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Sunday, November 28, 2004

Social Security Book Cooking

Blogger ate a long post I wrote on this recently. Republicans are still talking about not describing the increase in the deficit due to the Bush administration's partial privatisation of social security as an increase in the deficit. Interestingly, they seem to be willing to claim that the partial privatisation will move the social security administration towards solvency.

This is crazy. Furthermore there is no way to use financial tricks to hide the complete craziness of the argument. When a reform is proposed, its proponents should, and I trust will, be forced to discuss three numbers which can't be fudged. The date when the Social Security Administration will begin to spend down it's trust fund (seems to be 2005 according to current proposals) the date after which, without further reform, SSA outlays will exceed revenues for the forseeable future and the date when the trust fund will hit zero. The plan to "save" social security will bring all of these dates closer. Therefore the claim that it addresses the shortfall is laughably false.

Of course the plan is not at all a plan to save social security as is suggested by the argument in its defence.

A reasonable amount of borrowing now, the proponents say, would avert a much bigger financial obligation decades later. They say personal accounts would yield higher returns for individuals than the current system and could be a catalyst to broader changes that would bring the benefits promised by Social Security into line with what the system, which is also about to come under intense financial strain from the aging of the baby boom generation and the increase in life expectancies, can afford to pay.

The above paragraph, written by RICHARD W. STEVENSON by in The New York Times seems to me to mainly demonstrate the extreme strain that a reporter faces when required by the canons of the profession to write a balanced article on a debate when one party to the debate (the Republican one) insists on saying things that make no sense whatsoever.
Here the defender of the proposal is anonymous, which is odd given that it's the President's proposal. The defence is laughably weak, since it is based on the claim that the proposal will be a "catalyst" for something completely different, which is not described at all.

The honest argument would be that, yes the private accounts would make the shortfall worse, but once they are in place it will be politically possible to cut (or eliminate) social security, which would be a good thing. Obviously that is not politicially possible right now, so the anonymous source chose to say nothing about what exact "broader changes" he or she has in mind.

I really think that 55 senators are not enough to win the debate in the country (or even maybe the Senate) when one is so totally utterly unwilling to address reality. Of course, I've always been wrong before.l

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