HOW TO TALK: Dean Baker’s complaint!


Part 3—Our heroes are sometimes abstruse: Lori Montgomery’s front-page report about Social Security was groaningly long. Her alarmist screed ran on and on, for more than 2400 words. See THE DAILY HOWLER, 11/8/11.

Here’s the good news: If you read all the way to paragraph 35, you were at last rewarded! You finally got a dispassionate account of Social Security’s future prospects. At long last, Montgomery told you this—although she should have said more:
MONTOMGERY (10/30/11): Social Security can pay full benefits through 2036. Once the trust fund is depleted, the system would rely solely on incoming taxes, and benefits would have to be cut by about 25 percent across the board.
That “treacherous milestone” doesn’t seem quite so scary when we get information like that. In fairness, though, given the length of her piece, Montgomery should have said much more. At some point, she should have explained how easy it is to erase that projected 25 percent shortfall (after the year 2036) through relatively modest tax increases. Montgomery should have told her readers about the policy changes which could erase that future shortfall—the shortfall about which she shrieked and wailed and rent her garments for more than 2400 words.

Alas! That information wasn’t provided. Montgomery did include all the Scripted Russertisms through which readers are frightened by (largely irrelevant) data about historical changes in life expectancy and in the ratio of retirees to workers.

These frightening bromides date to the time when the late Tim Russert pimped long and hard for his near-billionaire CEO owner, Nantucket baron Jack Welch. Montgomery included them all, ratcheting up the alarm.

Montgomery authored a lousy piece of work. This Sunday, Post ombudsman Patrick Pexton largely failed to capture the depth of the problem with her report. But then, how good a job do we liberals do with this topic? After thirty years of disinformation, do we know how to talk about the Social Security program?

We’re quick to trash a player like Pexton. But how good is our work?

We would suggest that our team’s work is not very good at all. As an example, we’d cite a blog post in which a liberal hero responded to Pexton’s work.

The hero in question is Dean Baker, one of the very few liberal players who has actually tried to address this topic over the past several decades. In 1999, Baker wrote "Social Security: The Phony Crisis," one of the only books our tribe has authored about this transcendent topic and the disinformation campaign which surrounds it. (Baker’s co-author was Mark Weisbrot.) In our own case, we learned a great deal from this book; we’re grateful to both men for having written it. We wish we saw a lot more of Baker on our cable pseudo-news programs.

But Baker is a real economist—and a big of an egghead, in fact. For the most part, his book is too technical for general use—and his daily blog posts tend to be a bit too abstruse for general purposes. We don’t mean this as a criticism of Baker. As with Krugman, so too with Baker—the liberal world can’t ask its one or two active players to solve every political, policy and/or rhetorical problem dogging our public debates. Baker provides a lot of accurate info. It isn’t fair to insist that he must be a skilled popularizer too.

But you know how we liberals are! We’re very lazy and very feckless when it comes to topics like these. Beyond that, we’re highly self-impressed—and we aren’t very smart! We pretty much settle for whatever we get as long as it tells us that our tribe is right. For example, we settle for Baker’s recent blog post, the post in which he criticized Pexton’s ombudsman piece.

Did Baker capture the problem with Pexton’s report? He posted last Friday, when Pexton’s piece appeared on line. This is the way he started:
BAKER (11/4/11): If there were ever any doubts that "Fox on 15th Street" was a fitting label for the Washington Post, Patrick Pexton, the paper's ombudsman removed them with his defense of the Post's front page piece on Social Security last Sunday. Just to remind readers, the whole premise of that piece, as expressed in its headline, is that Social Security has crossed some "treacherous milestone" because it had gone "cash negative earlier than expected."

While this assertion was presented in a sensationalistic manner in the Post, as both the headline and the lead, it is actually not true. Social Security has not gone "cash negative" in the sense that the trust fund is still growing. While current benefit payments exceed designated Social Security tax revenue, the income to the system, which includes interest on its holdings of government bonds, still exceeds benefit payments.

