneth "Threatening Storm" Pollack, also employed by Brookings:

Expertise: Middle East, military and security affairs, Persian Gulf

I... see.

PRESIDENT OF BROOKINGS: We're very impressed by your credentials, and would like to hire you as our Expert on Astronomy. But before we do, I have to ask: does the earth orbit around the sun, or does the sun orbit around the earth?

BROOKINGS HOPEFUL: Geez, ask me a tough one! Nobody denies the sun orbits around the earth!

PRESIDENT OF BROOKINGS: You're hired!.

I Can No Longer Conceal My Love For John Ralston Saul!

I'm a huge admirer of the Canadian writer John Ralston Saul. To the degree that it's somewhat unwholesome.

Thus, I've held myself back here, so as not to embarrass my friends and loved ones. But now the dam has broken, and you are about to be flooded by my pent-up Saul-admiration. Take yourself and your livestock to higher ground.

The cause of this disaster is Jim Shanahan's reference in comments here to the University of Chicago's economics department. The Chicago economics department is famously conservative, and hugely influential. The professors there are also, in my opinion, big dumbasses.

John Ralston Saul shares my view, although he puts it more elegantly. His book A Doubter's Companion: A Dictionary of Aggressive Common Sense defines them this way:

Chicago School of Economics
A great center of contemporary Scholasticism. The economists working there and produced by it are as important to the stagnation of useful thought as the Schoolmen of the University of Paris were at the height of the Middle Ages.

Like that of the Paris scholastics, their mastery of highly complex rhetorical details obscures a great void at the center of their argument. They also share a tactical genius for exporting their conceptual definitions to less important centers around the world. The result is a pleasing symphony of international echoes imitating their cadences and so confirming their correctness, even when their policies bring economic disaster. The percussion section of Chicago's orchestra is the Nobel committee for economics. Each golden medal is like another congratulatory parchment presented at the end of an elaborate theological debate.

But what of content? There isn't much. What of Friedrich Hayek and Milton Friedman? These minor Thomists preach little more than inevitability and so counsel passivity.

What they call libertarian economics is a remarkable revenge of the scholastics on the men of the Enlightenment, who had theoretically destroyed them. Peel away the tangle of intellectual leaves from the Chicago School and what remains is a great clockmaker god who has set the world ticking. But the conclusion of the Enlightenment was that god's indifference left humans free to organize the world as they wished. Chicago has so deformed this idea as to invert it. The great clock has been turned into an absolute, all-encompassing system. Better than an ideology, the world is its own absolute economic truth. We must remain passive before its majesty.

This is a denial of Western experience. It is nonsense which simply comforts the power slipping increasingly into the corporatist structures.

Strategic thinking can save a great deal of time wasted over tactics. A large number of America's economic problems, and those of the West, could be solved by shutting down the Chicago School of Economics.

This would not prevent the academics employed there from preaching their essentially anti-social and amoral doctrines. They would be gathered up with delight by the hundreds of imitation Chicago Schools. The purpose of closure would be simply to disentangle a tendentious ideology from its unassailable position within contemporary power structures. The same sort of liberating shock treatment was applied to European civilization in 1723 when the Society of Jesus (Jesuits) was disbanded. The effect was to set free the ideas of the Enlightenment.

Whew! I'm all sweaty and out of breath!

If this gets your motor runnin' like mine, I suggest you read Saul's books The Unconscious Civilization, A Doubter's Companion, and Voltaire's Bastards: The Dictatorship of Reason in the West, in that order. They're actually all the same book, but with varying levels of detail. The Unconscious Civilization is easiest to understand, then A Doubter's Companion, then Voltaire's Bastards.

SECRET MESSAGE TO ALEXIS: I defy you!!!

January 15, 2005

Gary Becker: Famous Economist And Living, Breathing Joke

Gary Becker is an economics professor at the University of Chicago. (He's also won the faux-Nobel Prize for economics.) Recently the LA Times wrote a story about how economic risk has increased substantially for Americans over the past few decades. Becker is quoted in the story saying this:

"There has been a shift toward people taking more risk on themselves ... and the economy has gained for it."

God, I love this. I LOVE IT. I love when Americans are told about the glories of economic risk by professors with tenure. It's exactly like a Soviet apparatchik extolling the glories of communism while shopping in one of the USSR's free-market, apparatchik-only stores.

Mmmmmm. I always enjoy shamelessness, and this is shamelessness in its purest form.

Also, Becker is certainly unaware he's echoing a famous comment made by Emilio Medici, the head of the Brazilian military junta, in 1971:

"The economy is doing very well, but the people are not."

January 14, 2005

More Social Security

If you'd like to hear the rich, melodious voice of Dean Baker, he's a guest on this hour long NPR show, all about Social Security. The other guests are Peter Orszag of a centrist DC think tank and Randall Kroszner, formerly of the Bush administration. Unfortunately, both Baker and Orszag are too honest -- meaning, they get into the details of Social Security, which no one can follow if they don't already know a lot about it. (But you will be able to follow this if you read my upcoming short book!) By contrast, Kroszner tends to repeat various misleading talking points. Also, Orszag sounds like he's eight years old.

Also, here's Paul Krugman's latest column, about the disaster that privatization has been in England.

Blah, Social Security, Blah, Etc.

There's a lot of interesting Social Security stuff around today.

Via Josh Marshall, Senator Wayne Allard (R-CO) is saying the US is going to default on the Social Security Trust Fund. As mentioned earlier, Dean Baker has calculated this would transfer $1 trillion from the poorer 95% of Americans to the richest 1%. An average household in the top 1% would have "a net gain of more than $730,000."

Also via Josh Marshall, the Washington Post is reporting this:

President Bush plans to reactivate his reelection campaign's network of donors and activists to build pressure on lawmakers to allow workers to invest part of their Social Security taxes in the stock market...

White House allies are launching a market-research project to figure out how to sell the plan in the most comprehensible and appealing way...

The campaign will use Bush's campaign-honed techniques of mass repetition, never deviating from the script and using the politics of fear to build support -- contending that a Social Security financial crisis is imminent when even Republican figures show it is decades away.

It will be just as great as Iraq -- but here in America!!!

Finally, Bob Somerby at the Daily Howler continues his crusade against media cowardice and stupidity. Catch him now before he has an aneurysm.

And continue to read this, because they're only so much time left before this avalanche of lies gives me an aneurysm. Perhaps Bob Somerby and I can share the same aneurysm and save on expenses.

January 13, 2005

Sign This Moveon Social Security Petition

If you're a US citizen, I strongly urge you to sign this Moveon Social Security Petition and then get everyone you know to sign it too. If you ever do one thing this site suggests, please make it this.

I'm writing a short, easy-to-understand guide to Social Security right now. (More on this soon.) But in the meantime, I'll just repeat what I've said before: Bush's push to "reform" Social Security is a scam. It is as big a scam as the invasion of Iraq over non-existent Weapons of Mass Destruction. There is nothing wrong with Social Security, just as there were no WMD.

