CULT OF DUMB: Thirty years later!

THURSDAY, NOVEMBER 3, 2011

Part 3—Your side can’t explain and has failed: Can we talk?

The mainstream press corps simply [HEART] the sexy-time Herman Cain sex chase.

We know, we know: Sexual harassment is not about sex! Except it is—for the mainstream press! Just consider the way this sexy-time tale has played in the New York Times.

This morning, Cain sits at the top of the Times front page. But then, Cain has sat at the top of page one for three consecutive days now! These sexy-time, three-part headlines have all appeared at the top of the Times front page this week. We’re looking at our hard-copy newspapers as we type them up:
Tuesday, November 1:
CAIN CONFRONTS CLAIM FROM 90s OF HARASSMENT
HE DENIES WRONGDOING
New Media Whirlwind Becomes Exercise in Damage Control

Wednesday, November 2:
CAIN ACCUSER GOT A YEAR’S SALARY IN SEVERANCE PAY
CHARGE OF HARASSMENT
Candidate Played Down Outlay by Restaurent Group He Led

Thursday, November 3:
CAIN SAYS PERRY IS ORCHESTRATING SMEAR CAMPAIGN
ACCUSES AIDE OF LEAKS
Denial by G.O.P. Rival—Third Harassment Case Is Reported
Long lists of reporters’ names adorn these thrilling sexy-time tales. The Times has pulled out all the stops to get you the full information. Compare this to the lazy, desultory attempts which were made to explain the Cain/Perry tax proposals and you see the way the balance of interest swings toward sexy-time tales.

(Sorry: Toward important news stories in which the press corps addresses key issues involving the rights of women!)

The post-journalistic cabal called the press corps adores these sexy-time tales. Last night, on our liberal cable channel, Lawrence O’Donnell spent the vast majority of his hour chasing this sexy-time tale all around. Earlier, Chris Matthews devoted about one-third of his program—the first one-third—to this same sexy-time topic, even though he burned two later segments trying to sell his new book.

“The third woman. Let’s play Hardball,” Matthews said as he started his program. Just so you can enjoy a good laugh, this is what this big nut said as he introduced his first guests:
MATTHEWS (11/2/11): We’ll get to the latest with the allegations against Herman Cain, but we start with this big foreign policy blunder this week.

Howard Fineman is Huffington Post’s editorial director and David Corn is the Washington Post (sic) bureau chief for Mother Jones. Both are MSNBC political analysts.

We’ve got to get to this new development here tonight, Howard. How do we weigh the fact this third woman—and now we’re getting to me a graphic depiction, at least, of what one woman is saying. “He offered—he asked me to go to the company apartment.” I’ll read, it’s on the— NBC News hasn’t independently confirmed these allegations, but let me read what the Associated Press is reporting late this afternoon...
Too funny! Chris “started with this big foreign policy blunder”—until the lure of "a graphic depiction" made him forget what he said! For the record, no one has spent more time tugging his dinghy while limning such sexy-time tales than this big socio has. And no, we haven’t done any deletions in that transcript. To watch that comical Hardball opening, go ahead—just click here.

Fineman and Corn knerw they mustn't laugh at the funny thing Matthews had said. For the record, Matthews harassed (liberal) women all through the Clinton-Gore years (and beyond), although the “liberal world” never complained. Now, he’s appalled by such conduct!

The mainstream press and our own cable channel are in love with these sexy-time tales. They devote big time and big reportorial effort to running down every detail. But when it comes to the biggest policy issues—the topics which define the shape of American life—a very different culture obtains within this small, stupid mafia. Just look what happened when the Washington Post ran that top-of-the-front-page report in this Sunday’s paper (click here).

Lori Montgomery did it again—she pushed the standard disinformation about Social Security’s impending failure. Let’s be fair: Some of her report was even accurate, or at least it was technically accurate—but all of her report was grossly misleading. Needless to say, Montgomery’s piece rated three headlines, just like Cain’s sexy-time tales:
Sunday, October 30:
Social Security adding billions to U.S. budget woes
‘CASH NEGATIVE’ MILESTONE CAME EARLY
Fearing backlash, parties reluctant to pursue fix
Montgomery’s report got a very big spread. The report itself ran almost 2500 words. Inside the paper, it was accompanied by a large, sprawling graphic.

