A way to peer into the past: Today’s young children are pretty much horrible journalists.
The adults of the last generation may have been even worse. Consider what happened just one week ago when Paul Krugman took part in the roundtable segment on ABC’s This Week.
Unfortunately, Senator Ron Johnson (R-Wisconsin) was also present. Johnson, a former polyester and plastics mogul, soon uttered familiar sounds:
JOHNSON (3/10/13): To say that the Republicans haven't done anything is just false. The House has actually passed budgets—you know, with proposals to, to try and save Medicare, bipartisan proposals, quite honestly. The Senate hasn't passed a budget in over four years.It drives Johnson nuts to hear that Social Security is solvent through 2035. He says it’s “going broke.”
Listen, unless we do something, these programs are going broke. It drives me nuts. When I, when I hear people say that Social Security is solvent to the year 2035, it's not.
A bit later, Krugman tried to respond, and Johnson’s emissions grew worse:
KRUGMAN: The Social Security thing: Social Security is—there—it has a dedicated revenue base. It has a trust fund based on that dedicated revenue base. You can't change the rules midstream and say, oh suddenly—The money isn’t there—we’ve already spent it! It’s like you wrote a check to yourself! The trust fund is just an accounting fiction! The program will soon be bankrupt or broke!
JOHNSON: See here's, here's the problem—
KRUGMAN: You can't—
JOHNSON: Here's the problem with the trust fund. The federal government owns U.S. Treasury bonds. It's the same thing as if you have $20, you spend it. And by the way, that money is spent, it's gone. You write yourself a note for $20, stick it in your pocket and say, “I got 20 bucks.”
No, you don't. You, you have a note that you have to sell in the open market. The trust fund is a fiction, it doesn't, it's— It has no value.
What did viewers think when they heard these statements by Johnson? Presumably, different people heard different things, but one point is blindingly clear:
If you live in the United States, you have been hearing those claims for decades. And even now, from our brightest player, what follows is pretty much the best our team ever does in rebuttal.
We use the official transcript:
KRUGMAN (continuing directly): No, if you want to think of Social Security as not just being part of the government, then there's no such thing as a Social Security problem, it's just part of the general budget. You, you cannot say on the one hand—The chain of interruptions proceeded from there, but you may get the basic idea.
JOHNSON: And it's—
KRUGMAN: —Social Security is a—
JOHNSON: —and it's promise—
KRUGMAN: —on the other hand we're going to restrict it to only operating off of—
REP. DEBBIE WASSERMAN SCHULTZ: George—
KRUGMAN: I mean it's important to realize that the facts that are being brought out here are, in fact, non-facts. And how—
JOHNSON: No, they're absolute facts.
GEORGE WILL: As Pat Moynihan said, "Everyone is entitled to their own opinion, but not their own facts", and we're going to start this chimeric negotiation from two sides that can't agree on the most basic thing—
Part of the problem here lies with Stephanopoulos, who has never seen an interruption that he didn’t like. It keeps the appearance of discussion moving!
That said, the largest problem lies with the liberal world of the past thirty years.
Can we talk? By light years, Krugman is our most valuable player. But even he doesn’t have a crisp, strong way to reply to the hoary old claim that the trust find is just an accounting fiction—that the money is no longer there.
Nor is that Krugman’s fault. People have heard that hoary old set of claims for at least three decades now—but our side still has no rebuttal! The sloth and incompetence of many people has created this state of affairs.
To this day, Krugman doesn’t know what to say in response to that famous old bullroar. But that isn’t Krugman’s fault.
One player can’t solve every problem for liberals, although we’ve been willing to let Krugman try. In this case, thirty years of liberal and mainstream sloth are there for all to see.
Johnson is clueless, but he comes from a world whose entities have spent thirty years advancing that familiar set of scripts: The money isn’t there—we’ve already spent it! The trust find is just a fiction!
Krugman is very, very sharp, but the rest of his team has been sleeping. They haven’t created a sharp, clear rebuttal.
They’ve slept for the past thirty years.
Johnson spreads lie after lie about the trust fund, then interrupts Krugman before he can get three words out of his mouth, and of course, it's Krugman's fault for not having "a crisp, strong way to reply."
Oh, I stand corrected. It's NOT Krugman's fault after all. It is the fault of the entire "liberal world" that Krugman supposedly has no "crisp, strong" reply when he can't complete a sentence without being interrupted.ReplyDelete
But tell us, Bob. What would that "crisp, strong reply" actually be? You know, those witty bon mots that would have stopped the "trust fund has no money" lie years ago?
straw man alert-of course that's not what Bob said Go away troll-this blog is way above your reading comprehension levelDelete
Sycophant alert! That is exactly what Bob said. And since you missed it the first time, here it is again:Delete
"Can we talk? By light years, Krugman is our most valuable player. But even he doesn’t have a crisp, strong way to reply to the hoary old claim that the trust find is just an accounting fiction—that the money is no longer there.