So, go sign the petition.

January 12, 2005

Questions Will Be Answered

There have been many interesting Social Security questions in the comments. I'll answer these as soon as I have a second -- hopefully later tonight.

UPDATE: When I said "tonight," I obviously didn't mean "the night of Wednesday, January 12." I meant "tonight" in the sense of "the night within my soul, where it is always inky dark." Thus, if I ever get around to answering the questions, even 70 years from now, I will have answered them "later tonight."

Has Anyone Ever Told This Joke Before? It Seems So Obvious

In any discussion about Social Security, you constantly hear about a 1995 poll finding that more 18-34 year-olds believed in UFOs than believed Social Security would exist when they retired. This is always brandished as proof that we have to do something about Social Security.

I agree completely -- the ultimate arbiter of all public policy must be what 18-34 year-olds believe.

Therefore:

We must immediately start preparing our defenses against UFO attack!!!!!

WE CANNOT WAIT A SECOND LONGER TO DEAL WITH THE UFO CRISIS!!!!!!!!!

A Small, But Significant, Error by Nicholas Kristof

Nicholas Kristof writes:

Bolstering public health isn't as dramatic as spending $300 million for a single F/A-22 Raptor fighter jet, but it can be a far more efficient way of protecting Americans.

Urm... I think a more accurate way of putting that would be:

Bolstering public health isn't as profitable as spending $300 million for a single F/A-22 Raptor fighter jet, so it's irrelevant that it can be a far more efficient way of protecting Americans.

January 11, 2005

Blah Blah Social Security Blah

I will have lots more to say about Social Security my own self soon. But in the meantime, here's a roundup of things I've recently found useful:

Paul Krugman's latest column on Social Security.

This account in the American Prospect of why the British privatization of their Social Security has been a disaster. Be forewarned that it's hard to follow, and thus only for SS obsessives. All you need to know is privatization has been tried with horrible results in other countries, England included.

Matthew Yglesias has written a column for the American Prospect in which he makes the same point I did about why future retirees deserve higher Social Security benefits.

Matthew Yglesias also here explains the concept of the "infinite horizon" in accounting. (All of a sudden the Social Security Trustees are using this, in order to make the "problem" look scary.) I didn't understand this at all until he posted this.

And lastly... as you doubtless know, many people say the Social Security Trust Fund is just "meaningless IOUs." The reason they say this is because they want to lay the groundwork for defaulting on the Trust Fund bonds. And the reason they want to do that is because the bonds were bought via the payroll tax, which falls heavily on lower-income people... while the bonds would be paid back via corporate taxes and the income tax, which both fall heavily on higher-income people. As you can see here, the top 5% of households pay 15.4% of the payroll tax, but 49.1% of income taxes. The top 1% pay 4.0% of payroll taxes, but 29.5% of incomes taxes.

So, via MaxSpeak, here's a paper by Dean Baker looking at the consequences of defaulting on the Social Security Trust Fund. His conclusion? A default on the Trust Fund in 2016 would transfer over a trillion dollars from the poorer 95% of American households to the richest 5%. An average household in the top 1% would have "a net gain of more than $730,000." So, you can see why they'd like it.

January 10, 2005

A History Lesson From Billmon

Billmon briefly returns to refresh our memory on what the "Salvador option" actually means. (Thanks to Le Man de Poor.)

As you read this, remember this (accurate) characterization about the present day conservative view of our actions in El Salvador:

...many U.S. conservatives consider the policy to have been a success...

Get ready, Iraq! You have only begun to experience success! Soon you'll be so successful, Tony Robbins will be taking courses from YOU!!!

Why Does The Official U.S. Legal Code Hate America?

Here's something else interesting about the Newsweek story about the "Salvador option" being considered for Iraq: according to the U.S. Code, this is a textbook example of "international terrorism." And this means the Bush administration is a "terrorist group."

Here's what the U.S. Code (ie, "the general and permanent laws of the United States") says:

22 U.S.C. 2656f

(d) Definitions

As used in this section--
(1) the term ``international terrorism'' means terrorism involving citizens or the territory of more than 1 country;
(2) the term ``terrorism'' means premeditated, politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine agents; and
(3) the term ``terrorist group'' means any group practicing, or which has significant subgroups which practice, international terrorism.

Now, let's look at the "Salvador option" again:

...one Pentagon proposal would send Special Forces teams to advise, support and possibly train Iraqi squads, most likely hand-picked Kurdish Peshmerga fighters and Shiite militiamen, to target Sunni insurgents and their sympathizers... new offensive operations are needed that would create a fear of aiding the insurgency.

Okay:

"involving citizens or the territory of more than 1 country"
Check -- it would involve U.S. Special Forces training Iraqis

"premeditated, politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine agents"
Check -- "Kurdish Peshmerga fighters and Shiite militiamen" would "target Sunni insurgents and their sympathizers" to "create a fear of aiding the insurgency"

"'terrorist group'' means any group practicing, or which has significant subgroups which practice, international terrorism"
Check -- the Pentagon is a "significant subgroup" of the Executive Branch, which is headed by the Bush administration

Even better, according to the official US National Security Strategy -- signed by George Bush on September 17, 2002 -- Iraqi insurgents are entitled to attack the United States:

The enemy is terrorism—premeditated, politically motivated violence perpetrated against innocents...

The greater the threat, the greater is the risk of inaction—and the more compelling the case for taking anticipatory action to defend ourselves, even if uncertainty remains as to the time and place of the enemy’s attack.

Well, at least we know where we stand. And since we're all agreed these are the rules, I'm sure there won't be any whining on that day in 2009 when New York City is nuked.

Same Song, 24th Verse

Here's another part of the Newsweek article about the "Salvador Option" in Iraq:

...most Iraqi people do not actively support the insurgents or provide them with material or logistical help, but at the same time they won’t turn them in. One military source involved in the Pentagon debate agrees that this is the crux of the problem, and he suggests that new offensive operations are needed that would create a fear of aiding the insurgency. "The Sunni population is paying no price for the support it is giving to the terrorists," he said... "We have to change that equation."

Ah, that takes me back.

On May 7, 1991 (just after the Gulf War), Robert Gates of the Bush I administration gave a speech. Gates was then deputy national security adviser, and would later be head of the CIA. Gates explained that the economic sanctions on Iraq would remain until Saddam Hussein was out of power. This was in direct defiance of international law -- the sanctions were supposed to be removed when Iraq was WMD-free -- but the hope was it would encourage Iraqis to overthrow Saddam. As Gates put it:

"Iraqis will pay the price while he is in power... All possible sanctions will be maintained until he is gone."

And boy, Iraqis paid the price. By conservative estimates, 350,000 Iraqi children died because of the sanctions. And they still wouldn't do what we told them to.

I think the lesson from history is clear: this time, we must make sure the price they pay is higher.

Thanks For Making It Clear, Washington Post!

