Monday, January 10, 2005

 

Um, Josh, you're not talking about me there, are you?

Josh Marshall gets a bit snarky:
More on the WaPo's Social Security myopia.

The Social Security Trustees estimate that over the next 75 years the program faces a budget shortfall of $3.7 trillion.

As we've noted previously and will again, the Trustees use a very pessimistic estimate of future economic growth to arrive at that figure. But, for the moment, let's stipulate to that amount.

$3.7 trillion is a lot of money.

But how much will the president's Medicare drug benefit plan cost over the next 75 years?

$8.1 trillion, say the Trustees of that program.

And over the next 75 years how much will the president's 2001 and 2003 tax cuts cost if made permanent, as the president wants?

$11.6 trillion.

So you add that up and you get $3.7 trillion we need to cover Social Security's shortfall and $19.7 trillion we need just to cover the costs of the two major domestic policy initiatives of the president's first term.

And yet Social Security, says the president, is in crisis and destined to chew through the rest of the federal budget.

I would submit to you that in any reasonable universe this simple comparison shatters the president's credibility on fiscal 'icebergs' and spending crises. And yet these basic facts seem to garner little notice.

That is because, in the last couple decades, in the culture of Washington -- particularly among the elite commentators and reporters (just watch Meet the Press) -- presuming that Social Security is financially unviable has become an ready shorthand for public policy seriousness, much as many use a basic knowledge of imported wines or a familiarity with classical music to signal refinement.
Hey, Josh, maybe my knowledge of wine is basic, but I'm more than just "familiar" with classical music, thank you very much!
Comments:
Opponents to Social Security reform should address the following illogic implied by their opposition:

As Social Security is currently structured, individuals must first be employed. Secondly, employee contributions are matched by the employer. These two things are prerequisites for the continual funding of the program. If I were a proponent of Social Security in its current format, I would be a strong proponent of a vibrant and growing economy that allows for the perpetual contributions; from employees and employers.

You can’t have Social Security without economic growth. No employers, means no employees, means no contributions, means no Social Security funds over the long-term. The Government just can’t tax non-existent assets and profits to meet its obligations. Assets and profits are a prerequisite of Social Security. With me so far?

Now, here’s the kicker. If you assume that the current system requires a growing economy to sustain itself, why would you not translate that same assumption to the Personal Account structure of retirement funding?

Admittedly, there are no guarantees either way. That’s the very definition of a risk; no guarantees. Both structures involve risk. And BOTH sides of the issue (pro/con reform) assume a long term growing economy with occasional set backs.

I planted several Silver Maples in my backyard 15 years ago. The trees were barely 3 feet tall when I planted them. I did my research on what trees would do best considering soil and weather conditions. I almost went with Weeping Willows, but was advised against them. They grow very quickly, but according to the garden store owner, are ‘stringy’ and disease prone. My Maples have survived severe winters, summer droughts and insect infestation. But through it all, most of them have managed to survive; over the long term. They’re now about 40 feet tall. Long-term investing involves a similar patience and risk taking.
 
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Comments: "
Opponents to Social Security reform should address the following illogic implied by their opposition:

As Social Security is currently structured, individuals must first be employed. Secondly, employee contributions are matched by the employer. These two things are prerequisites for the continual funding of the program. If I were a proponent of Social Security in its current format, I would be a strong proponent of a vibrant and growing economy that allows for the perpetual contributions; from employees and employers.

You can’t have Social Security without economic growth. No employers, means no employees, means no contributions, means no Social Security funds over the long-term. The Government just can’t tax non-existent assets and profits to meet its obligations. Assets and profits are a prerequisite of Social Security. With me so far?

Now, here’s the kicker. If you assume that the current system requires a growing economy to sustain itself, why would you not translate that same assumption to the Personal Account structure of retirement funding?

Admittedly, there are no guarantees either way. That’s the very definition of a risk; no guarantees. Both structures involve risk. And BOTH sides of the issue (pro/con reform) assume a long term growing economy with occasional set backs.

I planted several Silver Maples in my backyard 15 years ago. The trees were barely 3 feet tall when I planted them. I did my research on what trees would do best considering soil and weather conditions. I almost went with Weeping Willows, but was advised against them. They grow very quickly, but according to the garden store owner, are ‘stringy’ and disease prone. My Maples have survived severe winters, summer droughts and insect infestation. But through it all, most of them have managed to survive; over the long term. They’re now about 40 feet tall. Long-term investing involves a similar patience and risk taking.
 
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