Conclusion—It’s so easy: Attention K-mart shoppers! Also liberal “intellectual leaders!”
It’s easy to talk about Social Security—if you just know how! Unfortunately, we liberals have had thirty years and we still can’t do it—because we’re so lazy and dumb.
How easy is it to talk about Social Security? Let’s consider one more part of Lori Montgomery’s front-page screed in the Washington Post. (For part one of our current report, just click here.)
In the course of her lengthy front-page report, Montgomery advanced thirty years of disinformation about this venerable program—thirty years of talking-points we liberals still can’t rebut. At one juncture, she offered the point we highlight below. Incredibly, we liberals still don’t know what to do when people say shit like this:
MONTGOMERY (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.In that first paragraph, Montgomery offers the standard projection about the system’s future status. This is very basic stuff. But uh-oh! In that second paragraph, she returns to the alarmist language which drove her entire report.
Several factors have disrupted even that timetable. The recent recession caused the program to go cash negative years earlier than expected. The payroll tax holiday is depriving the system of revenue. And 10 years of escalating debt have crippled the government's ability to repay the trust fund.
First, she makes an inaccurate/misleading statement, saying the current tax holiday is depriving the system of funds. (She may have gotten that one from Digby.) But then, she makes a truly interesting claim. She says the nation’s rising debt has “crippled the government's ability to repay the trust fund”—its ability to repay the money it has borrowed from Social Security system over the past thirty years.
“Crippled” is an alarming term. That to the side, our liberal “intellectual leaders still don’t know what to say when people confront us with claims of this type (example below). After thirty years of disinformation, we still stand around with our dongs hanging out; we then find someone to call a racist and compliment ourselves on our brilliance. The notion that it won’t be possible to repay the trust fund is left hanging there in the air.
Do you know how to reply to Montgomery’s highlighted claim? If not, it isn’t your fault! It’s the fault of the “intellectual leaders” who have been clowning, showboating, snoring and burbling over the past thirty years (example below).
That said, it’s easy to talk about Montgomery’s statement. Here goes:
Without any question, our rising level of debt does make it harder to repay the large amounts of money the government owes. But that's true with respect to all the money the federal government has borrowed over the decades, not just the money borrowed from the Social Security system. (And no, the ability to repay the money certainly hasn’t been “crippled.”) When folk like Montgomery play this card, they separate out one strain of borrowing—the borrowing from Social Security—and treat it as somehow different from all the other strains of government borrowing. Have you ever seen Montgomery, or anyone else, publish a sentence like this?
MONTGOMERY REIMAGINED: Ten years of escalating debt have crippled the government's ability to repay the money it has borrowed from those big banks in China.Have you ever seen anyone suggest that we won’t be able to repay the Chinese because our ability has been “crippled?” Of course you haven’t! Folk like Montgomery play this card with regard to Social Security only. And this card has been played in a million ways over the past thirty years. Indeed, another version of this tired old scam was offered in an earlier part of Montgomery’s report:
MONTGOMERY (10/30/11): Social Security is hardly the biggest drain on the budget. But unless Congress acts, its finances will continue to deteriorate as the rising tide of baby boomers begins claiming benefits...The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.To repay that money to Social Security, the government will have to “raise taxes, cut spending or borrow more” money. In recent years, this has become a standard talking-point; it is designed to make you think that we simply can’t repay all that dough. But Montgomery’s formulation obtains with respect to all the money the government will have to repay in the future. When the government repays those big Chinese banks (as it constantly does), it has to raise taxes, cut spending or borrow more money then too! Inevitably, it simply borrows more money—and that’s what the government will do when it repays the money it borrowed from Social Security. But this alarming formulation is only trotted out in one circumstance—with respect to Social Security. And omigod! After thirty years of this well-scripted crap, we liberals still don’t know how to respond to such talking-points. This was proven a few months ago when Matt Yglesias weirdly folded this right-wing talking-point into his own capsule explanation of the way Social Security works—with Steve Benen rushing to praise him for making the whole thing so wonderfully clear! To read our post, click here.
(Your lizard brain will tell you we’re wrong about the lads. You shouldn't listen to lizards.)
Even after thirty years of this crap, Yglesias didn’t know how to talk about Social Security! He produced a confusing and bungle account, with Benen praising him for his wonderful clarity! But last week, he received the modern world’s greatest reward—he was hired by Slate! To see Paul Krugman congratulate the brilliant lad, steel your nerves, then click here.