Here's a helpful editorial about Social Security from yesterday's Washington Post (via Josh Marshall):

The Bush administration appears ready to control the rising cost of benefits for retirees. Some sort of cost control is likely to be part of any honest reform to the system, and the Bush proposal has some logic...

Some argue that [promised benefits aren't] a problem... But given that future tax increases are inevitable to pay for soaring medical costs and for the deficits brought on by Mr. Bush and the Republican Congress, it's not responsible to fix Social Security's funding shortfall exclusively by raising taxes. Some cost control makes sense.

I will explain the logic if anyone wants, but here's what the Washington Post is saying: Because of Bush's tax cuts and out of control spending on Iraq, etc., we must cut Social Security benefits.

Now, you might think we could repeal Bush's tax cuts and overspending, and keep Social Security. Nope, I'm sorry. The Washington Post has already decided: we're going to keep the tax cuts and spending, and cut Social Security.

That's just the way it is. And if you don't like it, move to some country that isn't run by the Washington Post.

January 09, 2005

Being Right Isn't As Much Fun As I Anticipated

Before the invasion of Iraq, I had a long argument about it with my cousin. My cousin had been in the Army Reserves, and trained at Fort Benning, GA. So he knew what the School of the Americas is.

For those who don't, the SOA (now renamed the "Western Hemisphere Institute for Security Cooperation") trained members of the Latin American military. It had a hideous record. Its graduates overthrew democratic governments all over Latin America, and organized death squads responsible for rape, torture, and murder. Manuel Noriega was one graduate; another was Robert D'Aubuisson, a Salvadoran lunatic responsible for the assassination of Archbishop Oscar Romero.

(The SOA used to say they trained soldiers in "counterinsurgency." Remember that word.)

Now, my cousin is not an idiot. He was very aware of what the SOA graduates did. And his heart's in the right place: he doesn't like rape, torture and murder.

So in an effort to convince him, I said that our invasion of Iraq would inevitably lead to a situation like that in Latin America. Our Iraqi allies would act like graduates of the School of the Americas.

My cousin recoiled from this, and said it was ridiculous. He explained he "had the wit" to distinguish between US troops and SOA graduates.

Today, Newsweek is reporting this:

'The Salvador Option': The Pentagon May Put Special-Forces-led Assassination or Kidnapping Teams in Iraq

What to do about the deepening quagmire of Iraq? The Pentagon’s latest approach is being called "the Salvador option"...

Following that model, one Pentagon proposal would send Special Forces teams to advise, support and possibly train Iraqi squads, most likely hand-picked Kurdish Peshmerga fighters and Shiite militiamen, to target Sunni insurgents and their sympathizers...

You see? If you train someone to target "insurgents," you are training them in "counterinsurgency."

Of course, it's true we're not bringing the "handpicked Kurdish Peshmerga fighters and Shiite militiamen" to the School of the Americas. Instead, we're bringing the SOA to them.

Master Economist Dean Baker Strikes Again

I've mentioned Dean Baker before. He's an economist and co-director of the Center for Economic and Policy Research. If you're interested in the stuff I blather on about, I strongly urge you to check out his work.

Recently he's been posting things on the site of Max Sawicky. Here Dean makes the same point I just did about Bush lickspittle Peter Wehner. Here he explains why Wehner was also wrong when he claimed "wage indexation makes it impossible to 'grow our way' out of the Social Security problem." However, I believe Wehner does know the names of his own children.

For more, you can check out this. Or for the full dose, read a book Baker co-wrote called Social Security: The Phony Crisis.

By the way... when I refer to Peter Wehner as a "Bush lickspittle," I don't mean it in a pejorative sense. I'm just following the dictionary definition.

Sunday Is Bitter Joke Day

From the Washington Post:

Iraqis Die In Errant Bombing By U.S.; Toll Is Disputed

A U.S. warplane mistakenly dropped a 500-pound bomb Saturday on a house in a village near the northern city of Mosul...

[The U.S. military said] that five people were killed... The owner of the house told news services that the bomb killed 14 people, including seven children.

The conflicting death tolls could not be independently reconciled.

Well then, tie goes to America!

It's true we may make mistakes, such as dropping 500 pound bombs on the wrong target. But we never make important mistakes, like getting the number of people we killed wrong.

January 08, 2005

The Winner Gets The Authority To Launch America's Nukes

Bob Harris has been nominated for a Koufax Award for Most Humorous Blog. I urge you to vote for him.

Now... it's true a certain other website has been nominated, too. (Hint: A T_____ R________.) However, the website I have in mind is not a blog, hence really shouldn't be eligible. If there's a contest for Most Humorous Eblo, though, I certainly hope you'll consider supporting it.

Why Peter Wehner Is Wrongedy-Wrong-Wrong

As I just said, Bush lackey Peter Wehner wrote an email this week to "opinion leaders" about Social Security. One thing he said was this:

Here's a startling fact: under current law, an average retiree in 2050 would be scheduled to receive close to 40 percent more (in real terms) in benefits than an average retiree today -- and yet there are no mechanisms in place to produce the revenue to pay out those benefits. No one on this planet can tell you why a 25-year-old person today is entitled to a 40 percent increase in Social Security benefits (in real terms) compared to what a person retiring today receives.

This is preposterously false, and so I mocked Wehner for saying it. But I left out why it's false. Here's why:

1. What did Wehner mean?

By "in real terms," Wehner means "after you take into account inflation." In other words, it's not that a 25 year-old will receive 40% more because of inflation. Today's 25 year-olds are promised benefits genuinely worth 40% more than the benefits retirees receive today.

Here are the actual numbers. (I'll eventually put the sources for all my numbers at the bottom of this post. For now you just trust me. If any figures seem egregiously wrong, please contact me at tinyrevolution(at)yahoo*dot*com. I've made mistakes before.)

An average retiree receives $14,900 per year in Social Security.

An average retiree in 2050 will receive $20,500 per year (measured in 2004 dollars).

$20,500 is 37.6% higher than $14,900 -- or, as Wehner put it, "close to 40 percent more."

Again: this is after inflation. If prices in 2050 are twice as high as today, average retirees will be getting $41,000 per year, because $41,000 in 2050 will be worth the same as $20,500 in 2004. ($20,500 X 2 = $41,000.)

2. So, why should 2050 retirees get more than retirees today?

It's very simple: the US will be a much richer country in 2050. And it will be much richer BECAUSE of 2050's retirees. Hence, they deserve to share in the wealth they created.

If you divided the 2004 US economy so that everyone got an equal share, every man, woman and child would get $38,234. By 2050, that number is predicted to be $66,580 -- about 75% more. This means that if you make $40,000 a year today, someone like you in 2050 will make (speaking very roughly) $70,000.

That 2050 person will not be 75% smarter or nicer than you. They will have that extra money because of the work Americans are all going to do between now and 2050. Between now and then, you and I and other Americans are going to invent many new things, and more efficient ways to make current things. We're going to give birth to, raise and educate the workers of 2050. And we're going to keep the country secure. For that, you and I and other Americans deserve to share in the wealth we've created when we retire.

