Thursday, March 31, 2005

Bush's tactics.

I think Kevin Drum has it right:
There are only two ways to significantly improve Social Security's finances: benefit cuts and tax increases. Bush is too gutless to propose either one, so he's desperately trying to sucker someone — anyone — into proposing them first. Nobody with half a brain should oblige him.

Until Bush has the political courage to step up to the plate and send a serious proposal of his own to Congress, he shouldn't expect anyone else to do it either. In the meantime, he deserves nothing but scorn. His sustained display of political cowardice is setting a standard for generations to come.

(via Talking Points Memo)

Tuesday, March 29, 2005

Economists: Bush's unrealistic expectations.

I've noted before that Bush's arguments seem to rely and on two different economic forecasts: a very pessimistic one when it comes to predicting the health of Social Security, and an optimistic one when it comes to projecting what individual could earn with private accounts.

They can't both be true.

If the economy does as poorly as Social Security projects, there's no way stocks can return as much as Bush expects. But if stocks do provide the return he brags about, it's because the economy will be doing so well that Social Security will not have a problem!

But don't take my word for it:
President George W. Bush, promoting his plan to set up private Social Security accounts, is betting that stock returns will remain strong even as economic growth slows. Economists and equity strategists aren't so sure.

Bush is using forecasts from the Social Security Administration that say the economy will expand less than 2 percent a year -- the slowest sustained rate since the 1930s -- after 2020 as population growth eases. At the same time, the agency projects that stocks will return an annual average of 6.5 percent after inflation.

Thirty-nine of 58 economists and strategists surveyed by Bloomberg News say that if the economy slows that much, Bush's stock outlook is too optimistic. Over the last 50 years, as the U.S. economy grew 3.4 percent a year on average, almost twice as much as the agency is forecasting, the Standard & Poor's 500 Stock Index returned only 6.8 percent after dividends were reinvested.

"A 6.5 percent real equity return is not realistic" at the growth rates being projected, says Thomas McManus, chief investment strategist in New York at Banc of America Securities LLC. "If it were, we will not have a Social Security problem in 2050 because shareholders will be so wealthy they could easily fund the shortfall."

(via Washington Monthly)

Friday, March 25, 2005

The people learn, the less they like Bush's plans.

A new Pew Research poll found that support has dropped among the under-30 set ... the age group that was most in favor of privatization.

Shame on John McCain.

I was thoroughly disgusted to see John McCain touting Bush's privatization plan the other day. Turns out I'm not the only one:
Shame on McCain for being a part of this effort to divide the generations. Usually noted for candid speech, he even resorted to misinformation when he said in 2042 "we stop paying people Social Security." McCain knows that isn't true.

That is the date (actually it was changed to 2041 the other day) when Social Security reserves are expected to be used up. Even then, with no change in the program, recipients would continue to get about 75 percent of what was promised them.

McCain should be familiar with such tactics. After his surprising showing in the 2000 presidential primary, McCain became the target of a smear campaign in South Carolina. People connected to Bush questioned McCain's patriotism and morality - distorting the facts of his Vietnam War record and his adoption of a Bangladeshi child.

I know someone in a low-level position who is tenuously affiliated with the senator. I'm told secondhand that he defends this kind of thing as what McCain has to do to build power to do good. Sorry, but that argument doesn't hold water. Tell me, what possible good can McCain do that would outweigh jeopardizing the financial well-being of generations of Americans?

Senator, the Straight Talk Express has left without you. (editorial via Talking Points Memo)

Why Bush stacks the deck at his town hall meetings.

Dick Cheney went to Battle Creek, MI and Pittsburgh, PA to stump for privatization. Usually the transcripts of these events are routinely posted to the White House website, but these were not, and "Holden" decided to investigate why:
So I turned to local press coverage of the two events and soon found out why the White House is holding onto those transcripts. Big Time Dick is getting blasted by both the local press and his hand-picked audiences.