Montgomery’s report was grossly misleading. It worked off various misleading frameworks which have been completely standard over the past thirty years. There was nothing new about what she said. It has all been said many times in the past, confusing tens of millions of voters over the past several decades.

And how sad! When this standard disinformation piece led the front page of the Washington Post, your thoroughly hopelessly “liberal” team didn’t know how to discuss it!

Paul Krugman is, by far, our smartest, most important player. It isn’t Krugman’s “fault”—not at all—that the “liberal” world has never developed a way to discuss this particular topic. A sensible person can’t expect Krugman to solve every policy and/or rhetorical problem. In the past dozen years, Krugman has been our team’s most valuable journalistic player by a good strong country mile.

But here’s the way Krugman critiqued that piece. This critique, by our smartest, most valuable player, just massively/totally fails:
KRUGMAN (10/30/11): Social Security Bait And Switch, A Continuing Series

Dean Baker is angry at the Washington Post for spreading disinformation about Social Security. He’s right, of course—and it’s shocking that a well-known fallacy is the subject of a “news analysis” that purports to inform readers.

You see, the WaPo makes a big deal of the fact that Social Security is currently taking in less in payroll taxes than it’s paying out in benefits. Yet this means nothing, except as a favorite point used to create confusion by those who want to kill the program.

I’ve written about this repeatedly in the past, but here it is again: Social Security is a program that is part of the federal budget, but is by law supported by a dedicated source of revenue. This means that there are two ways to look at the program’s finances: in legal terms, or as part of the broader budget picture.

In legal terms, the program is funded not just by today’s payroll taxes, but by accumulated past surpluses—the trust fund. If there’s a year when payroll receipts fall short of benefits, but there are still trillions of dollars in the trust fund, what happens is, precisely, nothing—the program has the funds it needs to operate, without need for any Congressional action.

Alternatively, you can think about Social Security as just part of the federal budget. But in that case, it’s just part of the federal budget; it doesn’t have either surpluses or deficits, no more than the defense budget.

Both views are valid, depending on what questions you’re trying to answer.

What you can’t do is insist that the trust fund is meaningless, because SS is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because SS is a standalone program. Yet that’s exactly what the WaPo claims.

This is what you call negative journalistic value added.
That explanation isn’t “wrong.” It’s something worse—it’s useless. You could never use that explanation to help average voterS understand what’s wrong with that Post report. It’s muddled, murky, wonky and geeky—unlike the carefully crafted talking-points which have produced the massive confusion upon which Montgomery drew.

As a way of informing regular voters, that explanation is a big gigantic fail.

This isn’t an indictment of Krugman; it isn’t his job to solve every problem faced by the liberal world. It is an indictment of that “liberal world” over the past thirty years. It’s an indictment of Dionne and Robinson and the people populating the “liberal journals.” It’s an indictment of Corn and Walsh and the rest of the clowns who kiss the keister of Matthews. It’s an indictment of the new Josh Marshal, who plays the fool and stuffs bucks in his pants. It’s an indictment of Chait and Ezra and the rest of the children who never get too far out of line in pursuit of good jobs at good wages.

It’s an indictment of the whole charade in which you’ve been told that you’re represented within the press. But more than anything else, it’s a failure. That post is an epic fail.

Thirty years into this nasty campaign, your side has wallowed hard this week, enjoying the fun of those sexy-time tales. The New York Times has spared no resources as it tries to run down the truth. But how amazing! After thirty years of disinformation concerning the Social Security program, Krugman’s hopelessly wonky post was the best your side could do. And it was a massive fail.

No, this isn’t Krugman’s fault. By light-years, he has been our most valuable journalistic player. But that post is a fruit of the culture of dumb—even though our self-impressed tribe is much too dumb to see it.

Tomorrow: The eds can’t imagine—again!

41 comments:

  1. Yes, the media interest swings toward sexy-time tales, or, if you like, toward important news stories in which the press corps addresses key issues involving the rights of women...as long as the alleged wrongdoer is a Republican.

    However, with Democrats, it's a different story.

    -- When Kathleen Willey asserted (not anonymously) that Clinton had embraced her tightly and kissed her on the mouth (not just made her feel uncomfortable), the Times didn't run three days of Page 1 headlines.