In this sense it is simply wrong to say that the system is cash negative. More money is still coming into the system than is going out. Obviously the Post meant to say that benefit payments exceed tax revenue, but tax revenue is only part of the income for the program. It is a serious failure by the Post to ignore the income stream from interest payments, which is compounded by the failure of the ombudsman to recognize this failure.
What was wrong with Pexton’s review? Sensibly enough, Baker started by reminding readers about the problems with Montgomery’s report—the news report Pexton was reviewing. But as he looked back at Montgomery’s piece, Baker’s criticism was remarkably narrow. Montgomery claimed that Social Security had gone “cash negative,” Baker said—and that claim isn’t true. “Obviously [Montgomery] meant to say that benefit payments exceed tax revenue,” Baker said. But even so, “tax revenue is only part of the income for [Social Security].” Interest payments on the trust fund is another income stream, Baker correctly said.

This was Baker’s principal criticism of Montgomery’s report—and it’s remarkably narrow. The Post meant to say “that benefit payments exceed tax revenue?” In fact, that is precisely what Montgomery did say, right in her opening paragraphs. This is the way she began her alarmist, unbalanced report:
MONTGOMERY (10/30/11): Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone. It went "cash negative."

For most of its 75-year history, the program had paid its own way through a dedicated stream of payroll taxes, even generating huge surpluses for the past two decades. But in 2010, under the strain of a recession that caused tax revenue to plummet, the cost of benefits outstripped tax collections for the first time since the early 1980s.

Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation's budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits.

This is really not something that is arguable—Social Security has a stream of income from the interest on its bonds. The Post and its ombudsman may not like this fact, but it is nonetheless true.
What did Montgomery mean when she said the program has gone “cash negative?” She explained what she meant right in paragraph 2: She meant that, in the year 2010, “the cost of benefits outstripped tax collections for the first time since the early 1980s.”

That isn’t what she meant to say. It’s what she actually said, quite clearly, right at the start of her piece. The exact same point was clearly stated in a small graphic right there atop the fold on page one. “In 2010, the cost of Social Security benefits outstripped its tax collections,” the graphic clearly said.

Baker seemed to be offended by the use of the term “cash negative.” Is this a technical term with a well-defined technical meaning? Like you, we have no idea, and Baker didn’t say. But Montgomery’s use of this term, which she quickly explained, is a very minor part of the problem with her alarmist report.

Baker, an expert, was annoyed by this usage. But this usage is a tiny part of the problem here. You could strip Montgomery’s report of that term—and her report would be unchanged in terms of its effect on the general reader. Her report would be just as misleading and just as alarmist. By the way: Eventually, Social Security will go “cash negative” as Baker defines it. The overall issue isn’t changed by this narrow question of technical usage.

Did we mention that Baker is one of our side’s (very few) heroes when it comes to this transcendent topic? Just to remind the reader, we mention this fact here again. But Baker is a highly knowledgeable specialist who sometimes goes off in the weeds. The gentleman isn’t a popularizer—that simply isn’t his skill. But as with Krugman, so with Baker—these fellows can’t be asked to solve every one of our team’s many problems. And one of our biggest problems is this:

Even after all these years, we liberals don’t know how to talk about Social Security! We liberals have been very lazy. And we just haven’t been very smart.

Over the decades, we have settled for scraps from the table—scraps from our handful of active players. Our fecklessness has brought us to this point—to the point where this critical program is about to be pruned, in part because voters don’t have the first freaking idea about the way the way it actually works.

Voters have heard the other side’s disinformation—and they’ve heard us snore in the woods.

Do we know how to talk about this? If not, is our feckless tribe’s groaning failure really the tea-baggers’ fault?

Tomorrow: Digby reads Dean Baker

Please note: Your lizard brain will tell you that Baker just has to be right. Our advice: Tell your lizard to quit.


  1. Maybe you already know this....

    Last Wednesday, Gene Lyons wrote article at Salon, "How the rich created the Social Security 'crisis'," and mentioned you by name, Bob.

    Thank you, Bob, for the the important work you do! I've known for decades at gut level that the press corps and nominal allies have been playing us stupid. Until a few years ago, I didn't know about your analysis here at The Daily Howler. Since, I've been grateful for your heavy-lifting in providing facts and details, so I didn't have to work so hard in puzzling out what the heck is going on.