Unlike Dear Leader, when Cheney does a Social Security "town hall" meeting he allows audience members to ask him questions instead of placing "regular folks" on stage with him for well-rehearsed exchanges on the evils of Social Security. Turns out that was a huge mistake on Dick's part.

Go to his post to read the press excerpts. (via Talking Points Memo)

Wednesday, March 23, 2005

Most Americans no good at investing.

Part of the supposed appeal of privatization is that individuals can do so much better investing on their own. Yet once again, the facts say otherwise:
when it comes to managing money, studies done by a leading human resources firm to track the financial acumen of the masses show that most Americans don't know what they are doing. That's a big negative for Bush, whose plan is based on his belief that most Americans want to, and are capable of, building a profitable portfolio made up of stocks and bonds.

"I have a Ph.D., have belonged to an investment club for 10 years and have studied the market — and even I have invested badly over the years," says Marjorie Abrams, 67, a retiree from Gainesville, Fla. "What will those who don't understand the market do with their savings? How much time can they be expected to devote to it?"

Certainly not the long hours logged by professional Wall Street analysts, traders and money managers. Research confirms that a huge swath of U.S. workers have little or no interest in serving as their own personal portfolio managers.

Cooking the numbers.

The new report from the trustees of Social Security is out today, and -- surprise, surprise -- things are even worse than predicted last year. Now they claim that benefits will exceed revenues in 2017 (vs. 2018) and the surplus will be used up in 2041 (vs. 2042).

I say "surprise surprise" because the six trustees consist of four members of the Bush Administration, plus two public trustees -- and one of them has already expressed support for privatization. So this was pretty much a foregone conclusion.

So how did things get worse instead of better? Atrios has found at least four factors so far:
first pass - significantly lowered mortality rates from previous year, lowered the already ridiculously low immigration rates...

...increased near term inflation estimates...


It looks like the biggest jiggering is with the mortality tables. What I'd love is a model ran with last year's assumptions intact, with the 2004 actual data added, but that I'll never see...

...they do discuss how changes affect the long run actuarial balance, but not the solvency year.

Anyway, summing up, from what I can glean:

people live longer
teenagers work less
inflation higher
old people work less

Sunday, March 20, 2005

The Bush numbers are too optimistic.

Yale economist Robert Schiller -- whose book "Irrational Exuberance" warned that we were experiencing a stock market bubble in the late 1990s -- has crunched the numbers on the Bush Administration's proposals and found that most people would do worse, not better:
A new paper by Yale University economist Robert J. Shiller found that under Bush's default "life-cycle accounts," which shift assets from stocks to bonds over a worker's lifetime, nearly a third of workers would bring in less in benefits than if they remained in the traditional system. That analysis is based on historical rates of return in the United States. Using global rates of return, which Shiller says more closely track future conditions, life-cycle portfolios could be expected to fall short of the traditional system's returns 71 percent of the time...

Shiller's paper -- to be posted on his Web site, -- is adding to research that suggests the White House has been overly optimistic in its assumptions about personal investment accounts. A recent paper by Goldman Sachs economists said the White House's anticipated 4.6 percent rate of return above inflation could be nearly 2 percentage points too high.

Here's the direct link to Shiller's paper (doc format).

Republican Offers Lessons on Taking the Heat.

Those town halls intended to drum up support for Bush's plans have gone so well that a Republican is now offering rehearsals to his fellow representatives:
Back in their home districts, House Republicans lately have been getting hammered with hostile questions about President Bush's plans for Social Security. This past week, Rep. Jack Kingston (Ga.) offered a tutorial on how to handle the heat.

"Have you been getting hard questions at town hall meetings?" Kingston's office asked in an invitation to GOP press secretaries and other staff members to a "mock Social Security Town Hall Meeting." Over a pizza lunch, Kingston, the vice chairman of the House Republican Conference, offered to play a beleaguered congressman getting grilled by constituents.

The e-mail invitation was passed on by a Democratic source who professed incredulity that Republicans now need rehearsals for town hall meetings.

Saturday, March 19, 2005

Stil exaggerating, still being hypocrites.