    -- When Juanita Broaddrick said Clinton had raped her, that barely made the news. (In fairness to the media, Broaddrick had previously had filed a sworn affidavit denying that Clinton had ever assaulted her.)

    -- The media sat on John Edwards' adultory for months, letting the National Enquirer finally do the real reporting and break the story.

    -- Time Magazine had been handed the Monica Lewinsky story on a platter. They chose not to publish, allowing Matt Drudge to break the story.

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  2. How about this Bob, why don't you write that transparent and understandable explanation of SS's finances and post it to your blog.

    The we "failed" liberals can quote you exclusively to the rabble.

    Did you even bother to read Dean Baker's analysis of the article?
    I can't see that you did from this post.

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  3. David in Cal,
    That's because the corporately-owned media is liberal. Even corporations know the choice between liberal and conservative is a no-brainer. That's how ridiculous conservative policy is: Even corporations won't support it on a bet.
    That is the point you're making, right?

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  4. Not @ David in Cal because it is pointless...but to other folks, is it not priceless that someone can actually claim the press does address sex claims when it comes to Dems? And especially when it comes to Clinton. I mean Weiner must be relieved to hear that.

    Howler....you've been 'indicting' people--albeit it rightly and accurately- for years now. Can we please get on to the 'trial' and 'sentencing'? We (or, I, anyway) think I get your point....the tribe of ours produces crazy commentators. Who are incompetent to boot. Agree. Any advice on how to move on? Or do we endlessly keep indicting people?

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  5. Krugman got many things right about SS, but he omitted a few key points.

    1. SS started running a deficit decades before it had been predicted to do so. This indicates that official estimates have been much too optimistic. There's every reason to believe they're still that way, because the SS actuaries are still using optimistic economic projections and mortality tables.

    2. SS beneficiaries have the right to full benefits, whether or not there's money left in the Trust Fund. However, Congress can change the law at any time, cutting or eliminating benefits, even for retirees.

    3. When SS is viewed as a part of the total federal budget, SS alone isn't in crisis. However, it is a major part of a crisis, namely the ongoing enormous federal deficit.

    4. Because of a bad accounting practice introduced during the Reagan Administration, even though SS hasn't used up its Trust Fund, SS's growing deficit increases the overall federal deficit.

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  6. David in Cal,
    I'll take it from your response that you agree that the corporate-owned media is liberal because they know conservative ideology is fail.

    Now to address your SS comment:
    1) SS actually isn't running a deficit (it has $2.3 Trillion dollars in it). But you are right that the official projections are optimistic. They didn't take into account the economic crisis easily predicted by anyone who knew the history of enacting conservative economic policies.

    2)That's a good reason to to elect Congress-people who support SS, instead of those who want to destroy it (i.e. liberals, not conservatives).

    3) Exactly, SS is no more a problem than the Dept. of Defense as far as the federal deficit is concerned. To point to SS as the cause of the "enormous federal deficit" is just bullshit. (Although it seems SS, as opposed to the DoD is self-funding. (Where's the DoD's $2.3 Trillion trust fund?)

    4) I think we can all agree that Reagan was one of the worst things to happen to this country, and the sooner we fix the problems he caused the better the nation will be.

    "...SS's growing deficit increases the overall federal deficit."
    Wrong. See point 1) about how the SS doesn't have a deficit. In fact, SS's $2.3 Trillion surplus DECREASES the overall federal deficit.

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  7. David-in-CA believes, it would seem in complete seriousness, that a Democrat-friendly media didn't spend much energy pursuing "sexy stories" about Bill Clinton.

    No one could possibly fake that much unintentional irony -- Give that troll his trophy now!

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  8. Oh please, Bob. Krugman's blog is wonkish, it's not for the general reader and has never been intended as Cliff Notes For Liberals or as a press release to the world.

    The Baker post to which Krugman linked has a comprehensive refutation of the WaPo original. Of course, Baker also presupposes a level of reader sophistication -- these guys are professional economists after all, not the liars, propagandists and polemicists of the other side we so lament.

    Krugman's bi-weekly column, by contrast, is written in the plainest language possible. Is it your demand that the blog perform the same service? What then happens to his academic career and his intellectual interests? Or do insist that he become a hack?

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  9. 'What then happens to his academic career and his intellectual interests?'

