Now, no one tell Josh’s wife that he sneaked away to post during his honeymoon. While Josh was posting from an undisclosed, but sunny, location, I was reminded of a much colder time: the weeks after the Republican takeover of Congress in 1994. Democrats were devastated; pundits were gabbing hysterically about the dawning of “prime ministerial” government in the US. That December, I returned from England and had a conversation with the historian Fred Siegel, a friend and mentor of mine. Fred said not to worry; he wished control of the House of Representatives on the GOP as, eventually, it would turn them into what the Democrats on the Hill had become by the late 1990’s -- an out-of-touch, Beltway party focused on the needs of the donors who fund their campaigns.
In Slate this week, Jacob Weisberg notes that this prediction has come true. “Interest-group conservatism,” he argues, has replaced interest-group liberalism -- with all its accompanying pathologies. Weisberg’s piece underscores what many across the party have argued: that Democrats must seize the mantle of reform. Embracing a reform agenda -- along with developing a forward-looking public philosophy -- will not only rid Democrats of the worst excesses of interest-group liberalism, but put us on track to do what the GOP did a decade ago: win.
--Spencer Ackerman
(ed.note: Josh Marshall will be back Sunday evening. But he couldn't resist this one post from abroad.)
In the context of Social Security, what exactly is ‘solvency’? And just what are we looking for when we say we want to find it? I pose these questions because the president's new ‘plan' has placed them in a much higher relief for the following reason. According the Social Security Trustees' rather pessimistic estimates, in 2041 or 2042, the Trust Fund will run out and benefits will have to be cut by just over 25%. President Bush calls that ‘bankruptcy’. On the other hand, President Bush's 'plan' cuts benefits by about the same amount. And he calls that ‘solvency’.
Same cuts: one is a looming disaster, the other is an act of statesmanship. Go figure.
Now, there are some details and caveats. The Bush cuts aren't quite as big. He cuts a bit of a break for the working poor while reserving the full brunt of the pain for the middle class. On top of that he includes a private accounts-based phase-out plan and a ton of new borrowing. But then, as even the President's budget wizards now concede, his plan only keeps the program 'solvent' for a few more years. So it's not like it accomplishes much of anything anyway.
Yet none of this changes the essential logic of the Bush plan. And that’s where our attention should focus. If the issue is simply making sure that benefits remain equal to payroll tax revenues, that's easy. Indeed, we've already got that since the way the Social Security system is set up, benefits are automatically cut to the level of revenue coming into Social Security form payroll taxes and the Trust Fund. Just leave the damn thing on auto-pilot and it will remain 'solvent', automatically, from now until the end of time.
All the president has done is take the problem -- steep benefit cuts -- and redefined it as the solution. That’s not a plan or a solution; it’s a word game. And if we're really setting such a feeble standard, there are an infinite number of similarly silly 'plans' folks can cook up.
The point, I think, is that when people worry about 'solvency', their concern is not about something so trivial as a book-keeping entry. Their worry is that people like Social Security as it is today. And they want it to be there for themselves or, depending on their age, their children or grandchildren. Only there's a problem. And that is that in the second half of this century potential funding shortfalls could require cuts that begin to make Social Security into something very different than what it is today and what it was for those in the past.
Now, not every thing we want is possible in this world. And perhaps at some point some level of cuts will be necessary. But, as I said, I think they are what most folks want to avoid rather than being the goal, as seems to be the case for President Bush.
But, if changes become necessary, they are far from the only lever that can be pulled to put things back into balance. We could remove or limit the high-income-earners’ payroll tax exemption, the so-called ‘cap’. We could supplement Social Security with funds from general revenue. We could invest a portion of the Trust Fund in something other than Treasury bonds. We could nudge the retirement age up another year. Perhaps most immediately we could forgo the new round of high-income tax breaks President Bush wants passed – those which would re-pass or make permanent those from his first term. That in itself would go a long way toward solving the whole problem. Various mixes of these possibilities would solve the whole problem. And it is important not to forget that it is not at all clear that the problem will ever even materialize, at least at this scope, given increased productivity and immigration.
The important point is that for President Bush there’s only one solution -- big middle class benefit cuts. (And, of course, on top of that, lots more borrowing and cutting to create that Write House Holy Grail, private accounts.)
For most folks, that’s the problem. For President Bush, it’s the solution.
It’s his goal.
And that shouldn’t surprise you, since phasing out Social Security has always been what the president is after.
--Josh Marshall
<$NoAd$>I am off to the family homestead in the wilds of South Jersey. I’ll be blogging a bit from there. Before I do, allow me to pose a question to the TPM collective that would help immeasurably with a debate I’ve been having with some folks in DC:
If you have to read a long magazine article (such as a New Yorker profile), do you prefer to read it: on a website, in a printed magazine, printed from a website from a printer, or not at all?
If you could e-mail me at kenbaer17@hotmail.com with your answer in the subject line, I would be most grateful.
--Spencer Ackerman
The business of politics in the US has kept me from posting on the politics of the UK, and I have a lunch meeting in a half-hour. So, here’s a quick wrap-up of the British elections.
By now, you know that Tony Blair and the Labour Party have won a historic third term, but with a reduced majority of 66 seats. The Tories gained 33 seats to garner 197, and the Lib Dems increased their total by 11 seats to 62. This is a historic win for Labour -- and while a lot of attention has been focused on the reduced majority, they are still, by far, the dominant party of British politics. The Tories have picked themselves off of the mat and regained some natural Tory ground in the southeast and London to bring them closer to respectability. But to put it into perspective, the Conservatives are still worse off than Labour was after the disastrous Michael Foot-led campaign of 1983. The Liberal Democrats had a good night -- and now have more seats than at any point in their modern history -- but the Lib Dems have yet to break into prime time.
What the Lib Dems did do was provide an outlet for Labour rank-and-file anger toward Blair over Iraq. This Blair government takes power with the smallest percentage of the vote in history (about 36 percent). As the Prime Minister said today (which is, by the way, his birthday), “I have listened and learned.” What he heard was the British equivalent of a Bronx cheer.
While these elections are interesting for any political junkie, they are important for us as Americans. First, the UK is our strongest ally in the world -- and especially in the war in Iraq and in the war against terrorism. This election sent a very loud signal to the British leadership, across all parties, that there is very little upside in being such a staunch supporter of President Bush. I believe that Blair’s support of Bush is both in the strategic interest of his country and springs from his deeply-held beliefs about the threat jihadist Islam poses to the world (see Philip Stephens’ biography on Blair for more). Yet, with about 50 hard-core Labour rebels and a diminished majority, Blair will have to walk gingerly when it comes to foreign policy. And if, as expected, he gives way to Gordon Brown in a year or two, British support for Iraq – or similar adventures -- will not be anything close to automatic.
Second, there is a tradition of intellectual give-and-take between our two countries (Thatcher and Reagan; Clinton and Blair). Last night, Blair lost a good number of New Labour shock troops, and his diminished majority will tie his hands when it comes to pursuing innovation and reform in the NHS and other public services. Also, there are those who may interpret this election as a defeat for New Labour; they should not. Blair got hurt because of Iraq, nothing else. If Labour did not undergo the modernization project that Blair helped initiate in the 1990’s, it would not be in government today. As a Third Way fellow-traveler, I hope that this election and the eventual ascension of Brown to Number 10 will not dampen the intellectual ferment on the left in Britain. As we Democrats rebuild and do so in a rapidly-changing world, we need all the help we can get.
