Nick Kristof has a column today in the Times in which he argues that Democrats are wrong to flatly oppose President Bush on Social Security privatization, both substantively and perhaps also politically.
Democrats themselves, he argues, were serious in pressing the issue of reform in the 1990s. And they were right then and wrong now because even if the president has exaggerated the problems facing Social Security, it does face very real problems. Democrats may object that "Mr. Bush will use his reform as another occasion to soak the poor," as he puts it. But if that is the case, then that is only another reason for them to constructively engage the president rather than flatly oppose him. The heart of the column is contained in the passage in which he says that there is but "one powerful objection to private Social Security accounts." And that is that under present fiscal circumstances we cannot or may not be able to afford them.
Reading Kristof's column I can't come to any other conclusion but that Kristof doesn't grasp either the policy proposals up for discussion or the social purposes for which Social Security exists and that for him both are clouded by rhetoric meant to obscure the issues at stake.
Kristof's column, actually, provides an opportunity to review and expand upon the essentials of this debate. So let's have at it.
President Clinton tried to devote the final two years of his presidency to "saving" Social Security from the threat of future insolvency -- a threat which appeared substantially closer then than it does today, less than a decade later. His plan was to shore up the nation's fiscal standing so that it would be better able to cope with the pressures created on Social Security by the baby-boom generation in the early and middle decades of this present century. (For more on this point, see this earlier post on Social Security and the question of aggregate national indebtedness.)
Let's stop and understand what that means. He wanted to take steps now so that Social Security could continue to exist for future generations as a defined benefit social insurance and old age pension system. President Bush, on the other hand, is trying to phase that system out and replace it with a defined contribution system of 401k-style private accounts.
These are not two spins upon or flavors of putting Social Security on a solid footing. The difference is a category difference, as clear as it ever is between preserving something and trying to bring it to an end. The difference is fundamental. And anybody who does not understand this either doesn't grasp the policies involved, has been fooled, or is at work trying to fool someone else.
Let's grab this by the root.
Is it fair to say that President Bush is trying to "phase out" Social Security? Well, what is Social Security? For seventy years it has existed as a defined benefit social insurance program. What does that mean? It is a social program in which everyone who works during their lifetime gets a guaranteed benefit in retirement. It's not meant to be a sole means of support. Those who pay in more get more back; and those who pay in less a bit less. But everyone who works is guaranteed a benefit which provides at least a modicum of comfort and dignity in old age. Have the benefit structures changed over time? Yes. But they change for everyone together, not by the vagaries of chance or individual fortune.
Social Security envisions a retirement in which recipients, hopefully, have three sources of income: Social Security, some employer-based pension and personal savings. The latter two, in varying degrees depend on how hard you work, how much you make, how wisely you invest and the vagaries of chance. Social Security, as a defined benefit program, is meant to be the one leg of the stool which is a flat guarantee.
At root, with all the statistics and flimflam over words, President Bush wants to change that. He wants to phase out Social Security in favor of private investment accounts. In the latter case, there is no guarantee at all, just as there is no guarantee in private nesting, which of course is just as is should be. He wants to get rid of the defined benefit program and change it to a defined contribution program -- not partially, but totally. Indeed, he said this in his recent press conference quite clearly. But few of the reporters present latched on to the statement or its significance. Social Security, he said, is "now in a precarious position. And the question is whether or not our society has got the will necessary to adjust from a defined benefit plan to a defined contribution plan. And I believe the will will be there. (emphasis added)."
There's no 'partial' here. He's talking about phasing out one and replacing it with the other. Reporters and commentators don't seem to get that this is a category difference, though this is something that is widely understood in the pension policy community.
Let's look at the words they use.
Take this article from the trade publication Business Insurance from August 30th of last year. The headline reads: "More employers freezing, phasing out DB [i.e., defined benefit] pensions; Companies closing defined benefit plans may experience unwanted side effects." And the lede reads: "Faced with increasing pension funding liabilities and an unfriendly regulatory environment, more employers are phasing out their traditional defined benefit plans and opting to beef up their defined contribution offerings." Or take an example from the mass circulation dailies in which the same issue is discussed. This from the Miami Herald back on January 22nd, 1995: "If you work for a big corporation, you may still qualify for a defined benefit plan. But don't count on it. Many employers that offer both defined benefit plans and 401(k)s are phasing out their pension plans and beefing up their 401(k)s."
As those who follow these matters well know, going from a defined benefit plan to a defined contribution plan is seldom a good thing for recipients. Under the president's plan benefits would be far lower and they would not be guaranteed in any way. Whether you think this is a good thing or not, the change is a fundamental one.
A number of wavering Republicans are now saying that they will only sign on to the president's plan if it still maintains the guaranteed benefit. But that's silly. Not only is it obvious that his plan doesn't do that; as we've noted above, he's already said himself that it doesn't do that.
It's easy to get lost in verbiage about defined this and defined that and mazes of actuarial figures. The key, though, is the difference between an unsecured system and a secured one. That's why it's called Social Security and why phase-out is really the only candid way to describe what the president wants.
Privatizers have tried to confuse this issue in a number of ways -- most recently by referencing President Clinton's willingness to consider investing a portion of the Social Security Trust Fund in private securities rather than in Treasury bonds. In his 1999 State of the Union address Clinton said "I propose that we commit 60 percent of the budget surplus for the next 15 years to Social Security, investing a small portion in the private sector just as any private or state government pension would do. This will earn a higher return and keep Social Security sound for 55 years."
Whether investing a part of the Trust Fund in private securities is a good idea or not is a complicated question. In retrospect, at least in the short run, doing so in 1999 would have been a very bad idea since, as we now know, the stock market was at the height of an historic bubble. Tricksters like Brit Hume on Fox and various easily-bamboozled hosts on CNN are now saying that what Clinton was proposing is what Bush is proposing today. But anyone who says this is either being dishonest or is simply ignorant.