    Well Jesus...when you put it THAT WAY.

    *That's snark, by the way*

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  10. Robert, you're confusing deficit with debt. SS ran a deficit in 2010 and in 2011 because it paid out more than it took in. The SS Trust Fund is the acculated value of all the annual surpluses and deficits. This figure is now a positive $2.3 trillion, so SS is not in debt.

    SS's results shouldn't affect the overall budget deficit, but they do, because of Reagan's accounting change. What Reagan did results in double-counting assets. Here's how it works.

    SS has $2.3 trillion asset, namely the Trust Fund. SS has lent that money to the federal government. So, SS has an asset which is a receivable of $2.3 trillion. The federal government has cash of $2.3 trillion. The federal government should also book a liability of $2.3 trillion for the money they owe SS. Then the net of the SS and federal balance sheets would be 2.3 + 2.3- 2.3 = $2.3 trillion

    However, Reagan changed the booking in such a way the the federal budget doesn't show this liability. So, SS shows an asset of $2.3, but the federal government shows no offsetting liability. As a result, the combined federal and SS balance sheets overstate our assets by $2.3 billion.

    IIRC, the 2011 SS deficit was around $50 billion. From the POV of SS, their Trust Fund went down by this amount. From the POV of the federal budget, they actually sent $50 of cash to SS. If the federal budget had maintained a liability equal to the SS Trust Fund, they would have reduced their liability by $50 billion. Then the combination of their payment to SS and the reduction of their liability would have netted to zero.

    However, because the federal budget doesn't maintain such a liability, the $50 billion that the feds paid to SS goes right to their bottom line. That is, of the $1.3 trillion federal deficit in 2011, $50 million or so was the cash they sent to SS.

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  11. "How about this Bob, why don't you write that transparent and understandable explanation of SS's finances and post it to your blog."

    I think Bob's point is that doing that won't matter. He doesn't write for the Times or the Post, and he doesn't play Hardball. He's a comic, not an economist! Who's going to listen to a comic try to explain Social Security?

    The problem is that the Dionnes and Robinsons and Matthewses and Montgomerys fail to push back against the misinformation and triviality, either due to their own ignorance and/or laziness or unwillingness to threaten their own cushy positions and career prospects. Until and unless that changes, we're screwed.

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  12. Yes David, when a woman who swore the President of the United States had not raped her suddenly, and without evidence, swore the President had raped her, that did not make the news, except at Fox and NBC.

    Does it ever occur to you, as a right winger, that you are totally insane? The news SHOULD NOT carry baseless charges. Broaddrick's story, which by the way was wildly compromised by politics and perhaps a personal grudge (See Conason's "The Hunting of The President") was later further discredited when She wrote a half crazed "letter to the editor" about Hillary Clinton. Broaddrick was simply fishing for a dismissive word from Clinton, which She could turn into a cash settlement.
    The notion that the Press pulled punches on Clinton "scandals" is very foolish indeed, and I suggest you do some time with the archives of "The Daily Howler."

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  13. David in Cal,
    Of course SS ran a deficit in 2010. We have a REAL unemploymment rate of around 20% (thank you conservative economic policies).

    But, because of Reagan's accounting chicanery we KNOW that SS currently DECREASES the national debt by $2.3 Trillion. I don't see that being as big a problem as you do. In fact, where do other parts of the budget reduce the debt by any amount? How much does the DoD, for example, DECREASE the debt? None that I can see. In fact, it INCREASES the debt. In that case, fixing SS should be VERY far down on your list of priorities.

    Let's get back to the deficit, though. How can we decrease the SS deficit? Easy. By reducing unemployment. (A stimulus program--a REAL one, not one laden with tax breaks like the one passed in 2009--should do the trick).
    But how do we reduce the overall deficit, while spending to stimulate the economy? Just as easy, by eliminating the Bush tax cuts. That should reduce the deficit this year (and every year) substantially.

    I would love to see your screed about how the Bush tax cuts were just money stolen from the SS Trust fund and given to the nation's richest of the rich.

    I'm not sure I see your problem with SS. Although I'm 100% with you if you want to dig-up Reagan's body and piss on it.