--Spencer Ackerman
In Rochdale, just outside of Manchester, Lorna Fitzsimons -- a Labour MP looking for a third term -- was facing a tough challenge from the Lib Dems. So, who did the Labour high command send to help? Karen Hicks, Howard Dean’s campaign manager in the New Hampshire primary and the field director at the DNC in the general election. Fitzsimons, apparently not well-versed in recent American political history, told the New York Times that: "Karen is my ace in the hole."
Well, the Lib Dem candidate, Paul Rowen, must have had a royal flush because he’s the new MP from Rochdale.
--Spencer Ackerman
<$NoAd$>Word just came in that the far-far-far left, Islamist candidate George Galloway has defeated Oona King -- daughter of an ex-pat African-American civil rights activist and Jewish mother -- in the east London constituency of Bethnal Green and Bow. Galloway is not just anti-war and anti-American, he is pro-Saddam. Read what James Forsythe wrote in the New Republic Online about Galloway:
Galloway, dubbed "Gorgeous George," has been an MP since 1987 and is regarded as one of the House of Commons' most gifted orators. He is also one of its most hardened leftists. "I did support the Soviet Union, and I think the disappearance of the Soviet Union is the biggest catastrophe of my life," he told the Guardian in 2002. The signature issue of his political career, however, has been the Middle East. Even before he was elected to Parliament, Galloway managed to persuade his hometown of Dundee in Scotland to symbolically partner with the West Bank city of Nablus. Since Blair became party leader in 1994, Galloway has been a constant thorn in the side of New Labour. His support for Saddam--he earned the nickname "the member for Baghdad Central" and in 2002 he wrote of his experience on "the crowded dance floor of a North African nightclub ... dancing with Tariq Aziz, the deputy prime minister of Iraq"--stretched the relationship to its breaking point. In November 2003 he was expelled from the party for what Labour Chairman Ian McCartney described as inciting "foreign forces to rise up against British troops."
As Forsythe goes on to explain, a Galloway win could spark a backlash against Muslims as: ”it could lead many Britons to conclude that Muslims threaten the country's liberal political culture.” Galloway’s win is a loss for us all.
--Spencer Ackerman
I have BBC coming over cable, and my former housemate from Oxford on the IM (his Scottish better half has generously surrendered him). And there’s been a lot of cool graphics and the swingometer has done things I never thought it could do. But so far, only a dozen or so results have come in and almost all of them are from safe Labour seats. What we’re seeing is that in the rock-solid Labour constituencies, turnout is down and there’s about a 6 percent swing to the Lib Dems -- but Labour still wins. Clearly, Labour supporters are punishing Blair. What really matters is what happens in the battleground, and the only marginal to have come in is Putney in western London (number 53 on the Tories' target list). The swing was 6 percent to the Tories. If that’s indicative of anything, it will be a longer night for Labour supporters than the exit polls led anyone to believe.
--Spencer Ackerman
In 1994, Tony Blair and Gordon Brown met at the chic Islington restaurant, Granita, and hammered out the bargain that made Blair party leader and set into motion the rise of New Labour.
As the polls closed in Britain tonight, two of my favorite ex-pat journalist friends decided to honor the evening by supping at this famous eatery. Yet, Granita has since closed and is now a Tex-Mex place called “Desperados.”
Yes, the joke writes itself.
My margarita-swilling correspondents report that the BBC was there looking for comments, but the only people eating at a Tex-Mex restaurant in London on election day were other journalists and Americans. With nothing to learn, they scarfed down their queso and headed to the polling place across the street. The workers there told them that turnout was at about 50 percent -- way off from the usual turnout in the mid-60’s. Odds are that the Islington left either stayed home or voted Lib Dem. Not a good sign for that healthy majority Blair needs.
And this just in: the BBC/ITV exit polls predict a Labour majority of 66. Wow. Blair may be a desperado by the time dawn breaks.
--Spencer Ackerman
The polls close in Britain in just under two hours. C-SPAN 2 will be running BBC One’s coverage of the returns, and if you like political theater, I highly recommend tuning in.
First, there’s Peter Snow of BBC and his swingometer (again, nothing to do with Austin Powers). Snow is an institution. He frenetically runs across the BBC set commenting on each seat as it comes in, while at the same time giving viewers the overall electoral picture. Backing up snow is the BBC’s graphics that put the red-and-blue maps of US networks to shame.
Second, election coverage in Britain is more reality TV than public affairs TV. In each individual constituency, all the candidates hear the results at the same time and in the same place. Gathered in what looks like a junior high gym or a fire hall, the candidates stand together on stage with big colored ribbons on their chests. Then, without any hint of inflection in their voice, an election monitor calmly reads the results. I’ll never forget in 1997 watching government minister after government minister see their political careers go down the toilet as upstart Labourites beat them (the shock on Michael Portillo’s face -- and on Stephen Twigg’s -- when the young Labourite Twigg beat the Defense Minister in Enfield Southgate was priceless). And all they could do was grin and shake hands.
All night, BBC will go from constituency to constituency to get the results. I’ll be watching and blogging the results as they come in.
--Spencer Ackerman
<$NoAd$>I’ve never been a big fan of institutionalizing constituency groups within political parties, even when they claim to represent me. But let’s hand it to the National Jewish Democratic Council (NJDC) for sticking it to Senator George Allen.
Allen, whose eye is on 2008, is scheduled to give the commencement address at Pat Robertson’s Regent University this weekend. The NJDC called on Allen to condemn Robertson’s remarks on “This Week” this past Sunday in which the good Reverend reaffirmed his belief that the “out-of-control” judiciary is a bigger threat to the United States than al-Qaeda -– and even bigger than the Nazi threat of six decades ago. Allen’s spokesman dismissed the NJDC release saying that it “takes Robertson's remark totally out of context.”
Let’s roll the tape:
10:50:15 GEORGE STEPHANOPOULOS (OC) But, sir, let me just stop you there. How can you say that these judges are a more serious threat than Islamic terrorists who slammed into the World Trade Center?10:50:23 PAT ROBERTSON
It depends on how you look at culture. If you look over the course of a hundred years, I think the gradual erosion of the consensus that's held our country together is probably more serious than a few bearded terrorists who fly into buildings.
Putting it into context, how can the Republicans be strong in the war against terror, but embrace those who seek to belittle it?
--Spencer Ackerman
<$NoAd$>Putting politics aside, I’d be remiss if I didn’t note that today is Yom HaShoah, or Holocaust Remembrance Day. Sixty years ago this year, the Nazi death camps were liberated by Allied forces, and the full extent of the genocide was made known. Many of us have read the books, seen the movies, and gone to the museums, but as this event fades further and further into the past, it becomes ancient history to too many -- or trivialized too often.
While the day has a special significance in Israel and to Jews all over the world, there’s a more universal resonance to this day of remembrance: a day to reflect on humans’ capacity for evil -- and capacity for inaction in its face. Recognizing those frailties one day a year, hopefully could go a long way to stiffening our resolve when confronted with such barbarism in our own times.