The pro-Bush group Progress for America is at it again, according to the non-partisan Annenberg Political Fact Check:
The pro-Bush group Progress for America released a new TV ad highlighting Social Security’s long-term fiscal deficit by telling voters that the system will go bankrupt “sooner than you think.” But the ad fails to mention that the system isn't projected to go "bankrupt" for another 37 years, when the Trust Fund is exhausted. And even then, neutral experts agree Social Security could still pay between 70 and 80 percent of currently scheduled benefits.

The group also takes aim at “National Democrats” for having no plan to address the system's financial shortfall. It’s quite true that Congressional Democrats have not endorsed a specific plan, but neither has President Bush.

Thursday, March 17, 2005

The Soft Bigotry of Life Expectancy.

Slate's William Saletan explains the different (and sometimes misleading) sales pitches that George Bush is making to different ethnic groups:
So, here's the situation. In an op-ed written in Spanish and not made available in English on any federal Web site, the administration argues that Latinos, who live longer than whites do, should support Bush's reform plan because they're growing rapidly as a share of the working population. Meanwhile, in forums and private meetings aimed at blacks, the administration argues that blacks, whose share of the working population is growing at a slower rate than their share of the population over 65, should support Bush's reform plan because they don't live as long as whites do. Only once has Bush slipped up and alluded to one group in the course of making his pitch to the other. And on that occasion, at best, he seems to have conveyed—and failed to correct after its publication—an impression that helped him politically but was contrary to the truth.

Wednesday, March 16, 2005

Bush: I'm not offering any detailed plans.

From today's press conference, from Reuters:
President Bush said on Wednesday he would not unveil a detailed proposal to overhaul Social Security, his top domestic priority, anytime soon because Congress would probably reject it.

But Bush told a news conference he would not back down from his push to create private accounts for Social Security despite polls showing a lack of public enthusiasm even after he has spent weeks traveling the country to promote the notion.

"The first bill on the Hill always is dead on arrival," Bush said. "I have not laid out a plan yet, intentionally," he said. "I'm interested in coming up with a permanent solution. I'm not interested in playing political games," he said.

Got that? It's not political games to let everyone know what you want, but refuse to offer any details. But Democrats are playing political games when they demand details and fail to offer any ideas of their own. Because Republicans are never partisan, only Democrats. And if you don't agree with that, you must hate America.

Monday, March 14, 2005

Skepticism of Bush's Social Security Plan Is Growing.

So far, the public doesn't seem to be buying the Bush arguments. From Tuesday's Washington Post:
Three months after President Bush launched his drive to restructure Social Security by creating private investment accounts, public support for his program remains weak, with only 35 percent of Americans now saying they approve of his handling of the issue, according to a new Washington Post-ABC News poll.

While the White House has helped convince more than two-thirds of those polled that Social Security is heading for a crisis or possible bankruptcy without change, 56 percent disapprove of his approach, a survey of 1,001 adults conducted March 10-13 shows. By comparison, 38 percent approved of his handling and 52 percent disapproved of it in mid-December.

Moreover, 58 percent of those polled this time said the more they hear about Bush's plan, the less they like it. The latest polling, combined with detailed interviews last week, shows that Bush's drive to significantly alter the 70-year-old national insurance program has run into significant hurdles with every age cohort.

We can't relax, however, because it's clear that Bush is determined to get his way on this one. Who knows what they'll resort to.

UK expert: Don't make the same mistakes we did.

Under the bland headline "Social Security plan criticized," today's Detroit Free Press relates some pretty damning criticism from someone who knows unusually well what he's talking about:
The man in charge of recommending changes to Britain's retirement system offers Americans a warning: Beware of changes to Social Security such as those President George W. Bush is urging.

Nearly 20 years ago, Britain adopted a form of personal investment accounts much like the one Bush proposes. Britain also changed the way it calculates retirement benefits to adjust for inflation, keying them to consumer prices rather than wages, as Bush and lawmakers are considering for Social Security.