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  14. Robert, here's one problem with SS. SS decreases the National Debt on paper by $2.3 trillion. But, that's only because of Reagan's phony accounting. With proper accounting, SS wouldn't reduce the National Debt. That debt reduction has no economic reality.

    Here's the long run problem: Under current law SS will run bigger and bigger deficits -- really big deficits. These can be dealt with three ways, but all of them are problematic:

    1. If benefits are cut, retirees will get less than they expected.

    2. If assessments are raised, that will burden all working people.

    3. If benefits and assessments aren't changed, SS will add greater and greater amounts to our already unsustainable deficits.

    And, don't forget that cuts in benefit and/or increases in assessments and taxes will hit people at the same time as other adjustments are being made because of the current deficit and the spiraling costs of Medicare and likely costs of Obamacare.

    Whether spending boosts the economy is questionable. FDR, Bush and Obama all tried stimulus. It didn't work for any of them. OTOH, there's no doubt that tax increases depress the economy.

    I think the evidence shows that a tax increase is more powerful than stimulus. That is, if the government enacts a new stimulus and raises taxes in order to pay for it, I think the impact would be a net depressive to the economy.

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  15. P.S. Robert, you seem to be double counting the end of the Bush tax cut. People want to end the Bush Tax cut to help reduce the deficit. Now you want to end the Bush tax cut to pay for a stimulus. Ending the Bush tax cut can't pay for both.

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  16. "You could never use that explanation to help average voterS understand what’s wrong with that Post report."

    In my view, Bob's main point of this post is found in that sentence. And in his ongoing work, I find this the most valuable critique.

    Everything rests on what the citizenry as a whole understands about its situation.
    Seems to me Bob's work is about being effective at helping the citizenry understand how their country's political elites are rigging the game and misleading and lying and so on.

    Something the left and centre-left, has done very poorly, including my tribe of environmentalists.

    We may be the most guilty of wonkery language and complex analyses/critique, and thus failed badly at translating our arguments and rebuttals into language used by average voters.

    I believe the average voters can't understand our critiques often simply because the words we use are simply foreign 'wonk' language. So we are also easily caricatured as 'egg-heads'.

    This isn't about dumbing down the language. It's about translating and using clear explanations that can be understood and become common understandings.

    I also greatly value Krugman's work, but I agree with Bob. Krugman's post on SS wouldn't work for average voters.

    I left white collar work a decade ago where my colleagues mostly had university educations, and have been on blue collar jobsites since. This particular explanation of SS by Krugman wouldn't settle in and have much traction with my co-workers in either working world. but especially not in the blue collar setting of course.

    The issues Bob raises in this post and similar posts I've read for a couple years are just as pervasive here in Canada by the way.

    For example, here is some current environmentalist wonkery: ecological integrity.

    This is THE leading term in advocacy for parks, wilderness and wildlife among staff and board members of environmental groups.

    Good luck finding an average voter who understands its meaning. Yet my colleagues persist in leading with it in public communications designed to explain our agenda. Good grief, eh?

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  17. "Here's the long run problem: Under current law SS will run bigger and bigger deficits -- really big deficits."

    So David in Cal is guaranteeing the economy is NEVER coming back. If it did, more people would be employed, wages would increase, the amount of FiCA revenue would increase, the SS deficits would decrease and perhaps be surpluses. All because of Reagan-led modern conservative policies crashed the economy and shot the unemployment rate through the roof.
    (BTW, when are we pissing on Reagan's body?)
    -----
    "There's no doubt that tax increases depress the economy."
    Not sure what you mean by this, but I don't think it's necessarily so. Sure, it could. But with the stimulus, more money will be in the system-- and despite what Reagan told you (yes, it all goes back to that horrific piece of shit) money moves UP in a capitalist society. With more money in the system comes more demand for goods, which drives entrepreneurship and employment (and wages, and FiCA revenues).

    Also, you forgot a fourth option: remove the FiCA cap.
    Let's flat tax FiCA first, and see how that goes. I'm betting it solves all foreseeable SS deficit issues so much, before long the FiCA rate will go down.
    ---------

    You're right. I doubled up on my accounting of the Bush tax cut revenue (just call me Dutch). No worries, we'll just stop the wasteful spending that drives up our deficits. Not entitlement spending (unless you mean the defense contractors who think they are entitled to your tax dollars) but REAL waste. How much do you think ending the drug war will save us? What about charging the defense contractors that ripped us off of $60 Billion in Iraq reconstruction funds and recouping some of that money?