Thirty years in, our brilliant intellectual leader simply didn’t know squat from squadoodle when it came time to talk about Social Security. (Squadoosh was missing in action too.) We ought to be embarrassed by this. Being pseudo-liberals, we aren’t.
How should liberals talk about Social Security? There are two basic points we liberals should make—and we should say anything else:
First, we should say what Montgomery said in that first quoted except. Let’s present this point again. This is Montgomery’s language:
The first things liberals should say when they talk about Social Security: Thanks to the trust fund, Social Security can pay full benefits through 2036. Once the trust fund is depleted, promised benefits will have to be cut by about 25 percent, absent some new source of revenue.It’s possible to make a few additional points about the size of those promised benefits. Resist the temptation to do so! That would take us liberals far beyond our current “grade level.”
There’s one other thing a liberal show say if he talks about Social Security. We’ll borrow this language from Kevin Drum’s recent post. Again, these are Kevin’s Drum’s words:
The second things liberals should say when they talk about Social Security: Social Security only needs minor tweaks...If we gradually raise the payroll tax from 6.2 percent to 7.2 percent and gradually raise the earnings cap from $100,000 to $250,000 between 2030 and 2050, Social Security will be solvent forever.Yes, the program will need more revenue—but the needed adjustment is fairly minor. It’s fairly easy to tweak the system so that future promised benefits can in fact be fully met.
It’s possible to make a few points about the way those tweaks would compare to the size of projected future incomes. (Baker and Weisbrot discussed this matter in their 1999 book.) But there again, that takes us far beyond our very restricted “grade level.”
It’s easy to talk about Social Security! Liberals should just keep making two points:
a) The system does face a revenue shortfall.Our liberal “intellectual leaders” should keep making those two basic points—and they should say nothing else. If they try to recall a third point, they will likely forget what it is. Beyond that, we liberals should stay away from the more abstruse “explanations” which have come from some parts of our world. Paul Krugman is a massive intellectual hero. But he has never devised a clear explanation for the way this whole shebang works. (Neither did Candidate Gore in Campaign 2000.)
b) It’s easy to find the additional revenue.
Oh by the way: If you try to stick to these points, conservatives will start reciting time-honored points about the Social Security trust fund. This is where the disinformation machine has worked its magic for the past thirty years, secure in the knowledge that we liberals are too dumb, too feckless and too self-impressed to devote any serious effort to the project of learning how to talk. (By way of contrast, the plutocrats do devote a lot of time and effort to their relentless search for effective disinformation.) They’ll say it’s just an accounting fiction! They’ll say the money isn’t there—that we’ve already spent it! At some point, they'll even say that the government will have to raise taxes, cut spending or borrow more money to repay the money it has borrowed! And this is where our liberal "intellectual leaders" will break down and lose.
As Yglesias and Benen made wondrously clear, we still don’t know how to talk about the trust fund after thirty long years of this garbage!
We’re lazy and feckless; we’re dumb, uninformed. On the bright side, we spill with self-regard. And there’s one thing we do know: If we just posture hard enough, we will get rewarded one day with a spanking new job at Slate.
People! How great is Slate? Why, it’s owned by the Washington Post!
The fruits of our lack of labor: To see the fruits of our lack of labor, be sure to read the part of Drum’s post in which he records the way some Berkeley students assess this program’s future.
Drum’s words: “The conservative campaign to convince everyone that Social Security is doomed has been wildly successful, even among extremely bright kids who are actively interested in policy issues.”
Alas! That campaign has been successful because your “leaders” have failed.
Not only can't we liberals talk about Social security, we can't even publish Chapter 6 of "How He Got There" , even though we promised to for at least a year!ReplyDelete
You know Bob does this all for free, right? Like, in addition to his day job? I don't think you are entitled to anything from him. If you want it that bad, maybe you should hit the donate button up there and toss him some coin...
The political leaders failed as much as the intellectual leaders failed.ReplyDelete
In fact, I take issue with the characterization of this fight being between Democrats and Republicans. If you haven't noticed, the Democrats are attacking Social Security more effectively than the Republicans ever have. This is not a failure to explain a political position but a failure of motivation. The Democrats work for the same masters the Republicans do and their masters want to attack Social Security.
The Democrats that support SS in theory, like Nancy Pelosi, are not fully fighting legislatively or politically for its survival and instead are smoothing the way for Obama and his Republican Catfood Commission friends to cut Social Security.