What Clinton was proposing was simply a different way for the Trust Fund to invest its money -- perhaps a good one or a bad one. But it would still be a defined benefit program. The risk of investing would be borne by the government, not the individual. Making a higher rate of return would make it easier for the Social Security program to pay guaranteed benefits down the road. But for the individual the benefits would remain the same regardless. As Clinton noted, many state defined benefit plans invest their money in this way. Under the Bush plan, it's different. Individuals invest their own small sums in the market and they're on their own. No guarantee.
So, to sum up this lengthy discussion. Our current retirement system envisions people going into retirement with three sources of income: the guaranteed benefit from Social Security, private savings and hopefully, though less and less frequently, an employer-based pension. Democrats have no beef with private investing, though privatizes try to imply otherwise. They want families to save more for retirement than they are today. The issue is no more complicated than a simple one of diversification -- the need for Social Security and private savings, both of which complement each other. (Later we'll discuss why the decline of employer-based pensions is an argument for the add-on accounts favored by Democrats.)
Anyone who looks honestly at the numbers realizes that under private accounts the average beneficiary would almost certainly get less money in retirement than they will now under the current Social Security system. But the key is that the president wants to phase out the defined benefit Social Security system and replace it with 401ks, the defined-contribution approach. Or, in other words, to get rid of Social Security and have people make up the shortfall with private savings.
Kristof says that the only "powerful objection" to phase-out is that at the moment we can't easily handle the transition costs. So it would seem that the entire issue of defined benefit versus defined contribution plans, Social Security versus 401ks, is lost on him.
Another problem is Kristoff's claim that there are a "variety of ways to organize retirement accounts so the poor are better off."
Social Security is not welfare. The issue is not principally one of "the poor." For coming up on a century, Social Security has been the sheet-anchor of the American middle class. It is about preventing people who have been middle class during their working lives from becoming poor when they retire. (In a later post we'll discuss how Social Security honors the value of work.) In so doing the guaranteed benefit of Social Security ramifies through the economy and through the generations in ways that the current debate has scarcely begun to explore.
For instance, Social Security has been instrumental in preventing parents from the necessity of deciding whether to support aging parents or spend on education for their children -- a devil's choice which was always a key route by which families were yanked out of the middle class, since investment in education has long been key to preserving middle class status.
In any case, we can go into more detail on all these points. And I haven't even touched on the survivors' and disability insurance portions of Social Security, which the 401k model wholly ignores. But let me return to my central point.
Getting rid of Social Security and preserving it are not two versions of the same endeavor, even if the distinction is intentionally obscured by the rhetoric of 'reform.' They are opposite objectives. Since President Bush is now trying to do the former nothing is more obvious or logical than that the Democrats are opposing him root and branch since they want to do the latter.
This is all another way of saying that the Democrats do have an alternative on the table: preserving Social Security rather than phasing it out. (Once again, let me say that in a later post I'll discuss why our values are only honored by a system like Social Security.) Democrats already have and will continue to propose adjustments to the system to handle potential shortfalls which are decades in the future. But this debate -- for anyone who understands it, indeed even the White House now concedes the point -- is not about solvency. And the fact that Kristoff does not grasp that point is not their problem, though his confusing the two issues certainly complicates preserving the program.
--Josh Marshall
Uh-oh ... According to the Fargo Forum, claims that the Fargo Social Security event blacklist was the work of an over-zealous local volunteer may not hold up.
"[C]lues uncovered Friday, says the Forum, "indicate a worker with the White House advance team may have been the culprit.
--Josh Marshall
Palm Beach Post, Feb. 5, 2005
Onstage with Bush during his hourlong town hall meeting were five Tampa Bay-area residents ranging from 20-something to retiree. They included 27-year old Jim Browne of St. Petersburg, who said, "Many of my generation do not anticipate Social Security being there."To which Bush answered, "When I was 27 years old, I don't remember anybody talking about whether the system is going to be there."
USAToday, July 28, <$NoAd$> 2000
Bush [then 32] won the primary and, in the general election against Democratic state Sen. Kent Hance, ran on some of the same ideas he promotes today. He supported the 33 1/3% tax cut proposed by Jack Kemp and William Roth. He predicted Social Security would go broke in 10 years and said the system should give people "the chance to invest money the way they feel" is best.
AEI Public Opinion Study, February 3, 2005
Confidence in the future of the Social Security system has been lacking for a long time. A question asked in 1981 shows that only 31 percent had a great deal or a fair amount of confidence that the Social Security system would have enough money to pay benefits after the year 2000! Still, Americans do not see the Social Security system in crisis. They believe it has serious problems.
--Josh Marshall
Sen. Grassley (R) of Iowa says the president has a 90 day window to sell the public on Social Security phase-out.
--Josh Marshall
Egg shells.
From Gannett...
Even Sen. Mike DeWine, R-Ohio, one of the president's strongest supporters, backed away from a Wednesday statement in which he said, "I agree with the president's plan to encourage personal savings."On Thursday, DeWine modified the statement to say, "I agree that we must do something to encourage personal savings." But he said he had not "determined whether ... private savings accounts should be a part of strengthening Social Security for our children and grandchildren."
The Cincinnati Post elaborates ...
Sen. Mike DeWine, a GOP moderate, sometimes supports the president's policies and sometimes doesn't. His office had a tough time explaining whether or not he stands with the president this time.Right after the president's State of the Union address Wednesday night, DeWine's office put out a statement saying the senator believed that the speech opened an important dialogue on protecting Social Security.
"I agree with the president's plan to encourage personal savings,'' the statement quoted the senator as saying.
Sounds like an endorsement of Bush's proposal to let younger workers invest a portion of their Social Security taxes in personal retirement accounts. Right? Not exactly.
The next day, DeWine's office issued another statement clarifying the senator's remarks. Instead of saying he agreed with the president's plan, what the first statement should have said, according to the follow-up release, was simply, "I agree that we must do something to encourage personal savings.''
"Sen. DeWine has not determined whether or not private savings accounts should be part of strengthening Social Security for our children and grandchildren,'' the second statement said. "He does, however, strongly believe that we must look for ways to encourage more personal savings so that when people retire, that in addition to enjoying the benefits of Social Security, they will have other sources of income.''
