Social Security

One traditional Democratic campaign claim has been that the Republicans want to do something bad to Social Security. They often do, but they've been foiled so many times that this claim has taken on a "boy who cried wolf" quality. That's sad, because this administration actually does have the Social Security system dead in its sights. Press Secretary Scott McClellan fired off the first rhetorical salvos:

The President will be meeting with a bipartisan group of congressional leaders to talk about the importance of moving forward on strengthening Social Security for future generations. Today's system is unsustainable; younger workers are facing massive tax increases or massive benefit cuts if we don't act. And the President believes very strongly that we need to move forward now and not pass this problem on to future generations. He also looks forward to hearing from members of Congress about some of their ideas about how we can work together to get this done.

You've got to hand it to Scott; there are so many whoppers in there the press hardly knew what hit 'em.

1. Do serious observers believe the President actually believes in Social Security for future generations? I don't. I think, in his heart of hearts, he believes that a fully private retirement system would be ideal, and that his proposal for individual accounts is the first step. Give everyone their money back, and let them make their own choices. (I guess he never was told about how well that worked out in the old days, and why we have a government program now. Or maybe he just likes the thought of little old ladies selling pencils from tin cups on the sidewalk.)

2. Today's system is not unsustainable. As the emminent Krugman writes this morning:.

Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem.

But it's a problem of modest size. The report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of G.D.P. That's less than 3 percent of federal spending - less than we're currently spending in Iraq. And it's only about one-quarter of the revenue lost each year because of President Bush's tax cuts - roughly equal to the fraction of those cuts that goes to people with incomes over $500,000 a year.

Given these numbers, it's not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come.

3. The President clearly does want to pass a problem on to future generations, since the proposal being floated involves what Scott so whimsically calls "some up-front transition financing" in the form of massive borrowing, using a cockamamie logic that (real) borrowing now would be cheaper than (hypothetical) borrowing in the future. (I'm guessing that the fact that the (real) borrowing now would also effectively transfer into (real) money now in the pockets of his financial-services supporters didn't slip by him.)

4. Does anyone really believe the man who has surrounded himself with yes-people Cabinet appointments actually is looking forward to hearing ideas from Congressmen? Except for maybe a run-down of the bizarre floor tactics they intend to use to keep it from ever being debated there? Do we think he'll be sitting down with some Democrats to hear why this is the stupidest idea since attacking Iraq?

Tune in to this one early, folks. It promises to get serious. You can hear the engines of deception cranking up now. Read Krugman for some vaccination.