  2. Bob Somerby quotes a half-truth:

    Social Security can pay full benefits through 2036. Once the trust fund is depleted, the system would rely solely on incoming taxes, and benefits would have to be cut by about 25 percent across the board.

    The rest of the story is:

    -- That SS can pay pay full benefits through 1936 is a projection, not a fact. This projection is based on overly optimistic assumptions.

    -- Even using those assumptions, a 25% benefit cut could balance the program for the year 1936. However, a 25% benefit cut wouldn't balance the program long term. Subsequent benefits would have to be cut more and more and more, due to rising life expectancies.

  3. DiC, 1936?
    Is this what they mean when they say conservatives are building a "Bridge to the Past"?

  4. David, which is it? You claim the projections to carry the fund at full benefits are overly optimistic. Which ones? The GDP growth assumptions? The life expectancy? The mortality rates?
    It's typical cant. You drop a stink bomb then run away. Have any facts to counter the middle case assumptions?
    Or is it that you would like to believe the pessimistic case? If so, why?
    One could also look at the optimistic case and say the program can pay full benefits with almost no changes ovr the 75 year horizon since even in the middle and pessimistic case, the baby boomers (actuarily as well as 'for real') die off and the bulge goes away.
    That explains why under all 3 cases, the deficit assumption lessens after 2050 when the oldest baby boomers would be 104.
    C'mon, man!

  5. Sorry, Tom. I was busy this morning.

    Yes, the projections do not assume that mortality will keep improving in the future, even though mortality has been consistently improving for many years. Also, the economic growth assumption are fairly optimistic.

    BTW just a few years ago it was projected that SS would have a positive cash flow for quite a while -- decades IIRC. That projection proved to be optimistic. SS cash flow turned negative in 2010 and remained negative in 2011.

    BTW having to cut benefits across the board by 25% is quite problematic.

    First of all, I question whether the poltical will exists to cut benefits to those already retired by so huge an amount. Today, there's no support for cutting benefits to retirees by any amount at all.

    Second, the cut in SS benefits won't be the only financial hit. We'll also have to cut Medicare benefits and have some combination of tax hikes and cuts in other federal spending in order to deal with our ongoing deficit. It's this combination that I'm so concerned about.

  6. ...and the 7,002nd time?

  7. Tom, you're technically incorrect about the impact of the baby boomers. When baby boomers were working, there was a bulge in SS income. However, when baby boomers retire, they'll be supported by their progeny. There's no reason to think baby boomers have more progeny than the generations after them.

    The only reason SS projections show improvement many years out is assumed economic growth (along with assumed no change in mortality.)

  8. No, David, I was paraphrasing the Trustees' Report. They are the ones who forecast the decline in the deficit after 2050 because the baby boomer bulge goes away and the mini bulge from births in the 80s is much smaller.
    In short, you avoided answering any of the questions and make the same tired claims about mortality and longevity. For an alleged actuary, you don't do much detail. The GDP projections are fairly optimistic? WTF?
    That's it for me and you.
    And by the way, if you have been reading Bob how can you do the Medicare needs to be cut routine? It isn't Medicare, it's health care costs.
    We can not spend money for "entitlements" but defense, that's a necessity.
    C'mon, man!

  9. By 2036, the Baby Boomers will be pushing 90 (those that haven't died already). It's entirely possible that by then the demographics will have changed enough for the system to once again be self-supporting. If not, I'm confident that enough political will can be summoned to prevent a Dickensian nightmare.

  10. Oh, and don't worry about "improved mortality" skewing the results. Mortality has only been "improving" for the wealthy. For most citizens, life expectancy hasn't risen nearly as much. Its effect on SS benefits will be minimal.

  11. Bob,

    So are you saying 99.5% of Dean Baker's column is ok? Boy, you really have high standards for our feckless tribe! Given Baker's near-perfect track record dealing in facts which are easily vetted, I have unlimited confidence in his analysis as opposed to a print reporter under the gun to produce output that draws maximum eyeballs and ad dollars.

    Ambler Gee