The Cedarville Republican remains open "to all ideas'' and believes that "the ideas that the president has, other Republicans have, and Democrats have should be fully explained, discussed and debated, and that we should forge a bipartisan compromise,'' the follow-up release said.
"He also believes that is most important that we listen to the people, on what they think should be done to ensure that Social Security remains strong."
The rapid growth of GOP queasiness about Social Security phase-out has strained the acceptance <$Ad$> mechanisms for the Conscience Caucus. Clearly DeWine is now a member of the Caucus since, as the founding rules state, he does "appear open to" opposing the president's plan.
FIW status (Finger In The Wind) is reserved for those members who more or less openly state that they are willing to begin phasing out Social Security so long as the president can make it safe for them to do so. This status was first created for Sen. Gordon Smith (R) of Oregon.
Now, here at TPM we're not so naive as not to understand that the great majority of Conscience Caucus members are Finger In The Winders in their heart of hearts. But, remember, the FIW status is reserved for that select group who more or less openly concede their intention to make a vote devoid of principle and indifferent to policy, like Smith.
As you can see, though, Sen. DeWine doesn't qualify since he is one of that legion of Republicans who just think the world of George W. for taking the initiative on such a complex issue but somehow, well ... just at the end of the day, gosh darnit, they just can't seem to get their head around the subject, can't decide whether replacing Social Security with private accounts is a good thing or not.
So even though we hear the initials may already be taken for something else, we've come up with a new category for these folks. Sen. DeWine is our first member of the Caucus to come in with CFO status, Can't Figure it Out.
[ed.note: An earlier version of this post incorrectly referred to Sen. Mel Martinez as possibly entering the Conscience Caucus with FIW status.]
--Josh Marshall
The Projo reports on the new Club for Growth ads running against Sen. Lincoln Chafee (R) in Rhode Island.
--Josh Marshall
The Prez will only chat up stock brokers on stage in Tampa?
A White House spokesman tells the Tampa Tribune that the president will be joined on stage by a handful of individuals "who have a vested interest in strengthening Social Security and have an important story to tell."
[ed.note: emphasis added.]
--Josh Marshall
Pat Toomey declares war on the Conscience Caucus!
With echoes of Milton and Paradise Lost, former Congressman and now Club for Growth President Pat Twomey has ordered television ad buys against Conscience Caucus members Sen. Lincoln Chafee, restored Caucus member Rep. Sherry Boehlert and Rep. Joe Schwarz, who we didn't even know until today was a Caucus man.
(We hadn't even had time to add Schwarz's name to the list before Twomey struck.)
Stay with these three worthies as they enter their time of troubles!
Chafee is already in CUP? status in the Caucus. He could give up the ghost entirely.
--Josh Marshall
Sen. Olympia Snowe (R) Maine risking her Loud and Proud status in the Conscience Caucus?
Last week Snowe told the Washington Post that she was "certainly not going to support diverting $2 trillion from Social Security into creating personal savings accounts" and told the president that "she would be concerned about doing anything that would undermine the guaranteed benefit of Social Security."
But today, according to RawStory.com, Snowe's press secretary Preston Hartman says: “I wouldn’t say it’s fair to say that she’s against the president’s plan.”
“She’s cautious," says Hartman, "and she wants to examine all the options out there.”
--Josh Marshall
Even the Libertarians aren't buying the Social Security Speech Code!
[ed.note: Ideological exactitude requires me to note that while one would expect Libertarians to be, on principle, in favor of a private-accounts-based phase-out of Social Security, they are the last folks you would expect to have any truck with a White House-dictated Social Security speech code. And in this regard, the good folks at Reason magazine's Hit and Run Blog, which we've linked above, have acquitted themselves quite nicely.]
--Josh Marshall
Ohhh ... and W falls back 5 yards.
From CNN/Money: "Bill Gross, manager of the world's largest bond fund, is criticizing President Bush's plan to privatize part of Social Security. Gross, managing director at Pimco, called the argument about the solvency of Social Security "silly" and said it was an example of the president not focusing on more important issues, such as the budget deficit."
--Josh Marshall
Montana's Great Falls Tribune says Bamboozlepalooza didn't convince the state's lawmakers.
But Caucus member Rep. Denny Rehberg did praise the president's "Oprah Winfrey-style" approach to working the room ...
Rehberg said he felt the president did very well in the "Oprah Winfry-style" panel discussion."It led to a free flow of information, and the president looked very comfortable listening to questions and explaining the future problems of Social Security," Rehberg said.
"It's a sign of the president's leadership that he doesn't want to coast in his second term, but to work to resolve an issue like Social Security that is emotional and controversial.
"He's asking the people of America to listen to different ideas for preserving and protecting Social Security, and he's open to nearly all ideas."
Rehberg did not commit himself yet to supporting the president's idea of personal Social Security investment accounts.
"I want to see all the proposals," he said. "But why not consider such personal accounts that would earn a higher return for young adults that they would own and could pass on to their kids?"
He even called them 'personal accounts'. <$NoAd$>There may be some hope for the president with Rep. Rehberg yet ...
--Josh Marshall
Ginny throws down the gauntlet!
In this news segment running on Florida's WUSF 89.7 News, Rep. Ginny Brown-Waite (R) says she thinks President Bush is coming to Tampa to muscle her and other Conscience Caucus members into signing on to his privatization bill.
But "absent specifics," says Brown-Waite, "I'm not drinkin' that Kool-aid. I am not gonna go down that road."
(See the quotes in question at timestamp 1:05.)
The Ginny vs. Prez showdown is tonight at the Tampa Convention Center.
--Josh Marshall
Sen. Debbie Stabenow (D) of Michigan sets up special anti-phase-out section of her senate website.
--Josh Marshall
Rep. Sherry Boehlert (R) of New York <$NoAd$> demands readmission to the Conscience Caucus!
This morning we received the following note from the congressman ...
Enjoyed your clever and off-times amusing comments. But shame on you for taking anyone to task for talking about our "responsibility to debate all proposals from top to bottom."My commitment is not to a specific course of action at this juncture other than to acknowledge a future problem and a determination to get going toward the development of a solution. Don't count me out yet!
We're always happy to take our dollop of shame if it means welcoming a representative or senator back into the Conscience Caucus.