--Spencer Ackerman
I punched the data into the seat calculator and consulted a swingometer, but I overlooked one thing: the gamblers. While no one in political punditry puts their money where their mouth is, these guys do. And what do the bettors say? The average spread for the size of the Labour majority is 89 seats. Above the danger zone for Blair, but since it’s below the expectations of the polls which are putting the majority in the triple digits, it could mean trouble for Blair with his own backbenchers.
So what’s going on?
A friend of mine at a major British paper tells me that the senior editors at his august publication are not encouraged with the "mood on the ground" reports they're getting from their correspondents from various constituencies this morning. Like the gamblers, most of the editors are predicting a majority in the 80s, with one guessing it could be as low as 60.
Of course, this could be lingering resentment toward Blair that these editors are hearing in their own Islington echo-chambers (how many of your friends on the Upper West Side were convinced that Kerry was going to win?). But, take the reports from the ground, add in the wisdom of the market, and the targeted campaigns that the Tories and Lib Dems ran, and it could be a rough next few weeks for Blair -– and a rougher one for Howard. The reports in today’s papers are that the Lib Dems are making in-roads in Tory constituencies, meaning that like in 2001, they may be the biggest winners.
A battered Tony Blair, an invigorated anti-war Lib Dem party -– it has the makings of a bad day for President Bush.
--Spencer Ackerman
Polls open in the UK in a couple of hours, but at the end of the last day of campaigning, a friend in the Labour boiler room sent me their compendium of all the latest public polls. They averaged the numbers from all the public polls conducted over the last three days, and came up with: Labour at 37.2 percent, Conservatives at 32.5, and Lib Dems at 22.8. Compared to 2001 totals, it appears that the Tory base has come home, and Labour has bled a little –- about 4 percentage points –- to the Lib Dems. Of course, what matters is what happens in the “marginals” or swing seats where the campaign has really been fought. Nonetheless, Brits obsess over the “swing” and use the swing in the overall vote total to figure out who will win what in Parliament.
Going to the BBC’s handy seat calculator -- which is almost as cool as its “swingometer,” which I assure you has nothing to do with Austin Powers -- we find that these numbers would result in a Labour majority of 118 seats, and Tony Blair would rest easy. But to stress again, it’s not how many runs your score, it’s how many games you win (Exhibit A: Gore 2000). This fight tomorrow will be a ground war fought in marginals all across Britain. It’s a turnout game now.
One of those guys slogging it out in the marginals is Steve Morgan. I have to give him and the folks at Morgan Allen Moore a million thanks for their invaluable election night guide. Democratic politicos know Steve as the guy who handles the foreign press at any major Democratic event -– New Hampshire primary night, the Convention, etc. At home, he’s the Michael Whouley of British politics (so much so, that their companies merged), the foremost Welsh expert on American football, and as of last week, the father of Cai. Congratulations, Steve.
--Spencer Ackerman
Back to the British election primer.
The Dynamics to Watch: Blair vs. Bush. The absolutely single-biggest liability for Tony Blair is that voters think that he is George W. Bush’s “poodle” and that he lied about Iraq. In fact, the latest Financial Times poll found that 62 percent of British adults believe Blair lied about Iraq; another poll for the Guardian found a majority who say he’s not trustworthy. The Lib Dems have been relentless in whacking Blair on this, and in recent days, the Tories (who supported the war, but have a lingering odor of imperial anti-Americanism) have joined in. While Blair’s support for the war and defense of his decision in the face of withering and personal opposition is admirable, his lack of personal support has dampened Labour enthusiasm. If Blair suffers for Iraq, he only has Bush to thank. If Blair is toppled, there could be a noticeable cooling of US-UK relations.
Blair vs. Brown. The tension between these one-time parliamentary officemates got particularly intense in the months leading up to the election. Years ago, Blair made a deal with Brown: he would stand for party leader, make Brown a very powerful Chancellor, and eventually step aside for Brown to take over. Their tensions reflect the tensions within the party: to many Labourites, Brown is one of them –- not the slippery Blair who “sold out” Labour principles. After jockeying with Brown and allowing the distance to grow, the Blairites realized that because of Iraq, Blair needed Brown to bring home the base. Since then, they have been inseparable on the campaign trail. Yet, there are enough Labour rebels that if the margin of victory dips below the triple digits and gets anywhere close to 50, the pressure on Blair to give way to Brown will be great.
Blair vs. Howard. The other night, after flipping between the Daily Show and that new HBO movie about FDR and his struggle with polio, I caught one of the BBC’s top political advisers being interviewed on C-SPAN. He made the key point to remember about Michael Howard: “Not only was he a member of the most unpopular cabinet in postwar British history, he was the most unpopular member of the most unpopular cabinet in postwar British history.” The nasty tone the Tory campaign has taken in the final few weeks has only underscored that point. Labour wants to make the choice between them and the Tories one between forward vs. back; Labour success vs. Tory failure. Check out this Labour party election broadcast (scroll down to “Remember?”); it’s the best use of Barbra Streisand in a political campaign since her November 2000 robo-calls to gay households in South Beach!
Update: TPM readers are just verklepmt over my reference to Barbra Streisand above. Yes, it's not Streisand's recording of the "The Way We Were" in the Labour party election broadcast linked above. However, since the song was written for her, first recorded by her, and inextricably tied up with her, I referenced it as a Streisand song. Thanks to all the readers who wrote in.
--Spencer Ackerman
Wow. One little attempt at humble, self-deprecating humor, and I am the poster child for all that's wrong with Democratic politics. I assure TPM readers -- those who very nicely suggested some books to read and those who not so nicely see me as an ignoramus -- that I do know quite a bit about Social Security. Compared to Josh and Matt, I am a novice. That's why it won't be my focus this week.
Now, I'm really off to the gym, and later tonight, I'll continue with the British election primer.
--Spencer Ackerman
Despite living there for the better part of four years, there are many things I can’t explain about Britain: the instinct to queue, the bad plumbing, and how a culture with such bland native food can love curry so much. What I can explain are the basics about the British elections held tomorrow. These next few posts should set the scene for people just tuning in to these elections.
The Basics: 646 parliamentary seats are at stake -– 529 of them are in England, 59 in Scotland, 40 in Wales, and 18 in Northern Ireland. 324 is the number needed to form a majority government. Seats are allocated on a first past-the-post basis in each district. That is, it doesn’t matter how many votes each party gets nationwide; it matters how many ridings a party wins. Thus, it’s possible to win the most votes, but not the most seats -– a phenomenon that last happened in February 1974.
The Labour Party, led by Prime Minister Tony Blair, holds a 160-seat overall majority and have had a commanding majority since winning election in 1997. If Labour wins re-election, it will be the first time in British political history that Labour has won three consecutive elections.
The Players: The Labour Party, led by Blair and his once and future rival, Chancellor of the Exchequer Gordon Brown, is the main center-left party. Blair has re-made the party into New Labour, shedding its socialist past, attracting middle-class voters, and proving that Labour can manage the economy -– and quite successfully at that. There’s a tension within the party between the working-class beans-on-toast crowd and the more affluent focaccia- and-roasted-vegetables set (think Quad Cities vs. Tribeca). Bigger than these class differences is the huge rift within the party on the war in Iraq. This is -- by far -- Blair’s biggest vulnerability.