"To repay that money to Social Security, the government will have to 'raise taxes, cut spending or borrow more' money."ReplyDelete
FALSE. I've got one word for you:
Over a hundred years ago this political party cut through the same BS arguments we see now regarding Social Security and demanded that the government spend directly in greenbacks rather than issuing bonds.
We recently printed trillions of dollars and gave them to the banks and the dollar did not crumble. The amount of money required to print to give out in Social Security benefits would be less than we just gave Wall Street.
Just ask Dean Baker or any Modern Monetary Theory proponent about this.
Even if one donates, one is not entitled to something -- Let's be clear on the distinction between "payment" and "donation."ReplyDelete
"Whining" we all can recognize when we see it, but thanks anyway for the repeated examples, Mr. Snipes.
Let's imagine an industrious young worker, saving for retirement in, let's say, 2042.ReplyDelete
This young worker dutifully carries each paycheck down to his local bank, deposits it, and immediately transfers 15 percent of his pay into a money market fund heavily invested in US Government securities.
Thirty years pass and the once-young worker arrives on the threshold of retirement. Those regular deposits have grown into a tidy nest egg.
Would any sane person try to convince our retiring worker that this nest egg is at risk?
@hardindr: It was Mr. Somerby who has said for the better part of a year that it was coming any day now. If it's not, then don't say it in the first place. In other words, say what you mean and mean what you say. Why is that such a hard concept for you to grasp? It has nothing to do with whether he does this for free. No one held a gun to his head to tell us Chapter six was coming any day now and then made him NOT publish it, did they?ReplyDelete
Maybe he doesn't have the time right now, maybe he can't find the right words, maybe he has other priorities, maybe, maybe, maybe, maybe...
How about that donate button?
Bob, if you are reading this re. Chapter 6 this humble reader says make all the promises you want and take all the time you need. Thanks for the blog.ReplyDelete
What Mr. Somerby overlooks here -- and what he *always* overlooks - is that you can't counter a crafted deception, one designed to appeal to emotion and fear, with the truth alone. At least, not on the national stage, with very limited media access (and filtered access, at that).ReplyDelete
You need, as it were, a commensurate barn-burner, at the very least. This shouldn't be difficult, given the brazenness of the proposed theft. To wit, politicians raised the SS payroll, forcing workers to contribute more than the system required at the time. But now they're that the Treasury securities bought with those surpluses should be forfeited -- because, unlike Treasury securities sold to foreign governments, investment banks, billionaires and individual investors, they're owned by working people, who don't count!
But this is just the kind of class-based argument you'll never hear from the Democratic party, not even during a campaign, for the most part. It offends Wall Street!
Besides, there's every indication that Obama himself is on the side of the thieves here.
So we'll NEVER win this argument, except maybe on this site, where there's only one David in Cal (not thousands, and with megaphones, newspapers and 24-hour disinformation networks).
Bob writes: To repay that money to Social Security, the government will have to “raise taxes, cut spending or borrow more” money. In recent years, this has become a standard talking-point; it is designed to make you think that we simply can’t repay all that dough. But Montgomery’s formulation obtains with respect to all the money the government will have to repay in the future.ReplyDelete
That final sentence is true. However, Bob seems to offer it as some sort of mitigating factor. On the contrary, it makes things worse. Not only is SS moving toward deficits, Medicare is already deep in deficit as is the overall federal budget. The SS deficit will make the coming disaster all the worse.
Walter, it's true that the dollar has stood up well despite enormous Bush/ Obama deficits and despite printing money. However, that won't continue forever. At some point, the dollar will fall against foreign currencies and inflation will take off. In fact, the dollars is already falling against some foreign currencies and 2011 inflation is running at around a 5% annual rate. I expect these trends to worsen.
"First, [Lori Montgomery] makes an inaccurate/misleading statement, saying the current tax holiday is depriving the system of funds."
How exactly is the payroll tax cut (it's not a "holiday" if extension of the cut is an integral part of Obama's "Jobs Act", and we've seen how well the Congress lets the Bush tax cuts expire on schedule) not depriving the system of funds?
I understand full well that current payments are not now being paid out of revenue, and I understand that Congress has agreed (by law) to simply borrow more money to reimburse SS the $112 billion on "holiday" from general revenues.
I know that Dean Baker says that this arrangement shouldn't be a problem, too, as "Under the law, the Social Security system is fully reimbursed for the money not collected as a result of the payroll tax holiday."
Many movement liberals, even some whose analysis is worthy of respect say that the 2% payroll tax cut will just be paid back according to the law...as the law stands today.