We've duly updated the membership list.
--Josh Marshall
From the Butte Montana Standard: "Burns said he's going to 'continue to look at it,' but had questions about how to pay the plan's estimated $2 trillion price tag."
--Josh Marshall
Hmmm. Gov. Mike Huckabee of Arkansas doesn't think "anyone pretends [the president's Social Security plan] solves the long term issue of solvency."
Has he been to DC recently? Seems there's a lot of pretending.
Says the Gov.: "It’s trying to address methods to improve the system and broaden the base of how it is funded."
--Josh Marshall
Coming later, Senator John Warner (R) of Virginia and his letter to the GAO on Social Security and privatization.
--Josh Marshall
If you're in Little Rock or Tampa, you're up. Today's your day. The Bamboozlebooza Tour is coming to town. If you're going to be on hand for the festivities do let us know and let us know what you hear and see. If you've got a blog, even better. There may even be a "Privatize This" T-Shirt in it for you.
Even better, are you on the black-list for today's events in either town? If so and you can prove it, there's a definite shirt in it for you. At the moment, the White House is claiming that the Fargo black-list was the work of an "overzealous volunteer" whose identity they and the local Republican party claim they are nevertheless unable to discover.
We wondered last night whether Rep. Denny Rehberg (R) of Montana had really gotten through all the festivities yesterday without making any mention of his position on the president's phase-out plan. Well, we hear this morning from listeners on the scene that Rehberg made some equivocal comments on the radio. And this passage from today's Missoulian seems to be the closest he got in print ...
Fellow Republicans U.S. Sen. Conrad Burns and Rep. Denny Rehberg, both of Montana, said after the speech they haven't made up their minds on Bush's ideas. Rehberg said the country needs to openly discuss the issue and not kill the opportunity to fix Social Security with partisan bickering."The president is trying to create a consensus opportunity," Rehberg said.
Clearly, Rehberg now gets slotted into FIW status in the Caucus. But if I'm not mistaken Bush didn't even get the two Republicans in Montana to sign on to his plan. If you see instances of the national press picking up on this fact rather than going on about Baucus, can you drop us a line about that too?
This isn't about Democrats: The President Is Hunting for Republicans Who Will Go On The Record In Support of His Plan.
Now on to Arkansas and Florida.
As we said we're keen to get reports from the ground in both states. As we told you here at TPM earlier and in more detail in my column this week in The Hill, Tampa is a hotbed of membership in the Conscience Caucus. You've got our favorite Rep. Ginny Brown-Waite to the north, Caucus member Rep. Bill Young right next door, Caucus member Rep. Katherine Harris to the South. And aside from them you've got folks like Rep. Bilirakis (R) who don't even seem willing to discuss the issue with the press and Rep. Adam Putnam (R) who looks likely to shift whichever way the wind blows.
These Floridians all to one degree or another have their fingers in the wind. And if you can't say much else for them they're good weather vanes, especially Rep. Brown-Waite. So if you hear them chatting on the radio or get quoted in the papers or if they get up on stage with the president to testify to their phase-out conversion experience, do let us know.
So basically the president is finding hardly any Republicans in any of these states who are willing to go on the record in support of his plan. This is why I would never make it in the news business. I woulda thought that'd be a big story.
--Josh Marshall
Does Donald Luskin have a problem?
No, this isn't a trick question. C'mon, play along.
On January 31st, Luskin wrote that the "president is seeking to reform Social Security with personal accounts — which, by the way, is the same reform being argued for by Harold Ford, the African American Democratic congressman from Tennessee."
Today, no less a worthy than Rush Limbaugh (R-Elysium) flogged the Harold Ford angle too, perhaps picking it up from Luskin.
Admittedly, Ford was once the Dean of the Fainthearted Faction.
But as far back as December 30th, he announced: "I do not support changing the Social Security system as has been proposed by President Bush, nor do I support Social Security proposals advanced by the CATO Institute. In fact, both of these proposals have the potential to harm current beneficiaries by paying for the transition costs by issuing debt. Piling on more red ink to the existing federal budget deficit and the national debt will do both long and short term harm to our economy. I do believe that the system needs to be reformed but I do not support changing the Social Security system as President Bush has proposed."
Then late last month he went even further to clear up any confusion. According to the Memphis Flyer, in their interview with the congressman, he "den[ied] that he does now, or ever did, advocate tapping payroll taxes to create the accounts."
There's even this passage from the article in question ...
And the congressman was quite explicit this week about disavowing not only President Bush's Social Security reform proposals but the concept underlying it. "I have not signed on to any legislation, since I have been in Congress to take money from Social Security to create private accounts. I do not favor privatizing Social Security. I am opposed to President Bush's attempt to do so. Categorically," he said.
As TPM readers are well aware, those are the words that finally got Ford ejected from the Fainthearted Faction altogether.
So it seems, contrary to Mr. Luskin, that Ford really doesn't support President Bush's plan.
Now, I am by no means trying to insert myself into some Luskin-Ford smackdown. But there does seem to be a problem.
--Josh Marshall
Perhaps Democrats should give some serious thought to amplifying this statement from Chairman of the Ways and Means Subcommittee on Social Security, Rep. James McCrery (R) of Louisiana.
From the AP ...
"The AARP and the Democrats think if you divert some money from the trust fund," the existing program will be undermined, McCrery said. "That is true on its face. It does decrease the level of the trust fund. Politically, that's going to be a very strong tool that (opponents) can use to defeat a plan."
That's quite <$Ad$> a thing for someone in his position to say. The Republican with the Social Security portfolio in the House says that diverting money out of Social Security into private accounts weakens Social Security.
Just yesterday, according to the Los Angeles Times, a Bush aide conceded that implementing "individual accounts would do nothing to solve the system's long-term financial problems." But McCrery goes further, affirming the whole truth, which is that they will not only not improve Social Security's longtime solvency they will greatly undermine it.
If that's true, why would anybody be for them?
Did I mention Democrats should mention this?
