Tuesday, November 23, 2010

Restating The Obvious, Again

One of the most maddening things in the world is watching people proceed to make decisions based on assumptions which are clearly unfounded, wrong, even insane, even after they have been told those assumptions have no basis in reality. One can only assume that the folks who operate this way are either crazy or have a hidden agenda. This whole "debate" on Social Security and its solvency is filled with people like this, so it's a constant battle to point out the problem.

Fortunately there are some good souls up to the task, as this op-ed piece shows. Here's the bio for the two writers of the article: "Nancy Altman, the author of "The Battle for Social Security," and Eric Kingson, a professor of social work at Syracuse University, co-direct Social Security Works (socialsecurity-works.org)." Both are obviously deeply concerned by the direction the Cat Food Commission appears to be taking, as evidenced by the preliminary report issued by the co-chairs, Erskine Bowles and Allan Simpson.

As the authors point out, both Simpson and Bowles are no friends of Social Security, especially as it is currently constituted. Both have made it clear that they intended to include Social Security in the work of the commission which was called to deal with the issue of reducing the federal deficit. That was their first mistake, one that they keep repeating and repeating. Our intrepid authors point out the fallacy of the assumption underlying that review of Social Security.

In releasing their plan, the co-chairs went out of their way to make clear that they were proposing changes to Social Security "for its own sake, not for deficit reduction." This was an acknowledgement that Social Security does not and cannot contribute to the deficit, because it has no borrowing authority and by law cannot pay benefits unless it has sufficient income and reserves to cover their cost. But Simpson and Bowles just couldn't keep their hands off the program. [Emphasis added]

Memorize this, class, because it's going to be one the test: SOCIAL SECURITY DOES NOT CONTRIBUTE TO THE DEFICIT.

Altman and Kingson then move on to the other parts of the report based on some pretty obvious and quite dangerous wrong assumptions. Here's my favorite:

Bowles and Simpson argue that we should raise the retirement age because people are living longer. But not everyone is. Over the last quarter-century, life expectancy of lower-income men increased by one year, compared to five for upper-income men. And lower-income women have experienced declines in longevity.

The co-chairs apparently think most Americans can work as long as politicians, Wall Street billionaires and others who have all of life's advantages. In effect, the Bowles-Simpson plan says to America's workers that they must work longer for less because the rich are living longer.
[Emphasis added]


But the authors don't stop there, they also reiterate the most obvious way to shore up the Social Security Trust Fund for another 75 years: raise or eliminate the cap on payroll contributions to the fund. The wealthy pay far less a percentage of their income into Social Security than the rest of us. Raising the cap to $200,000 would mitigate some of that unfairness and keep the Trust Fund in business for another couple of generations.

This is not rocket science, brain surgery, or even Accounting 101. And Simpson and Bowles are not uneducated and presumably not insane. They are both, however, well-off financially, which might explain that hidden agenda I referenced at the start.

If Congress doesn't fight this proposal and defeat it soundly, 2012 might very well make the 2010 bloodbath look like a walk in the park, as Altman and Kingson suggest. We all need to make that very clear, because that assumption, unlike those of Simpson and Bowles, is founded in reality.

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Blogger PurpleGirl said...

The Republicans have wanted to end Social Security since it was begun. One of my earliest political memories involves an older woman inveighing against Social Security, as theft of her HER money. With so many companies ending their own pension plans and the volatility of investments/savings, Social Security is needed now more than ever as the foundation of most people's being able to live during the last third of life.

I have, though, one nitpick. The rich pay the same percentage of income (up to the cap) into Social Security; it is the PROPORTIONATE share of their income that is way smaller and thus makes it unfair that there is a cap.

4:22 AM  

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