    BTW, David in Cal, I've had this debate with conservatives in the past and I won't let them give me the horseshit about defense spending and the drug war.
    We either have so much money we can let defense contractors rip us off and continue to shovel cash at an unwinnable drug war or we don't. And it seems to me the guys running around like their hair is on fire screaming about deficits since January 20, 2009 seem to think we don't.

    Finally David in Cal, you should be in the occupy movement, since you seem to be the one who knows the economy is fucked for good due to the actions of Wall Street.

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  18. Robert, actuarial projections show that even when the economy recovers, SS will run bigger and bigger deficits, unless some aspect of the program is changed.

    Robert, you could be welcome in the Tea Party movement. You seem to know that the economy is fucked. Now all we need to do is convince you that the primary cause of the fuckup was actions by the government.

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  19. "FDR, Bush and Obama all tried stimulus. It didn't work for any of them."

    This sort of stuff shouldn't merit refutation, so much as laughter. But maybe there are a lot of people who think it makes sense?

    Cites for this dosh, David-in-CA?

    At least for commonsensical meanings of "worked," stimulative policies under FDR did work for many folks in economic distress.

    In contrast, it is actually the attempt to reign in spending under FDR that is now quite sensibly regarded as a disastrously wrong policy for that time.

    Obama's stimulus, too, is generally accepted to have worked, in that unemployment and wage effects in the economy are less bad than they would otherwise have been. That things are bad now is no kind of case that the current stimulus "didn't work" and gave no kind of support to people.

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  20. For David in Cal:

    http://www.cepr.net/index.php/blogs/beat-the-press/planet-money-is-off-the-planet-on-demographics-and-retirement

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  21. Anonymous, after the fact, one can always claim that things would have been worse, had it not been for some policy or other. However, Obama's stimulus failed in Obama's own terms.

    Obama said that his stimulus would keep the unemployment rate below 8%. He provided a chart showing how unemployment would gradually decline. According to Mr. Obama, today's unemployment rate would be around 5.7%. As we know, the unemployment rate went above 10% and has been stuck around 9%.

    I agree that FDR's stimulus worked for many people, namely the ones he gave money to. We could similarly say that Obama's stimulus worked for the senior executives at Solyndra. They collected hefty bonuses -- ranging from $37,000 to $60,000 apiece -- as the Fremont company bled cash and careened toward bankruptcy this summer. These bonuses were courtesy of you and me.

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  22. No worries, David in Cal, as you pointed out SS is just part of the budget. Just like Bush stole the SS Trust fund and handed it out to the richest of the rich, we'll take the money we save from the Defense reduction, the recouping of monies from the Iraq Reconstruction ripoff, the end of the Drug War, the removal of the FiCA cap, etc and voila! No SS deficit.
    What else can I solve for you today?

    BTW, you know the Tea Party is just the Republican Party with a name change, right?

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  23. Bob, I've admired and enjoyed (and been enlightened by) your work for many years. But I've never truly understood your obvious disdain for certain progressives and liberals, e.g., Josh Marshall, Joan Walsh, Chait, Klein, Corn, etc., etc. I would've believed that you and these people (especially Walsh) shared so many common beliefs that such constant condemnation would not be possible.What are they doing wrong?

    I've got to admit, I'm a regular reader of most of the above, and to me they seem pretty inoffensive, and frequently and sincerely call out progressive ideals, and call bullshit on the wingnut rabble. Other than your apparent belief that Marshall is a money grubbing hypocrite, what's your problem with them? Do they do nothing right?

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  24. Good question, Laurence.

    Getting to the answer gets interesting. Start with what Bob's posted about tribes...

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  25. So, you have no cites that stimulus "doesn't work."

    You could have just said so.

    And, either you don't know Solyndra amounts to a rounding error on the real math of our economy, or you just love to change the subject -- We know which one it is!