--Josh Marshall
Did I miss something or did Conscience Caucus member Rep. Denny Rehberg (R) of Montana stay mum while squiring President Bush around Montana? Last we checked in with the congressman's office, his spokesman Brad Keena told us the congressman was "open-minded" about privatization.
I see here where Sen. Conrad Burns (R), who I guess isn't exactly what you'd call a centrist, said he was "intrigued" by Bush's privatization plan. "Social Security is still a very, very important part of the retirement of a lot of seniors in Montana," he went on to say. "So we'll listen and we'll look and we'll probe ... and see what is in it for the next generation."
Frankly, it hadn't even occurred to me that President Bush couldn't count on Burns as a phase-out man. But what about Rehberg? I can't see where he was quoted anywhere today in any paper even though he spent a good part of the day traveling at the center of the national news bubble and he's one of three members of the Montana congressional delegation. Maybe I'm missing some comment to a local radio or TV station. And if there was, I'd be much obliged if you'd let me know. But as near as I can tell, Rehberg didn't answer any questions about the president's plan at all. And I figure there would have been some press interest had he been inclined to do so.
Everyone's reporting, rightly, that Sen. Baucus (D) made clear he's not going to support President Bush on phasing out Social Security. But isn't the story here that President Bush just won this state with 59% of the vote in November. He went to campaign in the state to support his new Social Security privatization plan. And he couldn't get any members of the state's congressional delegation to endorse his plan -- and two of them are from his own party.
Oddly enough, in its reporting, CNN makes no mention of this -- another example of the dire need for a blog devoted entirely to documenting the decline and Foxification of this once proud network.
--Josh Marshall
Mayor Mike Bloomberg (R - well sorta) of New York becomes first Associate Member of the Conscience Caucus.
From the Times ...
Mayor Michael R. Bloomberg distanced himself from President Bush yesterday on the president's proposal to divert some Social Security taxes into private investment accounts, describing the plan, which was the central theme of Mr. Bush's State of the Union address, as excessively risky."I've never thought that privatizing Social Security made a lot of sense," said Mr. Bloomberg, who, like Mr. Bush, is a Republican. "I think what you'd see is that people would invest - some people would invest - unwisely."
He added, "These are not monies that people should be speculating with."
Someone needs <$NoAd$> to get Larry Kudlow to explain markets to this bozo.
--Josh Marshall
Rep. Ginny Brown-Waite (R) Floridia billows in the wind. Says she: "There are a lot of unanswered questions and until I have the answers to them, I am still in the 'withholding judgment' category."
We've put her in the Conscience Caucus with FIW status.
--Josh Marshall
Sen. Patty Murray (D) of Washington moves from "concerns" over phasing out Social Security to opposing it.
--Josh Marshall
A simple question that should be asked of Scott McClellan tomorrow and the president whenever the next opportunity arises ...
The Social Security Trust Fund now has accumulated roughly $1.8 trillion worth of US Treasury bonds. That total debt of the United States government is, if memory serves, just over $7 trillion. US Treasury bonds are owned by Americans, foreigners, individuals, pension funds, everybody under the sun. Most of the president's personal wealth appears to be tied up in them. They're universally considered to be the safest investment in the world. George W. Bush is the President of the United States. So the question is to him. Are the Treasury notes in the Social Security Trust Fund backed by the full faith and credit of the United States every bit as much as the bonds everyone else owns?
Everything the president is saying implies that they are not, that there is a very big question about whether those notes can or will ever be redeemed. So if they're not, the president should say so now.
--Josh Marshall
Wouldn't it be something if the battle for Social Security was won on the Hill and on the hustings but lost in the newsrooms?
It could be happen. Actually, it might be happening right now.
I've got a list here of Republicans who went into the Conscience Caucus today. And with any luck I'll be able to post on most of them tonight. For a sampling, take a look at this AP article. But right now the White House and its Hill allies can see they're losing this debate because the essential fraudulence of their arguments are being exposed.
President Bush's top aides are getting cornered into admitting that private accounts won't do anything to improve the solvency of Social Security. Actually, it pushes it toward insolvency. But candor comes in small packages from these folks. So I guess be grateful. The claim that there was any 'crisis' tanked so quickly even the White House isn't making that argument anymore. And as the Post notes, most of the money you make in your private account goes back to the government. The White House is now furiously denying it. But we've got the transcript of the "senior administration official" saying just that to reporters.
Across the board, the debate is going badly because the whole plan is being revealed for what it is: not an effort to shore up or preserve Social Security but an attempt to phase the program out. You can even see various news outlets over the last 72 hours swaying back to 'private accounts' and 'privatization' in their discussions of President Bush's plan.
And for all these reasons the RNC and the White House are launching a furious assault against the major national news outlets trying to muscle them into shifting the tone and the assumptions of their coverage. The cable networks (at least the ones not already taking orders directly), the broadcast network news divisions, the major national dailies.
Part of it is the language, the speech code, but equally important is the basic issue of when the program will face actual difficulties. If the Bush plan calls for 40% benefit cuts those are cuts. But if the current benefit levels will in fact never be paid, then cuts aren't really cuts, right?
Look through the various transcripts of background briefings posted here and elsewhere to see examples of this.
Let's try an example. Let's say a hypothetical Bush plan cuts benefits by 40%. But what if the White House says that as things are going now recipients in a few decades will only get 50% of their benefits. Well then the Bush plan isn't really a 40% cut; it's more like a 10 percentage point increase in benefits. Or maybe there is no Trust Fund. The whole basis of the 1983 reform just doesn't exist. And the $1.8 trillion just doesn't need to be paid back.
You can see where this sort of stuff goes. And it's what's going on right now.
The issue isn't bias. It's just that the media is far more playable than it should be. And the Republicans just play them harder, more systematically, better.
Who's pushing back on the pro-Social Security side? Who's knocking down the new round of flimflam? Might be good if someone did.
--Josh Marshall
Ring the bell!
The first member of the Conscience Caucus bites the dust.
It was only two short weeks ago that Rep. Sherry Boehlert, master of moderation from Upstate New York, was not only in the Caucus. He was on the brink of being Loud and Proud. He told his constituents: "I’ve never been a gambler … I don’t want to gamble with Social Security trust fund moneys. And so I am very, very skeptical of the so-called plans to privatize. And I think a disservice is being done to a great many Americans by sort of sounding the alarm that everything’s going to hell in a hand basket and we’re going to be broke by 2018. That simply is not so."