The result: "We have created the most complicated pension system in the world," said Adair Turner, a Merrill Lynch vice president and chairman of the United Kingdom Pension Commission.

Moreover, Turner said, contrary to the benefits promised when the British changed their system, their new approach isn't increasing national savings and isn't fostering an ownership society. And, he said, workers are retiring with less savings than they did before.

As a result, Turner is looking at revising Britain's system again to make it more like the traditional U.S. Social Security system that Bush proposes to change.

The article goes on to provide more details, and is definitely worth reading.

Will George Bush listen? Of course not.

Bush Social Security Initiative Carries Ideological Underpinnings

NPR's Daniel Schorr explains the ideology behind Bush's plans.

Saturday, March 12, 2005

There they go again.

The non-partisan Annenberg Political Fact Check explains how Progress for America's TV commercial comparing Social Security to the Titanic is a "big exaggeration":
In a new TV ad, Progress for America exaggerates the true state of Social Security's finances by comparing it to the Titanic. The ad claims the system will go "bankrupt" if nothing is done and that we must rescue the program "before it hits the iceberg." Actually, neutral experts predict the system can pay between 70 and 80 percent of currently scheduled benefits even if the Trust Fund is exhausted, which isn't predicted to happen for another 37 years, at least.

The ad also touts Bush's plan for "voluntary personal retirement accounts" as though that would improve the system's finances. But even the White House now acknowledges that individual accounts alone do nothing to fix the system's long-term financial shortfall.

Social Security: On With the Show.

You (hopefully) know that all the presidential "town hall" events touting Bush's privatization plans consist of carefully screened audiences that already agree with him. Today's Washington Post documents the screening process designed to keep oppornents out:
If the presentations sound well rehearsed, it's because they often are. The guests at these "Oprah"-style conversations trumpet the very points Bush wants to make. Seniors on stage express confidence that Bush's plan to create private investment accounts would not eat into promised benefits, and the granddaughter of one spoke hopefully on Friday of a richer retirement if the president prevails.

These meticulously staged "conversations on Social Security," as they are called, replicate a strategy that Bush used to great effect on the campaign trail. But instead of appealing to his political base in hopes of driving up turnout, Bush this time is targeting a far narrower audience of swing voters in the Senate -- centrists who so far appear unswayed by the president's public salesmanship. And Democrats, led by their new party chairman, Howard Dean, have begun firing back, belittling the forums as rigged spectacles rather than true town hall meetings.

The White House follows a practiced formula for each of the meetings. First it picks a state in which generally it can pressure a lawmaker or two, and then it lines up panelists who will sing the praises of the president's plan. Finally, it loads the audience with Republicans and other supporters.

If Bush had any real guts, he'd attend meeting where anyone could show up, even if it was to ask tough questions or state their disagreement with his plans. But that will never happen. Ever.

Thursday, March 10, 2005

Exposing the Echo Chamber.

The Center for Media and Democracy has a good article talking about the web of conservative organizations all working together to push the privatization of Social Security under the guise of "saving" it.

If you don't want to take the time to read the entire article (which you should), just click on the illustration to see a graphic presentation of it.

(The story behind this graphic: I found the article in a thread at Metafilter and mentioned that I thought it would be compelling to see it presented graphically. Fellow member monju_bosatsu whipped this up in about an hour, and graciously allowed me to post it here. I had actually started working on one of my own, but this looked much better. If only I had more time to spend researching and expanding this graphic!)

Blocking move.

The New Republic has an excellent article about what conservatives really want to accomplish, why they're wrong, and why they must be stopped -- and not compromised with:
The key point Democrats should understand is that, while it may be tactically useful to favor an alternative to privatization, no decent alternative is going to be signed into law under this president. There will be plenty of time in the future for shoring up Social Security or adding spiffy new savings vehicles. In the meantime, the crown jewel of the New Deal faces an existential threat. Defeating that threat is the task to which we must presently address ourselves.

I couldn't agree more. No compromise on this issue. Bush is wrong and must be stopped. I urge you to read this entire article. (via Talking Points Memo)

It's going to be a long haul.