The Conservative Party (aka the Tories), led by Michael Howard currently has 165 seats in Parliament. The Conservative Party today is like the Republican Party in 1940: a small opposition party of rural and wealthy voters that has to contend with a rejuvenated and dominant progressive party. After being obliterated in 1997 and embarrassed in 2001, the Tories are having a more successful campaign in 2005 -- one waged on the basis of social issues such as: crime, school discipline, and immigration. While – as James Harding notes in Slate -- their campaign lacks the big vision of Thatcher, the Tories stand to gain seats this election because of their careful targeting of swing districts and the mere fact that they really have only one direction to go.
The Liberal Democrats. Imagine if the Deaniacs split from the Democratic Party over Iraq, and you've got the Lib Dems. This is a middle-class party strong in university towns, and in odd suburban places throughout Britain. Led by Charles Kennedy, the Lib Dems have 51 seats in Parliament. Their pure anti-war stance has attracted many disgruntled Labourites as well as some Muslim voters. Lib Dems can play the Nader role in this election, siphoning off enough Labour votes to throw the election to the Tories or diminish the Labour majority enough as to provoke a leadership challenge to Blair. If there is a total Tory meltdown (a swing of about 10 percent from Tory to Lib Dem), the Lib Dems could become the official opposition.
More to come. But in my effort not to totally embrace the blogger lifestyle, I'm off to the gym.
--Spencer Ackerman
<$NoAd$>Chuck Todd, the man behind Hotline, has an excellent column today on the National Journal website (subscription only) about the big issue looming on the radar screen for 2008: immigration. He writes:
There's a disconnect between the politically correct legislators and media in Washington and the general public on the issue. Call it xenophobia if you want, but these [anti-immigration] initiatives are popular with the public, particularly as the economy stagnates and some lower-income workers are looking for someone to blame.
Add in the possibility of a terrorist attack, and the shut-the-doors crowd will be clamoring for the Great Wall of Brownsville.
Chuck is right that immigration will be a big issue for both parties, but on the presidential level, I still believe that it stands to damage the GOP more. While many rank-and-file Democrats may have serious reservations about immigration, there is no Democratic anti-immigration constituency -– and in the presidential nominating process, it’s the groups and activists who count. The GOP not only has an anti-immigration constituency, they also already have anti-immigration candidates. One Tom Tancredo in the race, and the whole field can easily be pulled to the right. While the opposite dynamic could happen on the left, the ambivalence toward unchecked immigration among Hispanics themselves should put a break on that.
--Spencer Ackerman
Matt has raised an interesting point: New Labour is to the right of Old Labour in relative terms, but in absolute terms, it is to the left of the New Democrats in the US. Thus, Matt says, why does the DLC and other New Democrats embrace Blair and New Labour and folks like the old guard at the American Prospect have its reservations?
My first instinct is to say, well England is England and the US is the US; chalk up their individual positions to their unique political cultures and history. But, it wouldn’t be so bold to attack the very premise of Matt’s argument: is New Labour really to the “left of mainstream thinking inside the Democratic party?” Read its latest manifesto. All things being equal (because it still is another country), what in it couldn’t conceivably been uttered by Bill Clinton -– or Joe Lieberman? Just because Britain has nationalized health care and stronger unions, it doesn’t mean that it’s a socialist paradise. Couldn't it be said that New Labour is to the right of the mainstream thinking inside the Democratic Party?
The thing to remember is that the main dividing line between New Labour and New Democrats and the more recalcitrant portions of their respective parties is a realization that the industrial age has come and gone and that we now live in a interdependent world which demands different policy responses in order to live up to the values of fairness, equality, opportunity, etc. that progressives cherish. If you drill down past the name-calling and the various issue positions, at the root of the divide is that New Labour and New Democrats are people on the left who have come to terms with -– and even embraced -- the market. In Britain, this entailed a more drastic break (one that culminated in the Labour Party repealing its Clause IV which called for the nationalization of the means of production). In both countries, it has resulted in a shift in how government provides for its citizens -– namely, finding ways to help people get what they need to compete in the global marketplace and using the power of the market to achieve social ends.
I don’t want to go on and on and on about this, and before the “netroots” starts burning my digital likeness in effigy, let me say that there is a lot more to say about this as it relates to foreign policy, domestic policy, and political strategy. That said, check out the relevant books on the topic: Daniel Yergin and Joseph Stanislaw’s Commanding Heights (which lays out the history of the rise of the market), Andrei Cherny’s The Next Deal (which only gets more relevant as time goes on), and although I have yet to read it, Thomas Friedman’s latest, The World is Flat, I am sure has a lot to say about this.
--Spencer Ackerman
Well, Matt has certainly set the stage for my debut. I just got back from the dentist, so let me do the requisite introductory remarks now, and think about what Matt wrote while I dig out from what's in my in-box.
To start, let me just say that it's a real honor to be on this side of TPM. I’ve been a faithful reader of the site since the dark days of the 2000 recount when Josh’s first posts were glimmers of hope for a dejected Gore speechwriter stuck sunning himself in the Plumbers and Pipefitters’ parking lot in West Palm Beach while his future employment slowly slipped out of reach. I’ve been a huge admirer and friend of Josh’s ever since he stuck up for me when a certain liberal magazine blackballed me for having the gall of supporting President Clinton’s agenda. And, of course, over the past few months, Josh -- and Matt Yglesias -- have performed a real service by guiding us all through the complex thicket of Social Security privatization. But until the tan and rested Josh returns from his tropical paradise, that service will be on hold.
I must confess that I know just about nothing about Social Security. When I have a question, I call Josh. When that fails, I bother Peter Orszag or Jason Furman. And when I have a real retirement question -– that is, investing on top of Social Security -- I follow my grandmother’s advice: “Ask your Uncle Arnie.” So, for the next few days, we’ll be taking a break from Social Security and talking mostly -– but not exclusively -- about the biggest political news happening this week, the British elections and why we Americans should care.
I first went to England as a grad student in Politics in 1994. While I didn’t study British politics, just being there for the rise of New Labour and their eventual election in 1997 was an education in and of itself (you’d be amazed what one can learn procrastinating from the work you’re supposed to do; then again, if you’re reading this, you probably already know.). It, in turn, informed my own work on the rise of the New Democrats which I turned into a book, Reinventing Democrats: The Politics of Liberalism from Reagan to Clinton (Kansas, 2000). Since then, I’ve followed New Labour closely, writing about it from time to time, and most recently -– and this is the last shameless plug, I swear -– this week for my column for the New Republic Online.
As we approach tomorrow’s election day, I’ll post as often as I can -- and as often as I hear from my sources all across the UK (actually, it’s just an eclectic group of my friends scattered across southern England, including journalists, politicos, political scientists, and the world’s expert on the 17th century English book trade). To that, I welcome the thoughts of any British TPM readers that may be out there. And, of course, if you have any good gossip or stories outside of the British Isles that need attention, now’s your chance. I got a password to TPM -- and Josh won’t be back until Sunday.
