02 January 2008|
Rebuttal: Joe Conason
The Successes of Bankruptcy, the Simultaneous Desirability and Repugnance of Government Control, and Joe Conason's Other Gems
The morning after the president's emotion-drenched 2005 State of the Union address, Americans may be wondering what he actually explained about his intentions for a second term.
Last night's rollout of the latest White House political product -- recently rebranded as "Social Security personal accounts" -- adhered closely to those familiar techniques. Bush proclaimed the imminent bankruptcy of the nation's most successful and popular government program,
1) On "imminent bankruptcy" "Today, more than 45 million Americans receive Social Security benefits, and millions more are nearing retirement -- and for them the system is strong and fiscally sound. I have a message for every American who is 55 or older: Do not let anyone mislead you. For you, the Social Security system will not change in any way." - President George W. Bush, State of the Union address, February 2005. Imminence is generally defined as "about to occur," which shouldn't necessarily be applied to a bankruptcy that will occur after 2040. The hyperbole is mendacious, partly due to Mr. Bush's cited words assuaging alarm and partly due to the demagogic distortion such a characterization represents.
2) On "successful". The Social Security tax rate has been raised over forty times, with the maximum payment being raised from $60 at the program's inception to $11,000 today. Despite the fact that these tax rates are larger than the income tax rates for over eighty percent of Americans, the program still faces a deficit in 2018. The program also faces a current unfunded liability of $26 billion. In every other sector of American society, the characterization of "success" requires profitable financial activity to be one of the most elementary prerequisites. Distortions abound in American politics, but the canard that Social Security is a success even as it's financial foundations are bleeding dry is alarmingly false.
3) On "popular." 67% of Americans prefer a voluntary system of private accounts over the current Social Security apparatus. As a more general aside: You should also know that the American public derives its preferences - preferences that once included segregation - from pervasive ignorance and apathy. These preferences are an extremely poor barometer of sound policy. As it turns out, the use of this egregiously poor barometer is considered one of the worst polemical techniques available, even bad enough to necessitate its own logical fallacy - the ad populum fallacy. Can you make a worse argument than the ad populum argument? Certainly, your citation of nonexistent public support - the erroneous application of a logically fallacious technique - has to be as bad as it gets, perhaps one of the most atrocious arguments in American political discourse.
surpassing his previous exaggerations of the retirement system's projected financial problems. He associated himself with Franklin Delano Roosevelt and the late Sen. Daniel Patrick Moynihan (and cleverly put every proposal to cut future benefits in the mouths of Democrats, living or dead).
The FDR quote he cited was, "As Franklin Roosevelt once reminded Americans, "each age is a dream that is dying, or one that is coming to birth."
Referring to Moynihan, "The late Senator Daniel Patrick Moynihan recommended changing the way benefits are calculated."
If these quotes were inaccurate, you were welcome to explain the techniques by which they were.
Furthermore, the Democrat you didn't mention was Bill Clinton, about whom Bush said, "During the 1990s, my predecessor, President Clinton, spoke of increasing the retirement age."
Presumably you ignored this datum because one can always argue theoretically that quotes were taken out of context, but you can't ignore actual events such as Mr. Clinton's proposals.
Speaking of actual events, and speaking of Mr. Roosevelt, let's review:
"Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans." -- Franklin Delano Roosevelt, January 17, 1935
It all has little relevance regarding the justifications of Social Security reform, but it's worth liquefying your points.
Instead he offered deceptive advertising of his sketchy plan. And, of course, he repeated his irresponsible warning that the "entire system will be exhausted and bankrupt" in a few decades,
Certainly, the warning would be irresponsible if it attempted to elicit undue concern. However, the reality that Social Security - as confirmed by its own board of advisors - faces a rather propinquous financial crisis renders the warning justifiable under the circumstances.
blithely ignoring the fundamental fact that payroll taxes will continue to cover at least 70 percent of outlays long into the future.
It should be observed that your "fundamental fact" is not recognized by the Social Security Board of Trustees, who, with expertise slightly greater than yours, have concluded that tax increases invariably will result should reform fail to be implemented.
Additionally, the statement itself has no net logical effect. Your amorphous "future" timetable means absolutely nothing without numbers. Furthermore, 70% is considered by most statistical experts to be less than 100%. This renders the payroll taxes - that you promote as sufficient - manifestly useless to maintain economic solvency.
Worse yet than his familiar false alarms, however, was Bush's refusal to confront the only predictable effect of his privatization scheme -- namely, that the system will veer into serious and permanent deficit if he succeeds in diverting funds into "personal accounts."
Natural logical extensions would lead us to the conclusion that the only predictable effect of the reform plan would be to give individuals personal control over their funds.
Abecedarian economic theory provides no axiom that would lead to any conclusions such as yours. Furthermore, it is Social Security that is veering into serious and permanent deficit, as evidenced by established and respected sources who do not write for Salon magazine.
To the extent that Social Security faces a future financial shortfall, the diversion of payroll taxes into private accounts will severely exacerbate that problem.
Observing that you spent the previous paragraphs happily denying Social Security shortfalls, one is left to conclude that an exacerbation of a non-existent problem is the political equivalent of multiplying by zero.
However, back in the grown-up world where we make decisions based on principles of natural law and established economic theory, the diversion of payroll taxes into private accounts is a short-run cost absorption that would be eventually covered by economic stimulation due to private accounts.
The work of Martin Feldstein, of Harvard University, concluded that the reform proposal would add $10-$20 trillion to the U.S. economy and would permanently increase our GDP by 5 percent.
His scheme will require enormous benefit cuts and gigantic amounts of public borrowing, because the cost of privatization mounts into the trillions with each ensuing decade. Every American born after 1950 will be paying those costs in higher interest rates, increased taxes and denied benefits.