Think of where we are today. As I say, current per capita GDP is $38,230. In 1960 (the same distance from today as 2050), per capita GDP was $12,990.

Why are we so much richer? I can only speak for myself, but I'm not smarter or nicer than people who were my age in 1960 and are now retired. The reason I'm so well off is because of lots of things they did. I didn't invent the transistor, or the mainframe computer (leading to the laptop I'm typing on right this second). I didn't give birth to, raise and educate myself. And I didn't fight and win World War II.

BUT -- what Peter Wehner is saying is that I should disregard all that. After all, if there's no reason for 2050's retirees to get higher benefits than today... well, why should today's retirees get higher benefits than retirees 45 years ago? The logic is exactly the same.

And today's average retiree gets $14,900 in Social Security. There are many ways to calculate this... but from Wehner's perspective, it would be completely fair to cut those benefits to $5,000.

After all, what did today's old geezers ever do for me? I mean, besides creating everything good about the world I live in?

3. Here's another way to look at this.

By paying payroll taxes to provide for today's retirees, today's workers can be said to be "investing in America."

Another way to "invest in America" is to buy savings bonds. That is, you're giving money to the US government now, hoping for a real, after-inflation return when you cash the bond in. The government sells something called Series I savings bonds. These bonds are "inflation-indexed," meaning that they will always return a certain set amount above inflation. Right now that set amount is 1.0%. Using the handy Money Chimp calculator, we find that over 45 years, Series I savings bonds provide a 56.55% return. (This is more than 45% because interest compounds.) Why is this possible? Because the economy will be more productive in the future.

And yet, by Peter Wehner's logic, no one on this planet can tell you why Series I savings bonds do this. Perhaps the entire Treasury Department is located in the huge building next to my house on Mars.

Likewise, by Wehner's logic, no one can explain why workers in the present make so much more money than in the past. What a terribly confusing planet this is. Nobody can explain anything!

4. Why Wehner said this irritating and preposterous thing.

We can never truly know the heart of another person. We can only make fun of them in hopes they'll wise up. But there is a clue to Wehner's perspective in the savings bond example above.

I'm sure it's fine with Wehner for people to buy bonds as individuals and get a return on them. Likewise, he thinks it's fine for people to have individual bank accounts and own stocks. However, he hates the idea of Americans sharing in America's increasing wealth without investing privately. He believes only private investors should get the money. Of course, they already get lots of it. And that's fine. But Wehner thinks they should get all of it.

Here's why they shouldn't: imagine a teacher starting out now who works for 45 years. She awakens a love for knowledge among hundreds of young people. In 2030 one of her former students invents an extremely effective medicine for heart attacks. In 2035, another starts a company making cars that get 400 mpg. Yet because she works at a low-paying Catholic school and never marries, she never makes enough money to save much herself.

Or imagine a soldier who fought in Operation Iraqi Freedom. He was shot in the leg and it had to be amputated. For the rest of his life, he works as a janitor. Perhaps he could have made more of himself, but his amputation made him uncomfortable around people, and he never tries. He never saves much either.

Do this teacher, do this veteran, deserve a modest share of America's increased wealth when they retire in 2050?

Peter Wehner says: NO WAY.

But most Americans say: YOU BET THEY DO.

That's why Social Security is so popular. It's fair, relatively painless, and it works. And that's why the Bush administration's only way to undermine it is to tell ridiculous lies.

5. Peter Wehner is a complete joke, but not a funny one.

It's a matter of faith among privatizers that the "return" on Social Security is too low. They talk about this constantly. And yet... Wehner is telling us the return on Social Security is too high.

Huh. It's almost like they'll say anything at all, no matter how contradictory, to make their case. This seems to remind me of something, but I just can't remember what it is.

* * *

Well, I could go on talking about this for the rest of my life. Indeed, I probably will. But not in this specific post.

January 07, 2005

Breaking News: I LIVE ON MARS

On Monday, Bush minion Peter Wehner sent an email to "opinion leaders," outlining the Bush strategy for Social Security. You can see it in its entirety at Brad DeLong's site. But here's an important excerpt:

Here's a startling fact: under current law, an average retiree in 2050 would be scheduled to receive close to 40 percent more (in real terms) in benefits than an average retiree today -- and yet there are no mechanisms in place to produce the revenue to pay out those benefits. No one on this planet can tell you why a 25-year-old person today is entitled to a 40 percent increase in Social Security benefits (in real terms) compared to what a person retiring today receives.

Wow! This is very interesting for me, because I can tell you why a 25 year-old person today is entitled to a 40% increase in Social Security benefits. In other words, I'm not on this planet.

You see, this is why it's important for me to keep up with the news. I've previously found out from the Washington Post that I'm irresponsible, and from the New York Times that I'm unreasonable. Fortunately, that doesn't matter, since I found out by reading Christopher Hitchens that I don't exist. And yet somehow I'm Swedish.

So, to recap: I am an irresponsible, unreasonable non-existent Swede living on Mars.

The surprising thing is how many of us there are.

UPDATE: Is it possible that Peter Wehner was not HIMSELF on earth when he wrote that email? Maybe he sent it from a small ship bobbing on the cold hydrogen seas of Saturn. In other words, I may still be here on the third planet from the sun!

In any case, modern life is very confusing.

January 06, 2005

Thank God Our Leaders Are Completely Different From Saddam Hussein

Previous installments in this long-running series can be found here, here, here, here, here, here, here, here, here and here.

Air America's website quotes this from the Nelson Report (via Atrios):

There is rising concern amongst senior officials that President Bush does not grasp the increasingly grim reality of the security situation in Iraq because he refuses to listen to that type of information. Our sources say that attempts to brief Bush on various grim realities have been personally rebuffed by the President, who actually says that he does not want to hear “bad news.”

Rather, Bush makes clear that all he wants are progress reports... Our sources are firm in that they conclude this “good news only” directive comes from Bush himself... the information/intelligence vacuum at the highest levels of the White House increasingly frightens those officials interested in objective assessment, and not just selling a political message.

Now, compare that to the final CIA WMD report about Saddam Hussein's regime:

WEAVING A CULTURE OF LIES

The growth of a culture of lying to superiors hurt policymaking... Lack of structural checks and balances allowed false information to affect Iraqi decision making with disastrous effects...

Key commanders overstated their combat readiness and willingness to fight... [officers] later admitted misleading Saddam about military readiness...

[Presidential Secretary] ‘Abd said key Regime members “habitually” concealed from Saddam unpleasant realities of Iraq’s industrial and military capabilities and of public opinion. Fear of the loss of position motivated this deception, which continued until the final days of the Regime.

Asked how Saddam treated people who brought him bad news, ‘Ali Hasan Al Majid replied, “I don’t know.” ISG assesses that ‘Ali Hasan Al Majid has never known any instance of anybody bringing bad news to Saddam.

The WMD report also says "More conscientious members of the Regime sought to work around sycophantic or timid superiors by cultivating alternative, direct lines of communication to Saddam."