"Nor is that Krugman’s fault. People have heard that hoary old set of claims for at least three decades now—but our side still has no rebuttal! The sloth and incompetence of many people has created this state of affairs.
"To this day, Krugman doesn’t know what to say in response to that famous old bullroar. But that isn’t Krugman’s fault.
"One player can’t solve every problem for liberals, although we’ve been willing to let Krugman try. In this case, thirty years of liberal and mainstream sloth are there for all to see."
way above your reading comp levelDelete
Oh, come on. Krugman is our best-placed and most valuable fighter and in that interview he wasn't given a fighting chance. The fact that the congressman can blather on stupidly with Stepanopoulis enabling and George Will mocking is indeed testimony to the total degeneration of civilized public debate. And that is not Krugman's fault--it's a cultural illness.Delete
Dear Anon 12:24 & 12:52:Delete
Rather hilarious for you to comment on someone else's ability to comprehend when you can't even comprehend the need for punctuation.
Exactly, and it is also not the fault of the "liberal world" that "our side has no rebuttal."Delete
In fact, "our side" has a rebuttal so good that it stopped Dubya's attempts to partially privatize Social Security in its tracks, and turned Paul Ryan's attempts to privatize Medicare into political poison.
So Bob, please look beyond some blowhard's success in interrupting a "ilberal" during a TV shout show for evidence that "our side has no rebuttal."
Dean Baker has suggest such a rebuttal, but puzzlingly, no one ever uses it. When someone makes that statement, simply counter with:Delete
"Oh? What about the bonds held by wealthy Americans? Are those worthless IOUs as well? Are these Americans not actually wealthy, because they only own worthless IOUs?"
Actually, the best rebuttal has been one used for decades: Instead of sticking the trust fund in a gigantic mattress, it is actually earning interest in the the safest investment in the world.Delete
I have heard that at least since the Reagan Administration, and the first people to use it was the GOP in answer to "liberal" criticisms that Reagan was spending the trust fund to hide the true costs of his own deficit spending.
Dubya even had to answer that by claiming that putting that dough in the stock market would generate a much greater return than the world's safest investment.
In other words, those "IOUs" were far from worthless.
--*I have heard that at least since the Reagan Administration, and the first people to use it was the GOP in answer to "liberal" criticisms that Reagan was spending the trust fund to hide the true costs of his own deficit spending.*--Delete
Using one politician's words (or one party's bloviations) against another's is hardly a means to ascertain truth. One might just as well point to the "liberal" criticisms you allude to. The fact is, both parties blew the "trust fund" on their pet projects. That both parties pointed their fingers at their opposites highlights the nature of politicians.
"What about the bonds held by wealthy Americans? Are those worthless IOUs as well?"Delete
Such bonds are backed by assets. In most cases, a failure to pay those debts will result in a liquidation of said assets to meet the obligations.
What assets do you suppose the U.S. government will liquidate to meet the social security obligations?
The original quote was referring to Treasury bonds held by wealthy Americans. You may have some in your IRA or 401-K. Those T-bonds are not backed by assets. They are backed by the full faith and credit of the federal government, and are considered the safest investment on Earth. They are functionally identical to the bonds held by the Trust Fund. If the Trust Fund did not buy the bonds, the government would have had to sell more to other investors. The money raised by selling ALL Treaury debt has "already been spent".Delete
Take a look at the annual report for any large corporation. You know how they account for U.S. government securities? They include them in a category with a name like "Cash and equivalents."Delete
That's right, kids. When the masters of Wall Street have one of these "worthless IOUs," they call it money.
The appropriate reply from anyone in the boomer generation is "I paid Social Security taxes for thirty years, and I'll be damned if you f'ing Republicans are going to rip us all off with this lie. There are lamp posts being measured for you."ReplyDelete
"I'll be damned if you f'ing Republicans are going to rip us all off with this lie. There are lamp posts being measured for you."Delete
It took two parties to spend all that money you sent them, and for whatever their complicity, and for which they should be eternally damned, the Republicans at least made mouth noises about restraining spending.
Oliver Goldsmith, writer of the brilliant 'She Stoops to Conquer' and friend of Samuel Johnson, was an abysmal extemporizer, according to contemporaries. The wit and intelligence of his writings never spilled over into his conversation.ReplyDelete
I feel the same about Krugman. I've never seen him acquit himself well in a public forum. He just doesn't have the quick verbal skills and ability to shoot down lies and misapprehensions needed by those who attempt to argue with showmen and panderers.