--Spencer Ackerman
My time here will be done shortly, with Kenneth Baer taking over in just a little while. It's been a real pleasure to blog for you all here and to get feedback from Josh's massive audience of readers. Speaking of which, a person doesn't just undertake uncompensated work for his own amusement. No! This was all a devious plot to promote my own work. So I hope that if you like what you've read, you'll check out my writing elsewhere. My blog has mostly been dedicated to silly stuff since I've been saving serious content for TPM, but after the handover there will be a return to substantive political commentary over there. In addition, I co-write Tapped with my colleagues from The American Prospect and you can browse my archived columns and magazine articles for the Prospect if you're so inclined.
If you really, really like what you read here you might want to call up The New York Times Book Review and say something like, "hey, have you heard of this Matthew Yglesias character? Wouldn't it be great if you actually printed that review of two books about Ronald Reagan you have on file and that you already paid him for?"
People also should know that I am capable of writing about things other than Social Security, I just thought it would be appropriate to focus on that issue this week since we're in the midst of a major now phase-out push and as we all know it's both a crucial issue and something TPM has played a big role in throughout the year. But to prove I have ideas on other subjects, and because Kenneth says he's going to be writing some about the British elections, here's a concluding thought. Tony Blair, as everyone knows, has moved the Labour Party to the right, dubbing it "New Labour" and antagonizing the apostles of "Old Labour" ideology. This, it seems, has greatly endeared him to "New Democrats" here in the USA who've been engaged in a similar project. But how similar is it, really? Iraq War aside, it seems to me that Blair's substantive views on domestic policy -- on the NHS, say -- would place him well to the left of mainstream thinking inside the Democratic Party. Which is to say that while he plays a similar role to Bill Clinton relative to the British political scene, in absolute terms his views are quite different simply because "Old Labour" was far to the left of anywhere the Democrats have ever been. So what gives?
There seems to me to be some muddled thinking on both sides of this question. The DLC should like Blair less, and my distinctly Old Democrat bosses at the Prospect should like him more. Since my successor literally wrote the book on the DLC, perhaps he can enlighten us about this. I'll also note that anyone who thinks the Liberal Democrats have gotten to Blair's left by opposing fees for university students needs to think harder. Free college tuition is a subsidy to the upper middle class, not to the poor. Given the availability of student loans, the main barrier to higher education for working class kids isn't tuition, per se, it's primary and secondary school systems that don't let them compete on a level playing field in the admissions sweepstakes. Now I'll doubtless enrage you all by suggesting that No Child Left Behind is a step in the right direction in that regard and sign off. But remember: Social Security now, Social Security tomorrow, Social Security forever!
--Spencer Ackerman
Can you taste the integrity?
Several months ago, we knew the president wanted to kill Social Security somehow, but he wouldn't tell us what his plan was. Back then, the Heritage Foundation was backing across the board price indexing. The Cato Institute had this plan that would have forthrightly eliminated Social Security. Then Bush said he wanted "progressive" indexing. And -- like magic -- Cato and Heritage now support just that. The White House sure is persuasive!
--Spencer Ackerman
Mississippi Republican Senators turn out to be not too thrilled with the idea of "progressive" indexing of Social Security benefits. And how's this for mumbo-jumbo? The president's "aides say the benefit cuts proposed by Mr. Bush have to be judged against what will happen if nothing is done to shore up the system as the baby boom generation ages and life expectancy increases. Social Security's trustees estimate that if no action is taken, the system can pay full benefits until 2041, and after that will take in only enough through payroll taxes to cover about 73 percent of promised benefits."
Fair enough, sort of. If we change nothing until 2041, and the Social Security Administration's estimates prove correct, then to achieve balance after 2041 wholly through benefit cuts, we would need to cut benefits by about 27 percent. Under the Bush plan, average workers would have their benefits cut by 28 percent by 2075, and 49 percent for higher-income workers. On top of that, the Bush plan doesn't even achieve its ostensible goal of solvency! You would need unspecified further benefit cuts to make the numbers add up, cuts approximately equal in size to the ones Bush has already put on the table.
--Spencer Ackerman
I don't like the term "add-on accounts" which, to me, frames the issue poorly and suggests a feeble-minded tactical response to the effort to phase-out Social Security. Programs designed to broaden the scope of asset ownership in America are more than defensible on their own terms, and like lots of other things I support (health care for the uninsured, a military capable of handling post-conflict stabilization missions better, etc.) shouldn't really be viewed as either a substitute for, or an enhancement of, Social Security as such.
The narrow economistic case for asset-building is simply that the national savings rate is very low and there's reason to think we'll be more prosperous in the long tun if we can turn that around. The broader moral case, however, is more important. The remorseless logic of technological progress and globalization is that the trend toward income inequality will continue apace. Inequality per se isn't the worst thing in the world. In addition to the bad inequality of the 1980s and 2000s where folks near the bottom see their income fall even as the economy grows and the rich get richer, you can get the 1990s full employment scenario where everyone wins. But it's not the best thing in the world, either. We can -- and should -- try to combat the trend through policies aimed at full employment and strengthening labor unions, but this is a tough nut to crack and it's worth deploying every tool one can think of.
The idea of asset-building is that instead of relentlessly inegalitarian capitalism or infeasible collective ownership of the means of production, that we ought to build what John Rawls called a "property-owning democracy" where productive assets are in private hands (like in today's America), but they're also widely dispersed (unlike in today's America) so that everyone has a stake in economic growth and everyone reaps the gains of growth.
It's an idea that's very much in the best American tradition. The Homestead Act in the 19th century created a situation where the government would give away for free the main productive asset of the era -- farm land -- to anyone willing to work for it. That's not feasible today, but the basic picture of letting every American who's willing to work hard acquire ownership over a home and some assets is still a sound one.
How to do it? Well doing it right would be hard, but fortunately this is an ambitious agenda that can be implemented in steps. The first step we should take is the surprisingly easy one of changing the default rules for 401 (k) plans. Right now, to start a 401 (k) you need to fill out a bunch of forms. A better plan would be to automatically enroll people in 401 (k) plans and make it so that you need to fill out forms in order to not contribute. This sounds pointless, but research indicates that it would dramatically broaden participation in these useful savings vehicles. There's also no reason for this to face opposition from any sort of entrenched interests or even the no-taxes brigade in the GOP. The next step, as Gene Sperling has argued is to switch the tax treatment of savings and investment around to make it more friendly to middle- and working-class people: "Without measures to have robust matching credits for low- and moderate-income workers and tax reform that would lead to a flat tax credit for savings, those arguing only to make 401K enrollment more automatic will do little to reach the huge numbers of Americans who are falling through the cracks or to turn our upside-down system for savings incentives right side up."
On top of that you could add some version of the ASPIRE Act which would give each child born in the United States "a starter deposit of $500 from the government and children from households below the national median income would be eligible for a supplemental contribution up to an additional $500." Those numbers are pretty modest, but it would be a foot in the door for bigger things to come, and could easily be linked up to some version of the Automatic 401 (k) which, in turn, should be given a more appealing name. A revived estate tax would seem to be a fitting and proper way of financing this sort of thing. At any rate, there's plenty of room for disagreements about the details here, but the Sperling article linked to above provides what are, I think, sound guidelines for what is and is not acceptable from the liberal point of view.
--Spencer Ackerman
What can you do about a guy like Joe Klein? As if his support for the Bush phase-out wasn't bad enough, he needs to insist that Democratic opposition to Bush's plan is not only misguided (by his lights), but is, in fact, comprised of "phony bleats of outrage from leading Democrats" who are "more interested in the demagogic exploitation of the issue than they are in the impact of baby boom retirement on their grandchildren."