But, if we can't admit that, yes, a diminishing of revenue "is depriving the system of funds" that the current government says at the moment it will return via some unknown revenue allocation in the future, then we liberal Democrats are simply courting discredit, aren't we?
I mean, do you know what else the Congress purports to do every year, Bob Somerby? These august bodies claim that they're going to reduce Medicare provider payments by close to 30%...right up until they pass the "Doc Fix," for another year.
If one can't look at the entire saga of the Bush tax cuts --now the Bush-Obama tax cuts, post-lame duck-- expiration, and see the "to-be-paid-back" payroll tax cut shortfall in SS revenues in light of that brief moment of clarity, then perhaps the lessons of the 2010 lame-duck session need re-examining, don't you think?
You make the commendably simple (and entirely accurate) case that Treasuries issued to SS are (almost) identical to any other T-bonds sold to, say, Chinese banks, and so when centrists and rightists claim that the Trust Fund is "just a bunch of worthless IOUs," they're lying. But then you choose to ignore the actual worthless IOUs represented by the payroll tax cut and its proposed extension.
Here's The Hill's Mike Lillis putting it succinctly in June's "Ignoring liberal Dems, Obama endorses longer payroll tax holiday through 2012":
"The Congressional Budget Office estimates the cut will reduce federal revenues by $112 billion over the next two years. Because the tax package is not offset by changes elsewhere in the budget, the government will have to borrow to fill that hole in the Social Security trust fund."
You can say that, absent a massive government jobs program of the kinds that brought our nation out of the last depression (and that Third Way, centrist Democratic leadership are loathe to enact), the payroll tax cut puts money in ordinary people's pockets at a time when they need it most.
You can say that a "jobs bill" composed primarily of tax cuts and infrastructure privatization schemes --such as the one that this Administration has repeatedly proposed-- has the most realistic chance of having to be more carefully rejected by Republicans intent on obstruction (either for political or ideological reasons).
But you can't claim with a straight face to the American people that the current Social Security tax cut is not depriving the system of funds, Bob Somerby...unless you somehow can.
So please, help us all out, and explain your apparent certainty that the current tax cut --and Obama's proposed extension and expansion-- will be fully returned with interest out of general revenues, given that the Social Security Trust Fund's Treasury bond obligations (along with Treasury's bond interest payments to Chinese banks and Saudi sovereign wealth funds) seem to be the only promises Congress seems to be able or willing to keep.
Please tell us that your faith doesn't originate in desperate desire for any aggregate demand stimulus, even the Obama Administration's nearly worthless, Third Way, bank-shot, hope-Republicans-vote-for-it, centrist-Dems-say-they-won't-join-GOP-filibuster payroll tax "holiday." Please tell us that you're not merely ignoring that "hole in the Social Security trust fund" because it's expedient...and the only kind of "jobs plan" the kind of Democrats that populate this Administration seem to be able to imagine.
Thanks in advance for your explanation, Bob Somerby, some of your loyal readership are quite looking forward to it.
So printing tens of Trillions of dollars to give to bankers is . . . a okay. It wasn't great but we saved the world with a little bit of troubling inflation.
But possibly having to print around a trillion dollars, decades in the future, to provide a meager old age pension for most Americans, one that they've already largely "paid" for? Well, that's a horrible risk to the currency.
What foolishness. Even according to you we managed this crazy ass "printing" for bankers with only ~ 5% annual inflation. Just imagine if we only did a fraction of the "printing" but we instead gave the money to average Americans.
Inflation is good if it is a result of the majority of Americans earning an income they can live off of. Giving people a half-assed pension is about the best type of inflation there is.
"2011 inflation is running at around a 5% annual rate."ReplyDelete
OK, now I know you're living in a parallel universe. The current inflation rate is at 3.9%, the highest it's been all year:
Current Inflation Rates
That site gets its info from the Bureau of Labor Statistics.
Wow, stuart_zechman, you wrote a gigantic (TL;DR) screed based on one possible overstatement in the midst of a very long piece, and on a point that Bob wasn't really talking about to boot.ReplyDelete
Do you have an issue with his larger point?
BTW, "misleading" is a component of that statement you so strenuously object to. You yourself say:
"Many movement liberals, even some whose analysis is worthy of respect say that the 2% payroll tax cut will just be paid back according to the law...as the law stands today."
