Saturday, August 20, 2011

Fixing Social Security – A small reality check

Here is a little item that I meant to post way back in the fall of 2010 but never quite got around to. It's still timely, though–all too timely, I'm afraid. There may be some more of these catch-up posts in the near future, for which I will beg readers' indulgence in advance.

=> Much of the confusion surrounding discussions of Social Security stems from a widespread tendency to conflate the long-term financial problems of the Social Security program, which are neither urgent nor apocalyptic, with the long-term problems of Medicare & Medicaid, which are genuinely threatening. This confusion, which helps produce a lot of unnecessary panic, is often just a result of misunderstanding. But it has also been deliberately fostered by political forces whose real agenda is to dismantle Social Security (in the guise of "reforming" it).

Of course, they have their reasons for wanting to do this–reasons that happen to be wrong, in my opinion, but in some cases honest and serious arguments could be made for them. However, it's important to distinguish between the ideological (and/or partisan) commitments driving this long-term campaign to undermine and dismantle Social Security and the misleading and pseudo-"serious" arguments often used to advance it. When these arguments emphasize scare-mongering claims about the inherent unsustainablity and imminent insolvency of the Social Security system, what they are really pushing are transparently fallacious economic analyses, rationalizations for preconceived positions based on quite different concerns, groundless propaganda, or some combination of the three.

With respect to Social Security, the following quotation from an October 2010 National Journal piece by Ronald Brownstein, linked to by Kevin Drum, gets to the heart of the matter:
"It's quite a manageable problem," says Robert Reischauer, the former director of the Congressional Budget Office. "It's a mere shadow of the problem associated with Medicare and Medicaid."
Kevin Drum adds:
Yep. We could solve Social Security for all time in about a day of easy negotiations if both Democrats and Republicans were actually serious about solving it. The required set of benefit cuts and revenue increases would be so minor, and would phase in over such a long period, that virtually no one would even notice.

Too bad we're not serious about it.
Right. And, frankly, it's not even clear that benefit cuts would need to be part of the package–beyond some adjustments that are already scheduled to kick in under current law. At most, very "minor" technical adjustments would be enough to do the trick. (As usual, Paul Krugman has laid out the key points clearly cogently on several occasions, for example here & here.)

Brownstein's article also quotes Barack Obama restating another crucial point that should be blindingly obvious to everyone except hard-core privatize-Social-Security ideologues (even more so this month):
[I]t's hard to imagine that anybody ... would feel real confident [about] putting part of their Social Security into Wall Street accounts after they've been watching what happened to their 401(k)s.... So I think that that approach is a nonstarter.
It should be a non-starter. But, unfortunately, this is one of those terrible ideas that never stops coming back.

–Jeff Weintraub