But look what a change has now been wrought.
Just moments after President Bush got done with his phase-out peroration, he posted this statement on his congressional website: "[President Bush's] message to Congress was clear – we must strengthen Social Security for all Americans – and I couldn’t agree more. As legislators it is our responsibility to debate all proposals from top to bottom. Americans have a right to a safe and secure retirement, and we will protect benefits for retirees and future retirees. It would be a major injustice to all Americans if we don’t act now - the worst thing we can do is nothing at all. Americans deserve the peace of mind of knowing they will receive full benefits for their retirement."
Oh My!
We're still poking around to see what prompted Sherry's change of heart. We just hope it wasn't W's helicopter love. However that may be, it looks like Sherry's a phase-out man after all, or at least for the moment. So he's outta the Conscience Caucus.
But as we'll discuss in posts later this evening, it turns out there's plenty more where he came from.
--Josh Marshall
Uh-oh ... Looks like Rep. Jim McCrey (R) of Louisiana, chairman of the House Ways and Means Social Security subcommittee, may be looking over the paperwork to join the Conscience Caucus. The AP says McCrery is now outlining "ideas similar to those supported by many Democrats and said he wants to discuss them with the Bush administration."
I guess that counts as a problem, right?
Maybe the president needs to put in a stop down in Lousiana too.
--Josh Marshall
Watch Sen. Baucus's own Social Security event back in Montana running live right now.
--Josh Marshall
TPM reader RT did the <$NoAd$>leg work so I'll let him speak for himself ...
From today's LA Times top story, referenced in the Note, an anonymous white house source said:"White House officials say they are confident that congressional skepticism will dissipate once the president persuades a majority of the public that action is needed to extend the life of the retirement program, a process Bush was scheduled to begin today by taking his Social Security message on the road."a couple paragraphs later:"In a significant shift in his rationale for the accounts, Bush dropped his claim that they would help solve Social Security's fiscal problems — a link he sometimes made during last year's presidential campaign. Instead, he said the individual accounts were desirable because they would be "a better deal," providing workers what he said would be a higher rate of return and "greater security in retirement."A Bush aide, briefing reporters on the condition of anonymity, was more explicit, saying that the individual accounts would do nothing to solve the system's long-term financial problems."
So, the Bushies claim, "there is a huge crisis and our 'solution' will 'do nothing to solve' it."
If this is the same White House source that briefed every other reporter yesterday it is Dan Bartlett.RT
A bit further down in the piece there's this gem ...
That candid analysis, although widely shared by economists, distressed some Republicans."Oh, my God," one GOP political strategist said when he learned of the shift in rhetoric. "The White House has made a lot of Republicans walk the plank on this. Now it sounds as if they are sawing off the board."
Jeeves! Bring me my saw ...
--Josh Marshall
The RNC's Ken Mehlman launches new website, preservingsocialsecurity.com, to flak Social Security phase-out. Take a look, document the lies, win a TPM 'Privatize This' T-Shirt.
--Josh Marshall
Fargo City Commissioner Linda Coates breaks the blacklist and enters the Bamboozlepalooza event as GOP roadies relent at the last minute!
Our favorite local Dakota blog brings you the latest and another phone interview with Coates herself ...
--Josh Marshall
Right out of the box Rep. John Boehner (R), Chairman of House Education and the Workforce Committee, said he was willing and ready to investigate the Armstrong Williams payola affair. Now, it seems, he's decided he'd rather not investigate after all.
--Josh Marshall
More details revealed about the Fargo Forty!
Actually, one detail is that there are apparently 42 of them. But that sort of breaks my rhetorical stride so let's not dwell on that. More interesting is what unites these would-be evildoers who are banned from attending the president's Bamboozlepalooza event today in Fargo.
According to the Fargo Forum: "At least 33 of the 42 people on the list are or have been members of the Fargo-Moorhead Democracy for America Meetup Group." As the Forum describes this cell, "The group is a local progressive organization dedicated to electing fiscally responsible, socially progressive candidates in the Fargo/Moorhead area."
No word yet on whether City Commissioner Linda Coates is also a member, public or otherwise, of said "Meetup" organization.
--Josh Marshall
Fargo Forty Update!
This blog reports that Fargo City Commissioner Linda Coates is currently in line to get into today's Bamboozlepalooza event with the president, notwithstanding the appearance of her name on the event blacklist. In fact, the author of the blog says he just got off the phone with her. Whether the Patriot Act will need to be invoked to deal with Commissioner Coates is anybody's guess.
But this blog will probably have the story first.
--Josh Marshall
New poll out today says most Mainers believe Social Security has "major problems". But 68% want to keep it in its current form, while only 24.5% support private accounts.
No wonder Conscience Caucus member Sen. Olympia Snowe (R) wouldn't get up out of her seat.
--Josh Marshall
The fearful signs of recidivist faintheartedness, from <$NoAd$> the Hartford Courant ...
[President Bush] described the perils of the current system, how it would be "exhausted and bankrupt" by 2042. From the Democratic side of the chamber came cries of "no" - unusually raucous behavior for this most traditional of forums. And when Bush urged Congress to consider changes, only two Democratic senators - Connecticut's Joe Lieberman and Nebraska's Ben Nelson - stood up and applauded.
A Faction man till the end?
Meanwhile, Rep. Rob Simmons (R) of Connecticut, stays in the Caucus but flirts with losing his Loud and Proud status: “While I am wary of dramatic changes to a program so important to our seniors, I do understand the need to provide alternative retirement opportunities to younger workers. I look forward to this debate in Congress.”
--Josh Marshall
More on the Fargo blacklist (the Fargo Forty?), the list of more than forty locals, including city commissioner Linda Coates, who are banned from the location President Bush is speaking at in Fargo today.
We hear another fellow on list is none other than James Holm, the producer for Fargo-based progressive talk radio star Ed Schultz.
You'd figure he'll probably make some mention of this on the show today.