Compare that, to this:

The CIA findings were leaked, wrote the Inquirer's John S. Landay, because "senior policymakers" have become frustrated by their inability "to provide Bush with more somber analyses of the situation in Iraq than the optimistic views presented by Vice President Cheney, Secretary of Defense Donald H. Rumsfeld, and other hard-liners."

Yes indeedy-do. Thank God our leaders are completely different from Saddam Hussein.

You Can Never Have Too Many Jokes About Social Security

This is the kind of joke that requires explanation. Which is to say, not a joke at all... at least, if you define jokes as "things that make people laugh." Generally, people don't laugh when you have an hour of explanation about actuarial estimates before the punchline.

So, here's the explanation:

We hear constantly about the looming Social Security crisis. Sure, it's doing great NOW, conservatives will say. But just wait until the baby boomers retire! Then the elderly will be so powerful that they will eat us all! Or something like that.

But all these claims about us being gobbled up by granny are based on projections made by the Social Security Administration. By law, the SSA must project SSA's finances 75 years into the future.

This has meant, for reasons too mathematical to go into, that Social Security has always shown a shortfall at some point in their projections. (Often, a much larger shortfall. See point #6, here.) Yet somehow, it's never happened. No one has ever missed a Social Security check. EVER.

Keep that in mind, and go check out this table from the Economic Policy Institute.

Essentially what this says is: in 1996, the SSA predicted a shortfall (ie, "Trust fund depletion date") in 2029. Yet with each succeeding report, the shortfall moved further into the future. In the latest (2004) report, the shortfall is predicted for 2042.

We've moved eight years into the future, yet the shortfall has moved thirteen years into the future. Thus in my capacity as expert actuary for this webpage, I have calculated that as every year passes, the shortfall will move 1.65 years into the future. Therefore, 100-year projections show that in 2104, the shortfall will be predicted for 2207. (2207 equals 2042 plus 165.)

Now that we've gotten that explanation out of the way, let's move onto the joke:

Republicans of 2104 will talk constantly about the "looming Social Security crisis" of 2207 and their plans to "save" it.

Now if you dare, you may also read on... for an

ALTERNATE BORING JOKE FOR THINK TANK ECONOMISTS

Alternately, the Social Security shortfall will have disappeared by 2061. However -- the Cato Institute still won't shut up about it.

Joke explained in math:

13/8=1.65
2042-2004=38
75-38=37
37/.65=56.9
2004+56.9=2060.9

UPDATE: Math corrected to be correct. However, the jokes have not been made funnier.

Five Senators, Eight Representatives To Challenge Ohio Election

David Swanson has this breaking news:

Five senators and eight representatives are going to vote to challenge the electoral votes from Ohio in the joint session of Congress called today to certify the election.

The senators are:

Barbara Boxer (CA)
Chris Dodd (CT)
Harry Reid (NV) (EXCELLENT)
Hillary Clinton (NY)
Barak Obama (IL)

The representatives are:

John Conyers
Stephanie Tubbs Jones
Dennis Kucinich
Jesse Jackson Jr.
Maxine Waters
Robert Scott
Mel Watt
Jerrold Nadler

If your people are on this list, you can call and thank them at (202) 224-3121 or 1-800-839-5276. If they're not, you can call and urge them to do so (there's still time, but not much) at the same numbers.

Bob Harris On The Tsunami

Bob has thoughts here and here on the tsunami, and what he saw while traveling back from Australia (where he was when it happened).

January 05, 2005

Max Sawicky, Defender Of The Aged

Max Sawicky is on the radio right now talking about Social Security. Check it out here.

O My Sweet Lord, This Is SO BORING

The only thing that allows me to keep paying attention to Social Security is my admiration for the Bush administration. That admiration overcomes the inherent boring-osity of the subject.

I admire the Bush-ites because they're trying to pull off the greatest heist in world history. And not under cover of night, but in broad daylight. If they manage it, they will be the greatest thieves who've ever lived.

So on a moral level they're hideous. But I do enjoy their moxie.

For instance, there's Charles Blahous. He's "Special Assistant to the President for Economic Policy," and is leading the charge on Social Security for Bush. And he has got moxie coming out of his ears. I hate to think of his dry-cleaning bills, since all his clothes must be stained with moxie.

For instance, there's this Washington Post article:

Blahous focuses his attention on the year 2018, when the Social Security payroll tax receipts will not cover benefit payments. "The government does have to come up with more money after 2018; that is the fiscal reality," he said.

Let's assume this matters, even though it doesn't. (I don't have the energy to explain why... although I will muster the energy if anyone wants me to.)

So, we're assuming that the government coming up with more money in 2018 is important. 2018 is the arrival of the terrifying crisis we've heard so much about.

Well, GUESS WHAT? Bush's plan will move up the date when the government has to come up with more money. According to this Congressional Budget Office analysis of Bush's plan, "outlays exceed revenues starting in 2007."

That's right -- if George Bush has his way, the "crisis" doesn't arrive in 2018. It gets here TWO YEARS FROM NOW.

In fact, there's no crisis. There would be no crisis under Bush's plan, nor under the current system. (Well, Bush's plan would cause a crisis for many retirees -- just not for the government.)

It's just funny that Blahous is such a shameless con man. He tells us that there's a problem arriving in 13 years. But he doesn't mention that the snake oil he's selling makes the "problem" arrive in two years.

(I realize this makes zero sense to the uninitiated. So ask if you're confused, and care.)

January 04, 2005

God Damn John Kerry And His God Damn Lies

I'm sure other people will be all over this soon, but I want to be the first to get out there and say this: GOD DAMN JOHN KERRY AND HIS GOD DAMN LIES ABOUT BUSH AND SOCIAL SECURITY.

Via Max Sawicky, we now have a good idea of what specifically Bush is going to propose for Social Security. AND IT SHOWS JOHN KERRY DID NOTHING BUT LIE ABOUT IT.

As you may remember, back in October, John Kerry's god damn campaign released an ad saying this:

“The truth is coming out... George Bush has finally admitted that he intends to privatize Social Security in a second term. ‘I'm going to come out strong after my swearing in,’ Bush said, ‘with…privatizing of Social Security...' Bush has a plan that cuts Social Security benefits by 30 to 45%. The real Bush Agenda? Cutting Social Security.”

John Kerry even claimed Bush planned a "January Surprise" to push for this. Fortunately, GOP chairman Ed Gillespie was around to tell the truth -- that Kerry was being "just flat inaccurate."

This is obvious now. I mean, it's January. And what does Bush's plan call for?

SS

Just to repeat so this is absolutely clear: John Kerry said Bush planned to cut Social Security benefits by 30-45%. As we now see, the truth is exactly the opposite: Bush plans to cut Social Security benefits by 30-45%.

WHERE'S YOUR APOLOGY, MR. KERRY? WHEN WILL YOU APOLOGIZE FOR YOUR GOD DAMN LIES???