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  26. Under current law SS will run bigger and bigger deficits -- really big deficits.
    DinC, according to the Trustees' Report, Social Security will consume as much as 6.4% of GDP by 2050 but the FICA collections exceed 4% of GDP at the same time so on balance, even after the Trust Fund is expended, SS will cost, under present law, 2.4% of GDP and after 2050, that portion falls.
    So, the increasing deficits is true up to 2050 but after that, the deficits do not increase, they get smaller.
    As to another of your points, had the excess cash flow generated by the Greenspan/Reagan fix been retained by the Trust, the country would have simply had to borrow more from the public, i.e. China et alii.
    So, to say that this was just an accounting error means you don't understand cash flow, the unified budget or deficit spending. Here's the nut: if the Trust had kept the cash, the Bush II deficits would have averaged more than $250 Billion higher each year.

    Oh, and Solyndra's technology is superior to the flat panels currently produced by China which through currency manipulation and subsidies have cornered the production of solar panels. I realize that might not fit the right whinge talking points you hear in your head but it's true.
    I'm not an actuary, I'm a banker and have been involved in financing solar projects for several years, so at least on this topic, you don't know what you're talking about. Really, a $60,000 bonus? That's all?

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  27. Tom, an annual SS deficit of 2.4% of GNP is a big number of dollars. For the 10 years 2012 -2021, that ratio would be $6.7 trillion. To see how large this is, consider that the highly touted supercommittee is agonizing over a 10-year deficit cut of only $1.2 trillion.

    Furthermore, the official SS estimates have proved to be too optimistic. Based on the techniques they use, I think they're still too optimisitic.

    I'll try again re Reagan's budget snafu. The SS Trust can't literally "keep the cash". It can't put a bunch of bills into a lockbox. SS invests the cash in federal debt, that is, it lends the money to the federal government. That's pretty much the only reasonable investment option. By investing in federal bonds, SS has sort-of kept the cash; they can always redeem those bonds for cash. Meanwhile, the federal government uses that money. So far, so good.

    The problem is an unreasonable accounting rule introduced by Reagan. The SS books properly show that the federal government owes them the amount of the Trust Fund, but the federal government books don't show a corresponding debt.

    Yes, a $60,000 bonus isn't necessarily huge. But, a bonus should be a reward for good performance. Bonuses are also a way to retain quality employees. A management that bankrupted their company doesn't deserve a reward. And, a company about to die doesn't need to retain employees.

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  28. David in Cal:

    "1. If benefits are cut, retirees will get less than they expected."

    Misleading. While it is they that if no changes are made future retirees will get "less than they expected" it is also true that what they get will actually have more purchasing power than what current SS recipients receive.

    "2. If assessments are raised, that will burden all working people."

    False. If the current FICA cap is lifted, that will burden only those working people who currently make more than the cap.

    3. If benefits and assessments aren't changed, SS will add greater and greater amounts to our already unsustainable deficits.

    Partially true. While the SS deficit is projected to grow for some time, that deficit is projected to level off in the future. At that point, it will not add greater and greater amounts to our unsustainable deficit.

    The crisis you have identified in SS is the result of baby boomer demographics and the recent economic collapse. If we fix the economy and increase the FICA cap these issues will be gone.

    Your deficit concerns will also be eased if (1) we allow the Bush tax cuts to expire; (2) cut waste in the defense budget; (3) convert to single payer healthcare, thereby lowering our healthcare costs. (for example, Britain pays less for its national health system which covers everybody, than we pay for medicare alone. This is because the single payer system keeps medical costs down).

    Obviously, you have political (philosophical) opposition to these proposals. That's fine. Just be honest that your concern for the deficit doesn't actually trump your other political preferences.

    ReplyDelete
  29. David, everyone and anyone who talks about " the massive federal debt" of now $14 trillion counts the SS debt so where and how you think that debt is hidden away somewhere is beyond me.
    As to your idealistic view of bonuses, let me say that as a corporate executive for 20 years, I'm happy to say you have your head up your ass. From "stay" bonuses to other types, a company doesn't have to be profitable to pay them but it is really quite sweet that at your age, you can still think that.
    I note your total lack of response to the issue of how Solyndra, the fifth solar panel maker in the US to file 11, got to bankruptcy. The Chinese did not want to face a low cost version of Solyndra.

    ReplyDelete
  30. For the 10 years 2012 -2021, that ratio would be $6.7 trillion.

    For an actuary, David, your math skill sucks. It is not a ratio. Either that or you thought you were calculating a fee.

    ReplyDelete
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