Doesn't matter how verbally agile a person is if that person is not allowed to complete a sentence.Delete
Don't you see? The "team" hasn't "created" that "sharp, clear rebuttal" that can be spoken in half a sentence.Delete
I disagree, Anon 2:36.Delete
I've found Krugman to be a very quick wit and an often excellent explainer of policy. He's just not "always" good or, as Anon 6:20 says, allowed to be.
Exactly, Anon 6:54. I know you're being sarcastic, but Bob is presenting a legitimate critique here. You need that half-sentence rebuttal (I like Dean Baker's suggestion) in a public debate. You can always elaborate later.Delete
There is "wit and intelligence" on abundant display in the above comment -- not to mention historical and literary allusion. All rolled into five sentences. Nice.Delete
It is important to anticipate statements and plan ahead, and our side has done a terrible job of providing its spokespeople with the resources they need: "Whoever told you that is a liar. The Trust Fund exists as a separate legal entity as a matter of law, it holds Treasury bonds as a matter of law, it continues to receive FICA taxes that can be used solely within the Social Security system as a matter of law, and interest is paid on its bonds as a matter of law, just like interest is paid to you on your Treasury bonds as a matter of law. Do you have no respect for the rule of law?"ReplyDelete
re IOUs... Senator Johnson sounds like someone who thinks his bank deposits reside on a shelf with his name on it.Delete
"Senator Johnson sounds like someone who thinks his bank deposits reside on a shelf with his name on it."Delete
With respect to his bank deposits, Johnson probably thinks that whatever the bank has done with his money, they have secured some collateral against the risk of the borrower's insolvency.
In these days of trillion dollar deficits, it would be difficult to identify the collateral against which the U.S. government stakes its IOUs.
"With respect to his bank deposits, Johnson probably thinks that whatever the bank has done with his money, they have secured some collateral against the risk of the borrower's insolvency."Delete
Senator Johnson knows nothing about how banks really work (does he really think the banks have enough housing stock to be anywhere near equal collateral to the mortgages they hold?), and frankly I'm shocked he never heard of "too big to fail".
Like I said, economic know-nothings.
Echoing Spear and taking the next step: "And you would use your lack of respect for the rule of law to screw the people in your [state/district] who have been paying into the system for years with the promise and their understanding that the system is separate as a matter of law? You should ask your constituents if they are happy with you suggesting we should muck around with the laws protecting their Social Security benefits."ReplyDelete
Agree the Krugman's debate skills are not his strong suit, and he often gets ambushed this way. Also agree with the above posted, we have mostly WON the debate on SS, and the silly argument that SS is like an IOU on a piece of paper you can't sell is so dumb it's not likely to win a lot of hearts and minds anytime soon.Delete
--*the silly argument that SS is like an IOU on a piece of paper you can't sell is so dumb*--Delete
Actually, by law, the special treasury bills that make up the totality of the trust fund are specifically designated as non-marketable. They are not like other government instruments.
You've never heard of "savings bonds"? The kind you buy and put away for 10 years or more? Non-marketable. Must be an "IOU".Delete
The simple answer is that the Trust Fund is a debt owed to Baby Boomers, who paid SS taxes all their lives (or at least since 1983) to build it up, and if it isn't paid out by the time they have all died they will have been cheated. People grasp arguments based on what belongs to whom, or immediate benefit, but even such simple economic things as how SS really works seem to stump them. But I have never seen that argument - even on this blog.ReplyDelete
To go one step further, the payout of the debt in the Trust Fund will have to come from income taxes (mostly), which are paid by upper-income people, and this is why upper-income people (which includes almost anyone who will appear on TV to talk about the issue) tend to be opposed to paying out the Trust Fund, not because they are really concerned about what will happen to the low-income people who will have to depend on SS in retirement. Again, people understand arguments based on where the benefits are flowing - or at least know which side to choose. SS bashers' arguments are designed to confuse people about this.
Krugman is excellent at presenting things in a simple way in writing, but life as a respected professor is not a good preparation for political debate. When he talks to students they listen and don't interrupt with obviously false claims.
Yes, and how come we all know this and can recite this if the "liberal world" has been so bad at getting this message out.Delete
What I think Somerby is trying to say is that we aren't convincing people who will never be convinced. Like Sen. Ron Johnson of Wisconsin.
But yeah, if he thinks "our side" is losing this debate, then let "their side" try to privatize either Social Security or Medicare again. They've gotten burned badly every single time they have tried.