*cough*

Seriously, though, this is amazing. The percentages provided above include the returns on private accounts... which means guaranteed benefits (like all Social Security benefits now) will be significantly lower. In other words, someone retiring in 2075 who invests badly will see a much greater cut in benefits than 45.9%.

Moreover, as Monsieur Sawicky points out, Bush's plan will cut benefits beneath what they'd be with no changes to Social Security at all. So Bush's plan is to make things worse for retirees than they would be under circumstances Bush calls a "crisis."

UPDATE: Perhaps I'm wrong that the graph above includes returns on private accounts. The Washington Post article I swiped it from is unclear. I assumed it was, because the graph (from the SS actuary) is very similar to numbers found in this Congressional Budget Office report.

Here's a comparison:

The CBO report (in Table 2) gives the annual scheduled benefit for a middle-income retiree born from 2000-2010 as $26,400. They project the same person would receive $14,600 in annual benefits (including the return from private accounts) under the plan Bush will likely propose.

14,600 divided by 26,400 equals .553 equals 55.3% equals a (100-55.3) 44.7% cut in benefits.

Meanwhile, the graph I swiped gives a cut of 45.9% for someone retiring in 2075. So I think I was right that it includes the return on private accounts. But I'm not sure, because of some other numbers the Post article throws around. I will call the SSA tomorrow and find out.

Kudos To Andrew Sullivan For Proving Our Violent Idiots Are As Clever As Their Violent Idiots

The New York Times Magazine ran a long story on Sunday about Al Arabiya. Al Arabiya is a 24-hour satellite news network broadcasting from Dubai. According to the story, they see themselves as CNN to Al Jazeera's Fox News.

And so, Al Arabiya has come under attack in Iraq from self-described jihadists:

In late October, a suicide bomber detonated a car bomb outside the Al Arabiya compound in the Al Mansour neighborhood in Baghdad, killing five, wounding dozens and destroying the channel's Baghdad office... A group called the Jihadist Martyrs Brigades took credit for the attack. In its dispatches, members had criticized Al Arabiya for giving the new Iraqi government overly favorable coverage. They called Al Arabiya a ''terrorist channel'' and suggested that its name, which means ''the Arab,'' should be changed to ''the Hebrew.''

I grew quite concerned when I saw this. I mean, that's pretty funny! To make a quip implying your domestic "opponents" are really on the side of your foreign "opponents"! No one's ever thought of THAT before!

Could it be, I wondered, that Iraq's hate-filled morons are more clever than our hate-filled morons? Do we suffer from a Clever Hate-Filled Moron Gap?

Fortunately, this article by Matt Welch informed me that, during the invasion of Iraq, Andrew Sullivan liked to call the BBC the "Baghdad Broadcasting Company."

Ha ha ha! Oh, I'm shaking with merriment! How can we bear to live in a world with people so incredibly witty!

So, I don't have to be worried any longer. Thanks to Andrew Sullivan for demonstrating that our hate-filled morons are EVERY BIT AS CLEVER as Iraq's hate-filled morons. Thank you, Andrew. Thank you.

Congratulations To My Father!

Yesterday my dad retired after 42 years working for the United States -- first in the army, then at the Department of Defense, and then at the National Geodetic Survey, which is part of the National Oceanographic and Atmospheric Administration, which is part of the Department of Commerce.

He worked as a geodesist, meaning his focus was geodesy -- which is "The geologic science of the size and shape of the earth." If you want to know about how the earth is not a perfect sphere -- and who doesn't want to know that? -- he's the man to see.

Nowadays NGS does fancy stuff like mapping the ionosphere, but they are all about mapping in general. Not surprisingly, Lewis and Clark are admired by many people in my father's line of work, including him.

You may not appreciate how important ultra-accurate maps are to life today, but they are. Oh, are they ever. Details on request.

My father may continue working in his field (which has become less mapping and more computers) in other ways, but still, today is a momentous day. And all his family sends him love and good wishes as he heads into this unmapped territory.

January 03, 2005

The Editors Have Bested Me Once Again

God damn it.

1. Here:

The great untold tragedy of our age is how often I get the feeling that Public Enemy songs are secretly about my life.

Don't miss the article by Robert Higgs to which the Editors point:

In a characteristically unwitting way, President George W. Bush himself stumbled upon a resolution of the seeming paradox when he told Time magazine’s interviewer last summer that the war had proved to be a “catastrophic success”... the term “catastrophic success” does express the character of the war precisely. We need only bear in mind that the catastrophe afflicts one set of people, whereas the success accrues to an entirely different set.

Moreover, to appreciate the war’s success, we must keep in the forefront of our thinking the instrumental rationality of its perpetrators. We must ask: Who bears the responsibility for launching and continuing the war? What are these individuals trying to achieve? And have they in fact achieved these objectives? Having answered these questions correctly, we shall be obliged to conclude that the war has been a huge success for those who brought it about, however disastrous it has been for many others, especially for the unfortunate people of Iraq.

It was, of course, also a disaster for the American dead and wounded.

This makes me think of nice liberals who criticized Ariel Sharon during the most violent phase of the recent intifada. They'd say: Ariel Sharon has failed! He hasn't kept Israelis safe from terrorism!

Which always made me wonder: Uh... what makes you think Ariel Sharon was trying to keep Israelis safe from terrorism?

It always seemed to me that Ariel Sharon's goal was getting into power and staying there. It's not that he wants Israelis to die. (Well, probably he doesn't.) It's just that if keeping Israelis safe and him getting into and staying in power come into conflict, well... lots of Israelis have to die.

2. And here:

Remember: sometimes, up is down AND up.

I myself have always planned to make the same general point made here by the Man de la Poor. But I never got around to it. Thus, I am embittered.

In this specific case, we had this progression:

A. Gigantic tsunami
B. Desperate need for assistance from richer nations
C. Shamefully small offer from the US
D. Vociferous criticism of shamefully small offer
E. Bitching and moaning, like that by John Podhoretz, about vociferous criticism:

Even as tears spring into the most hard-hearted person's eyes at both the unimaginable scope of the tragedy and at the wrenching individual stories of loss, opinion leaders just can't help themselves. They are using this cataclysm as little more than cheap debate fodder about the nature and character of the United States, its president and its citizens.

F. Heat felt by George Bush and others via vociferous criticism
G. Huge increase in aid from US in attempt to reduce heat

As the Editors say:

It's not pretty, but it's the way things work... not nice to look at, but it moved $300+ million in the right direction.

Yes: the way things work. The people in charge don't do the right thing because they are nice. You don't get to be in charge by being nice -- not here and now, and not in any country ever. But the saving grace of democracy is that the people in charge WILL do the right thing, if they're made to feel NOT doing the right thing means they'll stop being in charge. That's what they actually do care about, and that's why vociferous criticism matters.

I guarantee if you dug up old Soviet newspapers from after the Chernobyl meltdown, you'd find bitching and moaning just like that of Podhoretz -- bitching and moaning about how liberal elites were saying the Soviet government should be more open and do more to help the people effected by the disaster.