--Josh Marshall
Not a fun day for Conscience Caucus member Rep. Denny Rehberg of Montana?
He's tagging along today with the president's Bamboozlepalooza Tour.
But look at this poll that just came out from the Great Falls Tribune ...
President Bush might need to use all his Texas straight talk to convince Montanans to support letting individual workers invest part of their Social Security funds in stocks and bonds.Montanans oppose switching to personal Social Security investment accounts by a nearly 2-to-1 margin, according to a statewide opinion poll conducted for the Great Falls Tribune.
Nearly 59 percent of the 405 adults surveyed oppose the idea, while nearly 30 percent support it.
...
Baucus opposes the idea, citing concern about the estimated $2 trillion cost of making up for the money diverted into private accounts.
He also fears the president's plan will reduce benefits to future retirees.
Poll respodents leaned toward the senator, with 54 percent saying they are more likely to support Baucus' position on personal Social Security accounts. About 28 percent said they support the president's position. Another 18 percent supported neither position or were undecided.
Does someone need a Loud and <$NoAd$> Proud moment?
--Josh Marshall
Local Democratic officials banned <$NoAd$> from events on Bamboozlepalooza Tour?
Just like old times, I guess.
From North Dakota's Fargo Forum ...
Fargo City Commissioner Linda Coates is among more than 40 area residents included on a list of people barred from attending President Bush's speech today in Fargo.Among the 42 area people on the do-not-admit list: two high school students, a librarian, a Democratic campaign manager and several university professors.
White House spokesman Jim Morrell and Don Larson, a spokesman for the North Dakota governor's office, say they don't know anything about such a list.
"This is the first I'm hearing of it," Morrell said when contacted Wednesday.
But two sources close to Tuesday's ticket distribution confirmed the list exists and includes a handful of names of people who were not to receive tickets to today's event at North Dakota State University's Bison Sports Arena.
The list was supplied to workers at the two Fargo distribution sites, along with tickets and other forms citizens were asked to fill out upon receiving them. People who handed out tickets had copies of the list at their tables to determine if anyone should be denied access, both sources said.The list contains a wide range of people. Several wrote opinion page letters to The Forum criticizing Bush or the war in Iraq. Others wrote letters in support of gay rights or of Democratic policies.
It's subscription only. But if you register you can see the rest here.
--Josh Marshall
Milbank looks for signs of Caucus membership with hand-clap-ometer ...
When Bush told the crowd that personal Social Security accounts are the best way to improve the retirement system, most Republican lawmakers leapt to their feet. But a small band of moderates -- including Sens. Olympia J. Snowe (Maine), Susan Collins (Maine), George V. Voinovich (Ohio) and Mike DeWine (Ohio) -- were slow to join the applause. As others felt the pressure to come to their feet, Snowe, who has said she would "certainly not" support Bush's proposal, remained seated without applauding. She smiled uncomfortably and re-crossed her legs.
Remember for future reference, Collins easily swayed by colleagues' hand slaps.
--Josh Marshall
Sen. Baucus (D) of Montana has an OpEd in the Billings Gazette all set for the kick-off of the president's Social Security Bamboozlepalooza tour.
--Josh Marshall
The night of the long gavels?
Timed as it was to get lost in the hullabaloo of the State of the Union address, the Tuesday night/Wednesday morning purge of the House Ethics Committee was still a pretty audacious move.
It's been known for some time that the now-outgoing Chairman of the House Ethics Committee, Rep. Joel Hefley (R) of Colorado was going to get canned for his various offenses related to the Ethics Committee's handling, be it ever so gentle, of Rep. Tom DeLay (R) of Texas. The only mystery was just when the ax would fall.
But in this case, Speaker Hastert seemed to be channeling Michael Corleone in one of his less appealing moments.
As we noted back on November 19th, three of the five Republican members of the House Ethics Committee turned out to be in the Shays Handful. Or putting it more prosaically, three of them voted against the DeLay Rule.
The three were Hefley, Rep. Kenny Hulshof (R) of Missouri and Rep. Steven LaTourette (R) of Ohio.
Hastert axed all three.
The two who toed the DeLay line -- Rep. Judy Biggert (R) of Illinois and Rep. Doc Hastings (R) of Washington -- stay. And Hastings becomes Chairman.
Hulshof seemed surprised by the turn of events and in his own words, "deeply disappointed."
The following comes from the St.Louis Post-Dispatch ...
“I believe the decision was a direct result of our work in the last session,” Hulshof said in an interview, “particularly my chairing the investigative subcommittee” that examined ethics charges against DeLay, R-Texas, in the 108th Congress.Hulshof said his opposition to recent proposed changes of the GOP’s ethics standards may also played a role in his removal.
What's most telling, though, in this whole grisly affair is less the complaints of the purged than the comments of Hastert spokesman John Freehery who apparently couldn't be troubled to keep a straight face when denying that the purge was a purge.
This from the Rocky Mountain News about Hefley ...
John Feehery, a spokesman for Hastert, denied the charge, saying Hefley did a "great job" as chairman but had served the mandatory number of terms allowed without a waiver of House rules."He wasn't ousted. We have said all along we would make a change because that's what the rules state," Feehery said. "Any time you're (taken) off the Ethics Committee, it's not a punishment. It's not a joyful type of assignment."
And this about Hulshof from the Post-Dispatch ...
As for Hulshof, John Feehery, a spokesman for Hastert, said there was no connection to the DeLay matter and that the speaker simply wanted fresh faces on the panel.“It wasn’t really removing him,” said Feehery. “It was more like relieving him of his duty. The Speaker doesn’t like to have people who are such talented legislators like him have to spend so much time on ethics.”
Feehery noted that Hulshof sits on the Ways and Means Committee and “is likely to play a critical role on Social Security and tax reform.
“... Ethics is more of a burden than a privilege,” Feehery added. “And the speaker likes to mix it up,” referring to Hastert’s desire to put new members on the panel.
But Hulshof said he had specifically asked Hastert to reappoint him to the panel and noted that two other GOP members who were allowed to stay—Reps. Doc Hastings, R-Wash., and Judy Biggert, R-Ill.—have served on the committee longer than he has.