Is it not therefore misleading to suggest that the current tax holiday is depriving the system of funds without pointing out that under the current law those funds will be paid back? Is that not the equivalent of yelling "the sky is falling" when pooped on by a sparrow?
The assumption here is that "liberals" are losing the argument, thanks to incompetence.ReplyDelete
You need to determine, first, how many professional liberals would be only too happy to see Republican-style "entitlement reform". By all apparent measures, this camp includes a large number of nominally "liberal" pundits, and many Democratic politicians, including the current president.
With number like these, are you really surprised "we're" losing the argument? It gets "won" on Dean Baker's site, but what relationship does Dean Baker have to the Democratic party?
"So please, help us all out, and explain your apparent certainty that the current tax cut --and Obama's proposed extension and expansion-- will be fully returned with interest out of general revenues, given that the Social Security Trust Fund's Treasury bond obligations (along with Treasury's bond interest payments to Chinese banks and Saudi sovereign wealth funds) seem to be the only promises Congress seems to be able or willing to keep."
Bob doesn't have to explain anything; the default expected behavior is that the law will be followed and the money paid back. But you've hit upon a good point, Congress can simply change the law whenever it wants. That's how I'm afraid we'll lose Social Security, as these compromising milquetoasts now calling themselves "Democrats" keep trying to reach Grand Bargains with domestic spending terrorists.
Rob, your figure is correct. However, the so-called "current inflation rate" is the rise in the consumer price index from Sept. 2010 Sept. 2011. As you say, it's under 4%. There's another way to look at the current inflation rate:ReplyDelete
During the first 9 months of 2011, the CPI rose by 3.5%. The annual equivalent of 3.5% over 9 months is a bit under 5%. That's where my 5% figure comes from.
Walter, to be clear, I think it's terrible that we gave money to banks, and I think it's terrible that we printed money via "quantitative easing." These policies have caused inflation, but not at a disastrous pace. I believe worse is coming. Don't think we're immune simply because disaster hasn't hit yet.ReplyDelete
IMHO a good analogy is the story about a man who falls off the top of the Empire State Building. As he passes an open window on the 50th floor, someone yells to him, "How's it going?"
"so far, so good," he answers
"I think it's terrible that we printed money via "quantitative easing." These policies have caused inflation, but not at a disastrous pace."ReplyDelete
David in Cal: How do you know "these policies" have "caused" inflation? Can you prove that temporary world-wide commodity price rises -- which are on the retreat, BTW - are attributable to quantitative easing?
The answer is "no", because QE is NOT the same as printing money, at all. Also note that the dollar has now been trading for years at higher levels than it was pre-banking crisis.
But the claim that we're printing money and that hyperinflation is just around the corner sounds awfully good, doesn't it, as long as you don't reveal your real policy objectives, which always involve lowering the taxes of the top 1% and cutting the budget on everyone else?
"But the claim that we're printing money and that hyperinflation is just around the corner sounds awfully good, doesn't it,"ReplyDelete
Well, no. It sounds disastrous, especially for a retiree like me who worries about his savings being eroded.
I just checked a few exchage rates over time at http://www.x-rates.com/cgi-bin/hlookup.cgi
In the last couple of years the US dollar has fallen against the Canadian dollar and against the Swiss franc. It has risen against the Euro, for obvious reasons.
Reasonable people believe the "stong dollar" is a problem currently, especially vis-a-vis China. Maintaining a high dollar is not always a desirable goal.ReplyDelete
DavidinCA can't prove that monetary expansion has caused inflation -- because in quite manifestly has not. Inflation has remained quite tame. But there has been a huge expansion of money. Huge.
Those who bet on inflation (i.e. those who followed the thinking of the DavidinCAs of the world) have lost big time.
His theories have been discredited. Huge expansion has created not a ripple in terms of inflation. Long rates have experienced a bull market in spite of vast increases in money.
But, but, "Watch out," sez ChikenLittleInCA, "you're falling you just don't know it. IMHO, I'm right, as I always am, even if I've been wrong wrong wrong, so far."
Would betting on inflation have lost big time? Look at this graph of IAU, which follows the price of gold: http://finance.yahoo.com/echarts?s=IAU+Interactive#chart1:symbol=iau;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefinedReplyDelete
Someone who bought IAU shares at the beginning of 2010 would have a profit today of over 50%.
A bet on gold is a bet on gold, as any one can see, not a bet on inflation, which it does not track.ReplyDelete
Maybe that's why you chose it as an example, because it's so irrelevant? Relevant measures of inflation don't support your point.
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