In fact, Podhoretz is so lazy, maybe he just swiped an editorial from Pravda and changed a few words:

Even as tears spring into the most hard-hearted person's eyes at both the unimaginable scope of the tragedy and at the wrenching individual stories of loss, opinion leaders just can't help themselves. They are using this cataclysm as little more than cheap debate fodder about the nature and character of the Soviet Union, its politburo and its citizens.

January 02, 2005

Let's Take A Trip To The Land Of Boring Graphs About Social Security

I'm going to write a lot about Social Security this month. As I've mentioned before, I took a wrong turn in life and learned a gigantic amount about this unbelievably boring subject. In fact, Social Security is probably the only subject I actually do know a lot about... except perhaps Iraq's missing WMD and the starting lineups of the 1979-86 Washington Redskins.

BUT -- as boring as Social Security is, it is extremely important. Indeed, it is probably the most important achievement of America's democracy. It allows us to join together and do for ourselves what we could NEVER do as individuals. It has made the lives of millions of Americans better.

For instance, because of Social Security, my grandmother -- who had been a divorced single mother supporting herself for many years -- was in her old age able to live in her own apartment, independently, with dignity and without anxiety or feeling she was a burden on my father and aunt. She told me many times how grateful she was for this.

Now, there's some good news and bad news about Social Security.

The bad news is this: GEORGE BUSH WANTS TO DESTROY IT. He does not plan to "reform" Social Security, or "strengthen" it. He wants to kill it. He wants to turn the clock back to a time when old people starved in the streets. He wants to force us to give billions of dollars to Wall Street. And most important, he wants Americans to fight each other for scraps, rather than using the government to join together to cooperate in making things better for everybody.

This is the real reason people like Bush have hated Social Security since its birth. They want us fighting each other. They don't want us to realize that when we work together, and care about each other, we can do amazing things.

Social Security is a living, breathing example of this. That's why they want to strangle it.

And that's why WE MUST WIN THIS FIGHT. The dismantling of Social Security would perhaps be an even greater disaster, for even more people, than the invasion of Iraq. This is no joke, just like the 1000+ Americans coming home to lie in the cold ground is no joke.

The good news is, we can win this fight. That's because Social Security is absolutely fine. I realize this may be hard to believe, considering what you hear every day from Bush, other politicians, and newspapers and TV. But just remember: all of them also told you that Iraq definitely had terrifying Weapons of Mass Destruction. There was no question about it! Everyone agreed!

They are being just as honest here.

So we can and should win. But this will only happen if we educate ourselves, fast, and then mobilize.

That's why I'm writing this. There is little out there -- really, almost nothing -- that explains Social Security in a way normal humans can understand. I'm hoping to fill that gap.

So I would greatly appreciate any feedback you have on this. I want this to be clear, easy to understand, and fun to read -- and to answer all the questions people have about this. Please check these posts out, and let me know if I've failed in any way or there are ways it can be improved.

This will arrive in different chunks, but eventually I'll pull it together into a coherent whole. The coherent whole will probably have three parts:

Part I

For people who don't care about the details.

This part will say: THERE'S NOTHING WRONG WITH SOCIAL SECURITY, AND WE'VE GOT TO STOP GEORGE BUSH FROM KILLING IT. That's all you really need to know.

Then there will be tips on what actions you can take.

Part II

For people who want to know a little more, either for themselves or so they can discuss it with family and friends.

Here I'll provide a few easy to read graphs, etc. This will be similar to this page by the economist Dean Baker, co-author of Social Security: The Phony Crisis. In fact, it will be more than similar -- I'll probably just rip it off in its entirety.

As it happens, I worked for Baker briefly several years ago; in fact, I helped fact-check The Phony Crisis. (This is how I learned so much about this without dying of boredom -- I was being paid.) Baker is one of the most intelligent and honest people I've ever met, and I recommend all of his work on this subject. You can find some of it here.

Part III

For people who really want to know the nitty-gritty.

Most of what I've written below will go in this part.

* * * CAUTION CAUTION CAUTION Remember that the stuff below is for people who want a more indepth explanation... Parts I and II will be easier to read.

A. Retirement: What Is It? And Why Can't I Retire Before I Start Working?

Let's start with some basics.

Before understanding Social Security, you have to understand something else: retirement in general.

(DON'T SKIP THIS -- it's important.)

There hasn't always been such a thing as retirement, and certainly no such thing as organized retirement. You worked on the farm or in the factory until you died. And if you became unable to work before you died, you had to hope you had children who could take care of you. If not... well, you usually weren't alive much longer.

But gradually societies became richer. There was enough food, housing, etc. produced every year that older people could actually stop working -- and not die! This was a big step forward. Frankly, many jobs suck. And if you can stop working when you get old, yet not die, this makes life much nicer.

Here are some of the suckful jobs:

• working in a mine that every now and then collapses on you
• working on a farm with a thresher you occasionally fall into
• being the personal assistant of Diana Ross

The important point to grasp about all this is the basic fact about what retirement is -- no matter what country you're in, no matter what year it is, no matter what retirement is called. So, here's the basic fact:

Every year, a certain number of people are working. Other people aren't -- mostly children, retirees, and those so rich they don't have to work.

Every year, the workers produce a certain amount of stuff. This stuff must be divided among them, AND all the people who aren't working.

For children, their share usually takes the form of money earned by their parents. For the idle rich, their share is usually called "return" on "investments." For retirees, their share can be called many things: Social Security, a pension from the business they worked in, their own investments, etc.

That's what retirement is. Younger people who are working give retirees some of what they produced that year.

IT'S JUST THAT SIMPLE.*

It's very, very important to remember this when you hear people talking about Social Security, and about "saving" or "investment."

REMEMBER: Individuals save, but societies as a whole DO NOT. In other words, let's say you want to "save" so you can eat in 50 years. This doesn't mean you put corn in a cave that you will take out and eat in 2055. Instead, you give some of your extra corn to people who eat it now... in return for which, you get to claim a portion of the corn that will be produced in 2055.

* Well, actually it's not quite that simple. But it's almost that simple. I will explain some of the complications at a later date.

* * *

B. Social Security: What Is It? And, How Can I Get Me Some?

Now, some more basics: what does this mean to us, Americans living in the exciting 21st century, where we apparently can clone our deceased pets?

Okay:

Every year, American workers produce lots of stuff -- cars, potatoes, steel, houses, clones of dead pets, songs called "Oops!...I Did It Again," angry little websites. And so forth.

All of this added together is called the Gross Domestic Product, or GDP. According to the World Bank, in 2003 the American GDP was worth 10.89 trillion dollars. As I say: lots of stuff.

A certain portion of the GDP is handed over to retirees. For richer retirees, some of this portion is called "return" on "investments" (either via private savings, a pension from a former employer, or both).

And -- another portion of what's handed over to retirees is called "Social Security."

Here's how Social Security works:

Money is taken out of the paychecks of current workers, and handed over to retirees. It all goes directly to the recipients (except for a teeny-tiny amount the government takes to pay for the Social Security Administration's computers, staff, etc.).