I noted earlier predictions that the administration had only about 90 days to successfully make their case for privatization. But as noted by Josh Marshall, a Congressional Quarterly writer says Bush has two choices: cut a deal quickly and declare victory, or slug it out and hope for GOP gains in the 2006 Congressional elections. So far, it looks like the latter ... which means I'm going to be keeping this blog for a long time to come.

Wednesday, March 09, 2005

GAO official: There is no Social Security crisis.

I can't say it much better than this AP story:
Social Security "does not face an immediate crisis," the head of the Government Accountability Office said Wednesday, but it does face a long-term financing problem "and it would be prudent to address it sooner rather than later."

David M. Walker, who heads the nonpartisan Office of Comptroller General, also criticized President Bush for undertaking an aggressive two-month tour to try to sell his plan for allowing younger workers to divert a portion of their Social Security payroll taxes into private investment accounts. Walker suggested that Bush and members of Congress focus on improving financing for the program, which would not be significantly affected by establishment of personal accounts.


Monday, March 07, 2005

Yet again, what it's all about.

In this NYT article about those seeking "compromise" on Social Security, the true goal of "reformers" appears yet again (emphasis added):
"There is no support whatsoever among conservatives in the House and the Senate for add-on accounts," said Michael Tanner, director of health and welfare studies at the Cato Institute, a libertarian research group that has promoted private investment accounts for two decades. "The whole point is transforming the Social Security system from a system where people are dependent on the government to one where people can save for themselves and accumulate wealth on their own, and add-on accounts don't do anything to transform Social Security."

It's not about saving Social Security. It's about destroying it.

Wednesday, March 02, 2005

Grave Medicare ills await attention while Bush tackles Social Security.

More people are finally noticing that, as this this AP story explains, Medicare is in much worse condition than Social Security:
A looming Medicare shortage is seven times the size of the one that Social Security faces and nearly four times the entire federal debt. It is not being addressed by President Bush and Congress, and, to some, that is just as well.

Social Security, which Bush has hoisted atop his domestic agenda, is $3.7 trillion short of what it will need for benefits over the next 75 years, under the latest federal projections. Medicare, the health care program for the elderly, must find an estimated $27.8 trillion.

By 2018, Social Security is on track to start paying more annually to recipients than it collects in payroll taxes -- an ominous tipping point that Medicare reached last year.

While Social Security is expected to exhaust its reserves in 2042, Medicare should deplete the trust fund financing its hospital benefits in 2019, the latest forecasts show.

Tuesday, March 01, 2005

How Bush is using the Social Security Administration to push his plans.

Rep. Henry Waxman has released a report (PDF) showing how SSA publications have been altered to push the administration's claim that Social Security is in trouble.

The next six weeks are critical.

The White House believes it must overcome opposition to its Social Security plans within the next six weeks:
The GOP strategists stressed that the six-week goal is not a hard deadline for a political breakthrough, but they said the public's tepid view of Social Security change cannot be allowed to continue indefinitely. The directive raises the possibility that Republicans will have to reconsider whether legislation can be passed this year, as Bush wants.

Krugman: Just say no to even watered-down privatization.

Economist Paul Krugman notes that with privatization not going over so well, some Republicans are seeking compromise that still allow private accounts... ideas that should be rejected. And he notes what I've been maintaining, as well:
In short, anyone who wants to see the nation return to fiscal responsibility, wants to preserve Social Security as an institution or both should be opposed to any deal creating private accounts. And there is also, of course, the political question: Why should any Democrat act as a spoiler when his party is doing well by doing good, gaining political ground by opposing a really bad idea? (Hello, Senator Lieberman.)

The important thing to remember is why the right wants privatization. The drive to create private accounts isn't about finding a way to strengthen Social Security; it's about finding a way to phase out a system that conservatives have always regarded as illegitimate. And as long as that is what's at stake, there is no room for any genuine compromise. When it comes to privatization, just say no.