No, I think Somerby is referencing polls, which indicate many people think SS will go "bankrupt" or "won't be there."Delete
People with enough interest to be on blogs such as this one aren't rank-and-file. Your average person very much will still parrot the "worthless IOUs" line, and not just diehard conservatives.
And if you reference polls that boil down complex issues to simple questions, you'll find "many people" who believe space aliens have already visited the earth and were in fact responsible for the construction of the pyramids, and "many people" who believe that JFK was killed by a conspiracy involving Castro, the Mafia, the CIA, the FBI, the Secret Service, and various elements of the shadowy "military-industrial complex."Delete
--*Your average person very much will still parrot the "worthless IOUs" line, and not just diehard conservatives.*--Delete
Whether the IOUs are "worthless" or not is immaterial to the argument at hand. The salient fact is that they are IOUs, backed by nothing more than the willingness of politicians to see them backed. While payouts now still largely come from the payments made by current workers, a growing amount is coming from other government revenue streams, not from the accounting gimmick trust fund.
"The salient fact is that they are IOUs, backed by nothing more than the willingness of politicians to see them backed."Delete
A fact which Social Security shares in common with ALL our US debt instruments, Mike The Misleader.
It's fair to jump on Johnson's cluelessness. But, the real question people have is whether they can count on SS. The answer is "maybe" or "partly". Here are two unpleasant facts:ReplyDelete
1. The money that workers and employers pay into SS isn't saved and invested. Instead, it's used to pay current retirees. When we retire, our benefits will come from the working people at that time, not from what we paid in. (More precisely, a small portion of the money paid in was saved and invested in the SS Trust Fund. But, the Trust Fund isn't the main source of SS benefit payments.)
2. As currently structured, SS is not sustainable. It will not be able to pay promised benefits. People are right to worry about whether they will receive the benefits they're currently promised
And thank you, David, for proving my point.Delete
Which is: No matter how you say it, no matter how many times you say it, there will still be people like David in Cal who won't believe the truth if it were a pit bull nipping at their hindquarters.
As the Johnson-Krugman "debate" proved, you can't "debate" with anyone whose sole tactic is to deny even the most basic facts.
Anon, which "basic facts" do you think I'm denying?Delete
Oh, I don't know. Let's start with 1 and 2.Delete
Anon -- You should read the SS Trustees' Report, where is saysDelete
After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086.
Here's the most "unpleasant fact". SOcial security is strong and will "be there" for the citizenry if we don't let a bunch of economic know-nothings (you know, the ones who cut taxes in the run-up to 2 wars or the ones who want to solve a non-existent deficit during time of 20% un-/ under-employment. Like I said, economic know-nothings) who want to kill it do just that.Delete
Can you count on your house being there when you get home this evening, David? Not if you have bunch of firebugs watching your house for you. Especially if firebugs who want to burn your house to the ground.
Here's a thought. Stop listening to economic know-nothings, and stop electing and supporting them.
"SOcial security is strong"Delete
Payouts have been coming out of general revenue for something like three years, now, Berto. It's never going to go back into the black.
It ALL comes out of general revenue, Mike.Delete
Unless you think SS is separate (in which case it has $2.3 Trillion balance in the Trust Fund).
"The money that workers and employers pay into SS isn't saved and invested. Instead, it's used to pay current retirees."Delete
For the last 30 years, a portion of the money workers and employers pay into SS has been used to pay current retirees. However, the collections for SS have exceeded payouts and that excess has--in keeping with the design approved by St. Reagan--been loaned to the general fund.
Try not to leave out relevant details, will you?
I watched the debate between Krugman and the Congressman from Wisconsin--the idiot wouldn't shut his freaking gob. But I think still the problem is that the nonsense that's said, "there's no money left, it's all been spent" is very succinct and right to the point(however inaccurate)...the response, even here in these comments are long-winded and somewhat abstract. The reply is not the same sort of quick, short-hand that's easy to understand. If liberals--not just a few--had been defending SS for many years I think this response would be far better.ReplyDelete
--*"there's no money left, it's all been spent" is very succinct and right to the point(however inaccurate)*--Delete
How, exactly, is it inaccurate? If it's "right to the point", what is the "something happens" that always goes unspecified that renders the right point wrong?
Mike, Mike, Mike. Go to your bank and ask to see all the funds in claims in assets in cash.Delete
What? It isn't there? It's been replaced by IOU's in the form of such things as business loans, car loans, mortgages? For which the bank earns interest?
Wow! Better pull you money out of those certificates of deposit and savings accounts. Maybe even your checking account. After all, there's nothing there but IOUs.