I can assure everyone that my outrage is entirely genuine. It's also never been clear to me why the High Lords of Punditry think it's unacceptably "demagogic" to point out that the Republican Party wants to gut middle class retirement security. And then there's this shameful effort to pretend that privatization is all about helping out young people. But as I've point out before, under Bush's plan the younger you are the more your benefits are cut! If you think it's crucially important to the future of the country to finance tax cuts for today's wealthiest individuals by sharply reducing the living standards today's twentysomethings will enjoy when we retire, then fine. I'll say you're wrong, but lots of people have misplaced priorities. But to pretend that you're doing my generation some kind of favor is just absurd.
--Spencer Ackerman
We have a winner in The Wall Street Journal editorial page competition -- thanks to all the many readers who've sent me something. "Public Trust Busting" appeared in the Journal on my seventeenth birthday, May 18, 1998. It's mostly dedicated to praising the late Senator Daniel Patrick Moynihan's support for partial privatization. But, they also write: "Now, let us acknowledge that 'privatizing' Social Security is not what Mr. Moynihan desires. His political goal is to reform Social Security just enough to be able to save its universal guarantee." A misguided strategy, but not, I think, a malign one. More Washington Post editorial page than WSJ edit page. Certainly the Journal-ists do not approve: "No doubt many conservatives will want to go much further than the New Yorker, us among them."
In other words, they wanted then what they want now -- the elimination of Social Security as we know it.
Thanks to reader M.A. for the tip. I'd send you a t-shirt, but I don't think I have that authority.
--Spencer Ackerman
FYI, here's long-time Social Security commissioner Robert Ball's ideas about the scope of the Social Security problem (small) and some ways to achieve solvency courtesy of the good people at The Century Foundation. Obviously, I'm enamored of my own ideas on this score, but he's the country's leading authority on Social Security and I'm, well, a guest-blogger . . . so you might want to listen to him. At any rate, these in-house disagreements between friends of social insurance are small potatoes compared to the epic struggle over whether or not we should phase it out.
--Spencer Ackerman
As I enter my final 24 hours with this soapbox at my disposal, I'd like to shift gears a bit from unspinning the endless web of Social Security lies to offering some positive thoughts. To make a point Josh has offered a couple of times but not, I think, adequately spelled-out the Democratic Party seems to me to suffer from a surplus of tactical thinking. The elected officials and the strategists have fallen a bit dangerously out-of-touch with the content of liberalism. This isn't to say that Democrats need to adhere more closely to some kind of party orthodoxy. Outside-the-box thinking is always welcome, and I think there are some issues where the orthodoxy is dead wrong. It's to say that departures from the orthodoxy ought to be grounded in the merits of the issue and not just undertaken as heterodoxy for its own sake or as some short-term tactical ploy.
Generally speaking, too many people in this town seem to have things basically backwards. The idea should be for policy people to devise good ideas. Then political people think of ways to sell the ideas. If there's no way to sell a particular good idea, then you put it on the back-burner and look at something else. What you don't do is have the political people figure out what the public wants to hear and then go have the politicians adopt whatever that happens to be as the talking point du jour. That leads to the sorry spectacle I've seen on C-SPAN in recent weeks where you have Democratic congressman up there pretending that somehow a Democratic administration could magically make gasoline cheaper or force China to solve our economic problems for us.
So on Social Security: What is to be done? Ideally, nothing. The notion that we need to achieve perpetual solvency in 2005 for a program that's in balance into the 2040s seems to be based on a version of the old adage that "a stitch in time saves nine." And so it does. But you don't open up your closet and start stitching up your least threadbare sweater. The future is uncertain. We can't know right now if this Social Security deficit will even exist, much less how big it will be. The first thing to do is to work on the on-budget portion of the federal government, primarily through tax increases but also through budget reforms aimed at curbing wasteful spending. The good here should be, if not a balanced budget, then at least a declining debt-to-GDP ratio. The next-most-urgent economic policy problem is health care. Only then would tackling major changes to Social Security even be worth thinking about. In the interim, immigration reform, efforts to curb the incidence of disability, efforts to combat age discrimination, and achieving full employment as we had in the late 1990s are all ideas worth supporting on their own merits. And if achieved, they'll make Social Security's finances much better as a kind of bonus.
If for some reason it's politically necessary to do at least something (and I'm skeptical of anyone who thinks it's politically necessary to propose tax increases or benefit cuts) to narrow the Social Security gap the first best thing to do is to universalize the program by expanding coverage to all new state and local government employees. Next best, raise the FICA cap so that it covers 90 percent of payroll and change the indexing formula to ensure that it covers 90 percent of payroll forever. After that, rather than raising the retirement age, lower the benefits available to "early" retirees to encourage a larger proportion of the population to work up to the "normal" age -- right now most people retire "early" which, as the terminology indicates, isn't how it's supposed to work. You could appoint a Federal Reserve-style board to oversee the latter two ideas and tweak them periodically as necessary.
That's the Yglesias Plan for Social Security. Later on, the fraught question of add-on accounts.
--Spencer Ackerman
De l'audace, encore de l'audace, toujours de l'audace!
I was just on the radio talking Social Security with John Fund of The Wall Street Journal editorial page and opened with the elementary point that conservatives have never liked Social Security. They opposed its creation in the 1930s, campaigned for its abolition in 1964, and after the 1983 deal launched a "Leninist Strategy" (their words, not mine) to destroy it, the fruits of which we're seeing today. Understanding this point is absolutely essential to understanding what's happening in Washington, DC this year. There's a debate going on that has nothing to do with Social Security's finances and everything to do with Social Security -- should it be preserved or should it be abolished and replaced with something else?
Fund replied that no, no, no, "I like the concept of Social Security" he just wants to improve and "modernize" it. Then during the next back-and-forth he called it a "Ponzi scheme." Doesn't sound like the sort of thing a person who likes the idea of Social Security would say, does it? Of course not. Sadly, the Journal isn't available on Lexis-Nexis so I can't go to the archives and seek definitive proof that its editorial page does not, in fact, like the idea of Social Security one bit, but if any readers have access to documentation of the point and want to write in with relevant excerpts I'd be interested in reading them.
--Spencer Ackerman
Social Security, how art thou an insurance program? Let me count the ways.
My good friend Julian Sanchez, blogger and Reason magazine Assistant Editor doubts that it is in a column for his publication's website: "Neither is the notion of Social Security as 'insurance' terribly coherent, if it ever was. Even when Social Security was first instituted, over half of Americans who reached the age of 21 would survive past age 65. As of 1990 the percentages were over 72 percent for men and 83 percent for women. Aging is not a 'risk' to 'insure' against; it's a normal part of life to plan for."