IT'S JUST THAT SIMPLE.*

In 2003, the amount handed over to beneficiaries via Social Security was $479.086 billion. This was 4.40% of the 2003 GDP.

For those interested in the math:

This page from the latest official Society Security Trustees report gives total 2003 disbursements from the OASI Trust Fund as $405.978 billion, and total disbursements from the DI Trust Fund as $73.108 billion.

$405.978 billion + $73.108 billion = $479.086 billion

The World Bank says 2003 GDP was $10,881.609 billion

479.086 billion / 10,881.609 billion = .04402713 = 4.40% of 2003 GDP

* In this case, it really is that simple. Sort of. What's called "Social Security" includes the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. OASI money is taken out of current workers' paychecks and handed over to retirees and survivors (children and spouses) of workers who've died. DI money is taken out of current workers' paychecks and handed over to those disabled by workplace injuries.

BUT -- the bulk of Social Security goes to retirees. And that's the part of Social Security that's supposedly a problem. So throughout this, I'm just going to lump it all together.

* * *

Whew. Well, thanks for reading this far. Check back later tonight here for more, including the promised graphs.

Okay, I wasn't telling the truth about the graphs being here "later tonight." But they will arrive soon, and I'll put a notification on front of the site when they're done.

The Frog & Peach & Killing Innocent People

James Wolcott reads The Economist, so we don't have to (via Atrios):

There is only one traffic law in Ramadi these days: when Americans approach, Iraqis scatter. Horns blaring, brakes screaming, the midday traffic skids to the side of the road as a line of Humvee jeeps ferrying American marines rolls the wrong way up the main street. Every vehicle, that is, except one beat-up old taxi. Its elderly driver, flapping his outstretched hands, seems, amazingly, to be trying to turn the convoy back. Gun turrets swivel and lock on to him, as a hefty marine sargeant leaps into the road, levels an assault rifle at his turbanned head, and screams: 'Back this bitch up, motherfucker!'

The old man should have read the bilingual notices that American soldiers tack to their rear bumpers in Iraq: 'Keep 50m or deadly force will be applied.' In Ramadi, the capital of central Anbar province, where 17 suicide-bombs struck American forces during the month-long Muslim fast of Ramadan in the autumn, the marines are jumpy. Sometimes, they say, they fire on vehicles encroaching with 30 metres, sometimes they fire at 20 metres: 'If anyone gets too close to us we fucking waste them,' says a bullish lieutenant. 'It's kind of a shame, because it means we've killed a lot of innocent people.'

Wolcott adds:

There's a Peter Cook-Dudley Moore routine, one of their woolgathering dialogues, where Dud asks Pete, "So would you say you've learned from your mistakes?" and Pete replies: "Oh yes, I'm certain I could repeat them exactly."

That seems to have been the Bush administration's approach to Iraq. Take the mistakes of Vietnam and repeat them exactly.

The Peter Cook-Dudley Moore routine Wolcott is talking about is "The Frog & Peach" from their show Good Evening. It's an interview with Sir Arthur Streeb-Greebling, proprietor of a disastrous restaurant by that name. It serves only two dishes: frog a la peche, and even worse, peche a la frog.

You can read a transcript here. But you really need to hear Peter Cook, comedy genius, to get the full effect. And really, why bother when you have the even greater comedy genius of the US government right there on TV.

Dudley Moore: Well, it all sounds rather disastrous to me.

Peter Cook: Catastrophic, I think, would be a better word for it.

The People On Wall Street Are Beautiful Human Beings

The Washington Post pointed out something interesting yesterday:

President Bush's political allies are raising millions of dollars for an election-style campaign to promote private Social Security accounts... likely contributors include the financial services and securities industries.

"It could easily be a $50 million to $100 million cost to convince people this is legislation that needs to be enacted," [Stephen] Moore [head of the Club for Growth] said.

What's so profoundly moving about this is that Wall Street will not make any money off Social Security privatization. As I've mentioned before, the Wall Street trade group, the Security Industry Association, has researched this. And it turns out there's no windfall in it for Wall Street!

I find myself tearing up as I think about this. These people, these good, good people, are spending all this money for Social Security privatization, purely for OUR benefit. They have no other reason to do so. It's just because Wall Street CARES about us, their fellow citizens. How lucky we are to share this planet with people so full of public spirit.

Now, it's true there are some cynical bastards out there who'll tell you different. One of these jackasses has said things like:

"When these political action committees give money, they expect something in return other than good government."

Indeed, this guy even calls this kind of thing "sewer money."

But what does he know about politics and money? He was only a senator for 28 years, and the Republican candidate for president in 1996, and named Bob Dole.

We must pay no attention to such uninformed conspiracy theorists. Just sit back and enjoy the beautiful humanity of Wall Street.

UPDATE: Sadly, the world is full of ignorant assholes like Bob Dole. At least the guy who said this is dead:

Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration... The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public... The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

I urge you, if you want to understand economics at all, to NEVER read anything by this douchebag. Just so you can avoid him better, I will mention that his name was Adam Smith, and he wrote that in some dumb book called The Wealth of Nations.

Dennis Perrin Shoots, Dennis Perrin Scores

Dennis Perrin continues to pump out some righteously clear writing. I particularly recommend this post about the untimely death of Reggie White.

Since my days of fanatic sports fandom are behind me, I had no idea Reggie White had said quite this many unpleasant things. I still care about sports, and feel pity for those people who don't realize they are THE ONLY THING THAT GIVES LIFE MEANING. But I want to spend most of the time I have for sports doing them myself, rather than thinking about other people doing them.

This doesn't mean I scorn those who expend lots of effort thinking about such things. They're probably using their time more productively than someone who (for instance) obsessively tends to a website named "A Tiny Revolution."

January 01, 2005

Urgh

An anonymous reader wrote in to make me feel even more nauseous about the horrific effects of the tsunami. See the Oily Mess website, here. According to a Wall Street Journal article the site liberally excerpts, a certain type of economic development may have destroyed natural features -- coral reefs, sand dunes, mangrove forests -- that would have mitigated the tsunami's fury and lowered the death toll.

As Oily Mess says:

Governments in India, Indonesia, and Thailand are so eager for export-oriented development that they have encouraged the widespread elimination of mangrove forest and coral reef coastlines in exchange for hotels, shrimp farms, and ports... And what do we use mangrove wood for? According to my pal the food industry consultant, they make the most splinter-free chopsticks. Ah yes, now I can eat farmed shrimp with mangrove disposable chopsticks. Can we cook the sauce from the blood of the local people?

Ha ha! Yes, I've always felt we'd have a different economic system if, like conscientious hunters, we had to eat what we killed.

ALSO: Stevan Alburty mentions in comments that it would be worth pressuring the people planning the parties after Bush's inaugeration to cancel them and give the money to the tsunami victims. His thoughts are here.

ALSO ALSO: If you've ever wanted to shoot televisions in public places, or at least make them stop their goddamn yakking, this article in the New York Times will give you hope.