When corruption is really entrenched, there's no attempt to hide it.
--Josh Marshall
We told you on Tuesday night that Rep. Ron Kind (D) of Wisconsin was getting his papers in order to leave the Fainthearted Faction. And tonight he filed them.
The Milwaukee Journal-Sentinel quotes Kind calling the president's plan, "economically and morally irresponsible ... I am strongly opposed to any privatization plan that cuts current benefits or increases the federal deficit. Further, the president cannot continue his raid of the Social Security and Medicare trust funds on one hand and on the other hand allege that Social Security faces a financial crisis."
To the AP, he said: "The president's proposal to overhaul Social Security would drain more than $2 trillion from the Social Security Trust Fund over the next decade, endangering the benefits of current retirees and leaving a legacy of debt to our children and grandchildren."
These are the sorts of statements that are a bit vaguer on the policy nitty-gritty than we like to see. But it's the sort that got Sen. Dianne Feinstein (D) of California out of the Faction. And he makes up for vagueness with vehemence. So, on the totality of the evidence, Kind's out of the Fainthearted Faction.
That brings the House Faction down to a mere five members, two of whom already have OFO? status.
--Josh Marshall
The ax falls on Istook and our man Jonathan Kaplan has the story.
You'll remember way back when, after the aptly named Rep. Ernest Istook (R) of Oklahoma got his nose in a vise over his IRS-tax-return-snooping 'amendment', he went after a bunch of Northeastern Republicans by cutting off their transportation money. (Istook was chairman the Appropriations' Committee's Transportation Subcommittee.) You can read about it here along with the cackling remarks of his spokesman Micah Ledorf.
As we noted at the time, this was pretty foolish practice on the part of the House Republicans, since they may not be dominant in the Northeast. But they wouldn't have a congressional majority without healthy representation throughout the region -- something Istook's shenanigans put in danger.
Within a week, the sad-sack Istook was reduced to the ignominy of writing a public letter of apology to his colleagues.
And now, reports Kaplan, Istook's little stunt has cost him his chairmanship.
--Josh Marshall
Keep in mind that nothing that got said last night touched on the very big issues of disability and survivor benefits, which make up a substantial part of Social Security. That is money that in most cases, by definition, gets paid to individuals or on behalf of individuals who didn't have a lifetime of work to build up a private account. Where does that money come from?
--Josh Marshall
Atrios makes the expert catch here with this comment from Wapo associate managing editor Robert Kaiser ...
Even more curiously, a "senior administration official" who briefed reporters on the Social Security proposal earlier today disclosed details of the White House plan that I don't think will play well in Peoria. Most significantly, this official revealed that most or all of the earnings from new "personal" or privatized accounts will be paid not to the holder of the account, but to the government. The senior official called this a "benefit offset." It's one way to finance the creation of these private accounts, but it's going to cause quite a political stir, I think.
That's quite a deal, isn't it?
If you really do well in the market you might even work your way back up to what you were going to get anyway. Of course, that not counting the huge benefit cuts.
Here is the exchange with the mysterious "senior administration official" in question ...
Q Putting those aside, what is the revenue implication of a fully phased-in 4 percent account of the type that you've laid out?SENIOR ADMINISTRATION OFFICIAL: It would be very different depending overall on whether or not it was done alone or in the context of a comprehensive plan.
Q Assuming it's done alone, since that's all you're putting out here --
SENIOR ADMINISTRATION OFFICIAL: And the problem with assuming it's done alone is that we aren't advocating that it be done alone. We're advocating that it be done in the context of a comprehensive plan.
Q But people are going to want to know what is the cost.
Q But you're not saying what else is in there. You're not saying what else is in the comprehensive plan, so --
SENIOR ADMINISTRATION OFFICIAL: Well, when we have -- at the point where we can attach numbers to a comprehensive plan and model the effects of the accounts in that context, of course we'll put those numbers forward. But until that -- those specifications exist, we don't have the ability to project that.
Q In saying that there is no net added cost to the program, are you implying -- is it implicit that there is a benefit offset of one-third current guaranteed benefit because you're diverting one-third of revenues away from this program? If that's not correct, what would the benefit offset be to traditional benefits, and how would it be calculated?
SENIOR ADMINISTRATION OFFICIAL: The way that the election is put before the individual in a personal account structure of this type is that in return for the opportunity to get the benefits from the personal account, the person foregoes a certain amount of benefits from the traditional system.
Now, the way that election is structured, the person comes out ahead if their personal account exceeds a 3 percent real rate of return, which is the rate of return that the trust fund bonds receive. So, basically, the net effect on an individual's benefits would be zero if his personal account earned a 3 percent real rate of return. To the extent that his personal account gets a higher rate of return, his net benefit would increase as a consequence of making that decision.
Q So he would only get a benefit to the extent that his portfolio performed in excess of 3 percent?
SENIOR ADMINISTRATION OFFICIAL: Right. You can think of it as saying -- if you were making a decision on where to put your money going forward over the next 10 years, and you're saying, should I put it in this account or that account, if you're choosing to put your money over here instead of over here, then the net effect on you, as an individual, is to compare what would be the rate of return you get from this system, as opposed to putting it over here. And that would be the difference between the two.
Q Short of 3 percent, would he make whole or would he get less than the current guaranteed benefit?
SENIOR ADMINISTRATION OFFICIAL: Well, there's a implication at the end of your question which -- you have to remember, the current system can't pay the current guaranteed benefit, so --
Q -- is to be paid through 2042 or 2052, the point -- are you suggesting that would not be paid?
SENIOR ADMINISTRATION OFFICIAL: Well, it's -- well, actually, it's -- I don't want to get off on too far of a tangent, but the Congressional Budget Office actually put out a paper this week which made a modification to what they had previously said about what current law was. And they made it very clear that current law is actually the level of benefits the current system can actually pay, as opposed to the level of benefits the current system is promising. So if you ask the question in terms of --
Q But they also said it can pay current level benefits until 2052 -- correct?
SENIOR ADMINISTRATION OFFICIAL: But the Congressional Budget Office is also very careful to s