First and most obviously, Social Security provides insurance against disability. Through the survivor's benefits it also provides a kind of life insurance. Third, through the fact that you keep drawing benefits until you die rather than until some lump sum has been exhausted, it provides a kind of longevity insurance. Living until over the age of 65 is a very common and quite predictable feature of contemporary life, but none of us know exactly how long we're going to live. Someone who dies at 78 and someone who dies at 100 would need nest eggs of very different sizes to live comfortably in retirement. One's ability to keep working during the earlier portions of old age is also not-exactly-predictable. In my line of work it's a reasonable bet that I'll be able to keep on writing away for the vast majority of my lifetime, but many careers aren't like that. The guarantee of benefits starting in your mid-sixties serves as a kind of second-tier of disability insurance against the possibility that the vicissitudes of life will leave you unable to ply your trade into your late sixties and seventies even though you might be healthy enough to live.
As compared to private accounts, Social Security also provides insurance against poor market performance. Small investors are usually best off parking their money in broad indexes rather than trying to outwit the markets. This is a good strategy for the long haul, but it leaves you exposed to risks that are entirely beyond your control. Over the long term, the market goes up pretty reliably, but at any given time your investments may be in bad shape. Guaranteed benefits give you a cushion in case you wind up retiring in the midst of a downturn and need to be able to ride it out for a little while.
Last but not least, there's a mild redistributive element. What Bush wants to do is basically disaggregate all of this. The insurance elements will be eliminated or else (through forced annuitization) contracted-out to the private sector which tends to be less efficient at providing insurance against these sorts of risks. Then on the side there will be this welfare program which, as I've been saying, folks on the right say isn't part of a medium-term plot to phase out even the redistribution, but their actual behavior ("revealed preference" to put it in libertarian-speak) suggests that they're not serious about this. Both the redistributive elements and the insurance elements are important and worth fighting for on their own terms. The liberal view is that linking them together has been a successful policy over a period of decades and that whatever changes may or may not be made to the program should preserve this linkage.
--Spencer Ackerman
National Review editor Rich Lowry accuses Social Security's defenders of "dishonesty" on grounds so spurious I can't quite tell what they're supposed to be. Certainly he doesn't point to any statements that he alleged are inaccurate. My favored approach to calling people liars is to quote what they've said or written and then explain why it isn't true.
For example, one running thread of Lowry's argument is that Bush's plan is all about cutting the benefits of someone like Rick Hilton, Paris Hilton's super-rich father. In fact, benefits would be cut for anybody earning over $20,000 a year. Average wage earning making around $36,500 would take a very substantial hit. As it happens, that's approximately what I make, and while I'm pretty comfortable on that salary, I'm by no means rich. I'm also 23, share a house with a roommate, and don't have any kids to support. People raising families on salaries in the $30,000-$60,000 range are hardly living high on the hog or setting up trust funds for their kids.
But the dishonesty runs much deeper than that. Social Security taxes are capped at $90,000 of payroll income, so people like Rick Hilton who make lots and lots of money already pay no more in taxes and receive no more in benefits than do folks who probably count as rich in some sense in some parts of the country and who are still living definitively middle class lifestyles in your high cost of living regions. The Hiltons of the world are basically irrelevant to this debate.
--Spencer Ackerman
How progressive is progressive indexing? Not very, according to a new paper (PDF) from the Center for Economic Policy Research's Dean Baker. Pundits would do well to familiarize themselves with these numbers before proclaiming Bush the second coming of Robin Hood.
--Spencer Ackerman
Richard Cohen works up some excellent righteous indignation over the Republican Party's irrational aversion to taxes, but he seems to have a bad case of Washington Post editorial page disease. "George Bush is doing something interesting with Social Security," he writes, "I kind of like the idea of personal investment accounts if funding them does not weaken the overall program or add to the nation's incredible debt."
That's a bit like saying I like the idea of invading Iraq and toppling Saddam Hussein if nobody gets killed and it doesn't cost any money. How, exactly, is diverting one third of Social Security's revenues into another program supposed to be done without weakening the program? Well, obviously, it can't. The idea that "a deal can be made on Social Security" where Bush agrees to raise the FICA cap and Democrats "permit some sort of move toward private accounts" is pure fantasy. The issue on the table here is whether or not we should start phasing Social Security out and replacing it with a 401 (k)-type system. The precise details of the payroll tax aren't relevant. There are lots of ways to broaden asset ownership without undermining Social Security. All you need to do is make sure that the money involved comes from somewhere -- anywhere -- other than Social Security's revenue stream. If this were really the issue, a deal would have been made yesterday. But you can't split the difference between phasing Social Security out and not phasing it out.
A universal social insurance program divided against itself cannot stand. E.J. Dionne gets it.
--Spencer Ackerman
You may recall that some time ago television networks were refusing to air some advertisements for a gay-friendly church on what looked to many of us like pretty spurious grounds. Turns out whatever policy banned the United Church of Christ from advertising doesn't apply to Focus on the Family, an outfit you may recall as the main organizers of "Justice Sunday," among other things.
--Spencer Ackerman
Both Ed Kilgore and my American Prospect colleague Sam Rosenfeld wonder if Social Security phase-out isn't going to somehow warp into a proposal for the conservative version of "tax reform" (for how this differs from actual tax reform, see Jon Chait's excellent article on the subject from some time ago), i.e. exempting all income derived from wealth and investments from taxation.
To be frank, I have a hard time seeing how the logistics of that would work, both thanks to the details of the budget process and because the President has appointed a stacked commission to offer tax reform proposals and presumably won't move on the issue until John Breaux's done selling the Democratic Party down the river.
Nevertheless, this is something to keep your eye on. One way or another, this issue's going to hit us before Bush is out of office and Democrats need to be prepared. Unlike on Social Security, where the status quo is basically fine, it won't be viable for Democrats to oppose even a terrible tax reform proposal if that opposition becomes a defense of the actually existing tax code which isn't fine at all. Policywise, an unsatisfactory status quo is obviously better than a change for the worse, but politically I don't think it will be viable. The smart thing to do would be for Democrats to take advantage of their out-of-power status to get ahead of the curve by offering-up some pie-in-the-sky tax reform ideas that comport with progressive principles.
John Podesta and his team at the Center for American Progress offered some smart ideas on this front back in March and liberals everywhere would do well to listen. You can read the short version here or get the details here.
--Spencer Ackerman
Paul Krugman says "a program is defined as welfare, it becomes a target for budget cuts." In other words, redefining Social Security as a welfare program for very poor old people rather than universal social insurance will lead to its demise. His example of choice is the same as mine: "Last week Congress agreed on a budget that cuts funds for Medicaid (and food stamps), even while extending tax cuts on dividends and capital gains."
Andrew Sullivan says that "The patent weakness of Paul Krugman's spluttering opposition today is evidence enough of the merit of the president's plan."
And when congress voted to cut Medicaid and food stamps Andrew said . . . well . . . well he didn't say anything about it, did he? And that's the point. I don't know if he thinks cutting Medicaid and food stamps while piling on tax cuts for the rich is a good idea or not. More likely, he's just a bit indifferent to it. Which is just the way these things go. Once a program becomes the narrow concern of a minority of the population -- and not just any minority, but a minority that can't afford lobbysists, doesn't enjoy access to the media, is socially isolated from the American elite, etc. -- it gets squeezed out in favor of programs whose constituents do enjoy those things. There's no flailing here.
--Spencer Ackerman
As we've been noting, if productivity rises faster than anticipated, that will make Social Security's deficit smaller than anticipated. And there's very good reason to think that productivity will rise faster than the Social Security administration is predicting. It's very unlikely that productivity will rise fast enough to make the whole problem go away, but it probably will be smaller.