Regarding the saturation of your sentences with broken syllogisms and arrant illogic, I give you another seriatim riposte:
1) You offer no evidence to justify the "trillions" citation. This is expected, considering that no established study has concluded that the costs of privatization either mount, for that matter, or hit trillions, most likely because privatization means the absence of government funding. Secondly, every two-year election cycle that delays Social Security reform is estimated to cost the American taxpayer $320 billion. If costs were your concern, you would be promoting the transfer of fiscal power from the state to the individual.
2) On "higher taxes" First, Social Security taxes have been increasing since the implementation of the program, as observed earlier. Another raise sufficient to save the government program would be estimated - by the Trustees - at a 50% increase. This is the alternative to reform. Although, if there were tax increases, I suppose we could just call them a "roll back" of lower tax rates and consider them morally justifiable.
3) On "denied benefits." There are no proposals to deny benefits to anyone except wealthy retirees.
But Bush saw no reason to mention those disheartening details to his listeners at home in the heartland. To them, he promised an investment bonanza that would belong to them and their families in his great new "ownership" society. In fact, he offered a series of guarantees to younger workers for which he will never be held accountable:
"Your money will grow, over time, at a greater rate than anything the current system can deliver -- and your account will provide money for retirement over and above the check you will receive from Social Security. In addition, you'll be able to pass along the money that accumulates in your personal account, if you wish, to your children and -- or grandchildren. And best of all, the money in the account is yours, and the government can never take it away."
That last sentence is an outright lie, according to information provided by the president's own advisors. Indeed, to the extent that "senior administration officials" were willing yesterday to disclose the important footnotes their boss won't mention, those personal accounts sound much less attractive -- and not quite so "personal," either.
If your perfervid and tendentious crusade to discover reinforcements for your opinions were moderated by any deference toward authenticity, you would have retracted that statement as the Post retracted that article.
It is pointless to dilate on a point that can be explained so laconically: Your paragraph is based on apocryphal information and thus completely worthless.
Without explaining exactly what he plans, Bush briefly alluded to the sharp restrictions on the privatized accounts -- which are designed to prevent the frauds that have plagued privatization schemes in other countries.
The frauds, one is left to suppose, should be distinguished from the frauds that have plagued government programs both domestically and internationally.
One is also left to suppose that the proposal of protective restrictions serves, in the distorted world of Joe Conason, as probative and peremptory evidence against reform.
"You" will only be permitted a few selected funds for investment, in accounts administered by a government agency and run by private contractors.
"You" imply that the limited permission is a negative aspect of the reform. This is true, but you are amusingly unaware that your argument serves to highlight the remaining superiority of reform. How is that? "Few" is certainly not as good as "many," but it is manifestly superior to "one", which is the number of fund options offered by Social Security.
"You" may or may not earn enough, depending on economic conditions, to make up any benefit cuts imposed on the system by Bush.
That's not entirely accurate. The individual, under the current proposal, only gains if his/her investments make more than the average rate of return for Social Security (3%). Also, it isn't Bush that makes the determination, it is the Social Security Trust Fund.
"You" will not be able to will that annuity to your heirs, even if you happen to die long before you have used up its proceeds.
Yes, "you" will. This was another distortion retracted by the Post. Read it and weep, squire.
And there's one more important caveat that flatly contradicts the president's sunny promises. According to an unnamed senior presidential advisor who briefed reporters yesterday, "you" will have to surrender to the government any earnings in "your" personal account up to 3 percent, adjusted for inflation -- which happens to be the projected growth of earnings under the existing system.
"You" don't surrender anything. The value of the capital invested in the private accounts is deducted from the value of the public account - a provision of basic logic on the third grade level. The amount diverted into investment is deducted from the remaining amount.
To be more precise, "you" wouldn't have to surrender those earnings on retirement, because the government would already have control of "your" personal account. The government would simply seize that sum from your account -- and pay whatever fees are due to the private fund administrator -- before turning the remainder over to "you" and your family.
First, the government does not control the account. Again, this was another slice of misinformation that was retracted.
Second, you appear oblivious to the reality that Social Security is a system of government control over finances. Your adduction of "government control" as some sort of negative characterization leads intelligent readers to wonder why you spend your time defending Social Security, which boasts government control as its founding principle.
That might not amount to very much, particularly after "you" buy that mandatory annuity. Estimates by the Social Security Administration and the Congressional Budget Office place the inflation-adjusted gains -- after paying off that initial government fine -- somewhere between 0.3 percent and 1.3 percent.
1) The stock market has, since the 1920s, averaged a 7.6% real rate of return. It is unlikely that your model of 1.3% return will become reality, even in times of economic difficulty.
2) Is 1.3% more than 0%? Most of us agree it is, and would rather enjoy that small increase - the most pessimistic projection -coupled with the unquantifiable yet desirable benefits of personal control.
If this plan is ever approved, "you," and I, and most Americans will be big losers.
Big losers? Speak for "yourself".
Perhaps that is why the president prefers bloviating rhetoric and uplifting spectacle to all those disturbing details. He knows from experience that the truth won't sell the product.
Details apparently are disturbing to you, because you successfuly avoided them in this anfractuous voyage of retracted statements, incomplete logic, and ipse dixit assertions. Only Salon would sanction the high-colonic garbage such as the unrestrained asseverations that a bankrupt system is solvent, government control is undesirable under conditions of privatization yet apparently desirable under conditions of social welfare, retracted articles may serve as citations for a professional writer, and that privatization creates an annual accretion of deficits.
I am fortunate to be able to say I emerged from this nuclear wasteland unscathed, however I am not confident that your pollution isn't a national concern.