"What? It isn't there? It's been replaced by IOU's in the form of such things as business loans, car loans, mortgages? For which the bank earns interest?"Delete
Businesses, cars, and houses are all assets, and when the bank can't fulfill my withdrawal request, I expect it to sell one or more assets to meet its obligation to me.
What assets do you propose the federal government sell to meet its Social Security obligations?
What gives you reason to suppose that the federal government won't "sell" its Social Security obligations to pay for one of its *other* obligations?
"Better pull you money out of those certificates of deposit and savings accounts."Delete
If my bank's balance sheet looked like the U.S. government's balance sheet, I would.
The best things is: I would be free to do so.
"Businesses, cars, and houses are all assets, and when the bank can't fulfill my withdrawal request, I expect it to sell one or more assets to meet its obligation to me."Delete
So indeed are all those so-called "IOUs" in the trust fund Mike. And they are far more valuable and far more liquid than the "businesses, cars and houses" that you THINK your bank owns.
Quick Economics 101: The banks own none of those. They only own the loans on them
"To this day, Krugman doesn’t know what to say in response to that famous old bullroar. But that isn’t Krugman’s fault."ReplyDelete
It's not Krugman's fault that there's nothing to be said, but it is his fault that he can't admit that there's nothing to be said.
The "trust fund" is nothing but a promise from future politicians. The ostensible assets have been frittered away, completely. Sure, there's a ledger that says the account holds X dollars, but there are no actual dollars in the account. To pretend, against all evidence, that things are otherwise is insanity.
So we stop electing politicians who want to kill Social Security.Delete
What other existential problem can I solve with a teaspoon of common sense for ya, Mike?
"So we stop electing politicians who want to kill Social Security."Delete
One brand of "politicians" or another isn't going to save Social Security. It's not a matter of politics. It's math, as the kids say.
The damage is already done. The fallout is unavoidable. Either way you slice it, a lot of little people are going to get it in the neck, eventually.
The mistake was instituting Social Security in the first place. Early generations reaped the benefits, just like early investors in any Ponzi scheme, but the ultimately bankruptcy of the thing was always in the cards.
"The "trust fund" is nothing but a promise..."Delete
Just like ALL US debts.
SS is no different. The promises of the SS trust fund have been met in the past, and continue to be met today.
Just as with ALL US debts, there is no reason aside from demagoguery to believe they won't continue to be met in the future.
Truthfully, I can go long months without reading this blog, but inevitably, when I stop by, I see a post like the current one, with Howler dude *alluding* to the great and specific arguments that can be made against the likes of Johnson, et. al., but I've yet to see such arguments here. In the comments, I see a lot of ad hominem, and assorted half-baked thoughts, but never that so longed for irrefutable argument.ReplyDelete
So, how about it, Bob? How about a five part fugue on how that trust fund really exists and how it isn't really going to become a bigger and bigger drain from the general revenues?
Funny, Mike, I see all kinds of well reasoned arguments in this thread responding to your idée fixe, i.e."We're broke, we're broke, ahhhh it's just IOUs!" (Wash, rinse, repeat). So, are the govt. bonds held by the Social Security Administration somehow less secure that all the other govt. bonds the U.S. issues? If so, we've got bigger problems than Social Security to worry about. You're right that ultimately we rely on our elected officials to fulfill their end of the social contract. If they sell out Social Security then I predict that citizens of both parties will indeed be measuring lamp posts.Delete
If they sell out Social Security then I predict that citizens of both parties will indeed be measuring lamp posts.Delete
The guilty parties will escape punishment, because of the delay. President George Bush knew that SS was unsustainable. His SS Trustees told him so, year after year. But he didn't fix SS. Ditto for Barack Obama and those who served in Congress for the last 13 years. These people have allowed SS to remain on a track where it will not be able to fulfill its current promises.
However, by the time the actuarial predictions become reality, Bush, Obama, Pelosi, Reid, Boehner et. al. will be forgotten. It will be too late to hang from lamp posts.
Make up your mind, Mike. Is SS just part of the general fund (like Defense, for instance), or is it separate and going bankrupt (despite it being owed $2.3 Trillion from the general fund's borrowing of the Trust fund)?ReplyDelete
BTW, tough break if you want the government to defend you. Defense is broke and we'll have to depend on future politicians to fund it. No guarantee there.
Yup, and somebody better tell the plutocrats--like Pete Peterson--they're shit outta luck too.ReplyDelete
Both government bonds and specisl issue social security bonds have value as long as the economy is productive enough for taxes to fund their redemption.ReplyDelete
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