Now insofar as one is inclined to contemplate benefit cuts as a method of closing the whole, it stands to reason that if the problem turns out to be smaller, the cuts will also be smaller. Makes sense, right? The less you need to cut, the less you cut.
But since the president's plan cuts benefits by the difference between wage growth and price growth, and that difference gets bigger the faster productivity grows, it would accomplish the reverse. The less we need to cut, the more he cuts! If I had a seat in the White House press room, I would ask someone about that.
--Spencer Ackerman
As I said before, I was moving furniture yesterday morning when the Sunday chat shows were on, but a couple of emailers have described to me a chart that went up on This Week which George Stephanopoulos used to challenge Nancy Pelosi. Assuming my correspondents are describing the chart accurately, it was what I would describe in terms that aren't appropriate for a family blog. To make a long story short, it compared benefits under the Pozen plan to the benefits people will get if we do nothing to change Social Security and concluded that almost everybody will get more money under Pozen/Bush.
Now since the Pozen plan cuts benefits for most people and leaves benefits unchanged for others, you may be wondering how that could be possible. Well, it's possible because for the "do nothing" scenario they were using benefits payable rather than scheduled benefits. In other words, it's how much you can get if we assume that the Trust Fund runs out of oney in 2041 and benefits thereafter need to be cut down to what can be paid for out of current tax revenues. As you might be able to guess, the cuts are not small. But since the Pozen plan achieves solvency without any changes to the retirement age or any tax increases, how could it possibly cut benefits by less than just doing nothing and then cutting benefits when the Trust Fund runs out of cash?
Good question. The answer is that Pozen's cuts are smaller because the Pozen plan doesn't achieve solvency. It only gets you 70 percent there. With the modifications Bush is propsing, it gets you about 50 percent of the way there.
So what the chart proves is that a plan that only gets you halfway to solvency can be more generous than a plan that gets you all the way there. Which is obvious. And a rather stupid thing to be pointing out. But it only looks stupid if you bother to inform your readers that you're making a pointless apples and oranges comparison. Which, it seems, ABC didn't.
I used to get mad at the administration for trying to manipulate people all the time. I don't anymore. You can hardly blame them. Everyone would act this way if the media were so casual about letting them get away with it. But now we're well beyond letting them get away and deep into aiding-and-abetting territoriy.
--Spencer Ackerman
There's more to life -- and to politics -- than Social Security. Perhaps most crucially, as this bloody week in Iraq reminds us, there's national security, the issue that metaphorically killed the Democrats in 2004 and that literally kills people each and every day. As the author of an article criticizing the Democratic Party's tendency to try and avoid these issues and head for the high ground of domestic economic policy, I must admit to some fears that the party -- and liberalism more broadly -- may be falling into just that trap at the moment. Social Security is an important issue, this fight is an important fight, and we need to try our best to win it.
But at the same time, it's a comfortable fight for liberals. We've won a lot of elections on Social Security over the years. And when that strategy hasn't worked, it's never been because the other side won the debate about retirement. Instead, it's been because the public just didn't think Social Security was the most important issue. Right now, Bush has made it the most important issue, and he's paying a price for it. But unless you assume that the Republican Party's campaign operatives are all going to be replaced by idiots, you can get that national security will be back with a vengeance in the election cycles to come. And rightly so since there's no government responsibility more fundamental than national defense. To succeed -- and, frankly, to be worthy of success -- Democrats need to get better at tackling this stuff.
Yesterday on the excellent, new-ish Democracy Arsenal blog, Suzanne Nossel cited "The Energy of the Progressive Foreign Policy Opposition" as one of the top ten things at stake in the John Bolton nomination. "Let’s face it," she wrote, "Bolton’s helping us get our groove back." I certainly hope that proves correct. But so far, the debate over his nomination has centered heavily on questions about Bolton's personal behavior. Not personal in an illegitimate sense -- the material's all been relevant to his conduct in office -- but personal in the sense of being idiosyncratic to Bolton. That's a good way to beat a nominee, but it doesn't do much work in terms of discrediting the broad approach of the Republican Party toward these issues or bolstering the public's sense that Democrats have a good handling on them. Perhaps this isn't the time or place for doing that, but we're going to have to find some time and some place to really lay out a compelling liberal internationalist vision for the 21st century.
--Spencer Ackerman
As several readers have written in to point out to me, Senator George Allen (R-VA) made some odd comments on Meet The Press yesterday while I was busy trying (successfully!) to stuff a Klippan couch into a Honda Element. Allen says that "in the event that a personal savings account approach is taken" with Social Security, we ought to allow people "to invest in a home in addition to . . . stocks, bonds and other financial instruments." After that he suggested that old people should finance their retirements by selling their homes because "they don't want to be cutting grass and trimming hedges, and that is good for the economy as well."
This suggests some intriguing new spin possibilities. Why do Republicans want to cut Medicare and food stamps? To save poor people from the trouble of going to the grocery store and taking kids to the doctor!
Snark aside, there's a serious point to be made here. When selling phase-out to policy mandarins, journalists, etc. the administration is always quick to point out that there will be severe restrictions on where people can put their money. Just four or five balanced investment funds, all relatively safe. That's important, because if people are given free reign to do whatever they want with their nest egg, some people will invest it very poorly or very unluckily. Even if most people do fine, this is a problem, because if any non-trivial number of people see their account tank, there's going to be irresistable political pressure to bail them out. But once you start bailing a few people out you create a moral hazard and we'll wind up in a downward spiral of bad investments.
But when selling the plan to the public, the White House is all about choice. Your private accounts will be yours and yours alone! The government has no right to tell you what to do! There are going to be a lot of business lobbies out there working right away to loosen the restrictions on what people can invest in. Real estate interests will push for the Allen plan. Financial services companies will want to let people pick and choose individual stocks -- or at least invest in heavily-managed mutual funds that generate more fees. And just as with 401 (k) plans, the coalition of lobbyists and libertarians will succeed. Some folks will think that's great. I disagree (see moral hazard below). But agree or disagree, everyone should understand that the administration's promises on this score are not credible. But then again, when are they?
--Spencer Ackerman
An excellent Jonathan Kaplan article in The Hill notes that when privatization maestro Edward Prescott tried to sell the Treasury Department's professional economists on phase-out "as part of the department’s effort to build support for its plan in academia and on Capitol Hill," the economists told Prescott that lots of the things the administration's been saying about Social Security are, to put it bluntly, untrue. Kaplan also makes the point that this is part of a larger pattern, just one more step in the development of the postmodern presidency as someone once put it.
--Spencer Ackerman
Every time I've mentioned on my blog that faster productivity growth (and therefore faster wage growth) will shrink the Social Security deficit in come the emails complaining that this won't work because wage growth increases Social Security's costs as well as its revenues. You can also find this complaint being made by many a conservative pundit. Make the case to a bigger audience here on TPM, the number of complaints is only higher. But the complaint is wrong. Read the Social Security Administration's annual report and you'll see that it's wrong. Faster productivity growth leads to an improvement in Social Security's finances. That's why one of the assumptions of the (historically more accurate) "low cost scenario" (under which no deficit whatsoever is projected) is that productivity growth will be faster. Read Brad