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According to the Times

According to the Times, the <$NoAd$> Social Security Trust Fund is a bit of an afterthought.

The US Treasury bonds held in the Trust Fund may be give Social Security a better claim on federal revenues than other priorities. But maybe not.

As Timesman David Rosenbaum puts it ...

But trust fund or no trust fund, bonds or no bonds, Social Security is only one program with a claim on the federal budget.

There will be highways to build and, perhaps, wars to fight. There will be expenses for education and health care and many other government activities. And there will be citizens - voters - who do not want their taxes to be raised.

Maybe because of the trust fund, the politicians will decide that Social Security has the strongest claim.

But if so, that will be a political decision, not a legal one.


In other words, it's all a big misunderstanding.

Were hoping someone can

We're hoping someone can help us with this. Following up on yesterday evening's post on Joe Klein's comments yesterday on Meet the Press, we are hoping some TPM Reader can provide us with an example from Klein's writing (columns, magazine articles, even public comments) in which he explains his contention that whereas Social Security was suited to the 'industrial age' it is not well suited to the 'information age', whereas a private accounts system is.

To refresh memories on the key passage ...

I agree with Paul in that private accounts have nothing to do with solvency and solvency is the issue. I disagree with Paul because I think private accounts a terrific policy and that in the information age, you're going to need different kinds of structures in the entitlement area than you had in the industrial age. But it is very hard to do that kind of change under these political circumstances where you have the parties at such loggerheads.


If anyone knows of an example where <$NoAd$> he explains this argument, please send it along.

And then there were

And then there were four!

Sen. Mary Landrieu (D) of <$NoAd$>Louisiana has been hanging on by a thread in the Fainthearted Faction for weeks, largely on the basis of an early refusal to rule out private accounts categorically.

But she signed the recent letter the Dems sent to the president. And she put out this press release on Friday which settles the matter. The key points read ...

I agree with Treasury Secretary Snow on one very important point: We do need to strengthen retirement security in our nation. All Americans deserve the confidence that their retirement will be secure -- that Social Security will be there as promised, their 401(k) plans won't be raided through unscrupulous practices, and their pensions won't be squandered by reckless corporate management.

The President's plan doesn't seek to address any of these concerns. It is too narrowly focused and creates too much risk by betting hard-earned savings on an ever-changing stock market when we should be working to add certainty and stability to the system. I agree that we must expand opportunities for retirement saving, but we must not undermine this worthy effort with a flawed privatization scheme that takes the 'security' out of 'Social Security.'

We in Louisiana understand strong retirement security, and have about 350,000 state and municipal workers enrolled in a public pension plan that encourages savings and financial stability. I will oppose any federal proposal which changes or undermines this program, just as I intend reject any proposal which cuts Social Security benefits or adds to our already rising and troubling deficit.

I look forward to my meeting next month with Secretary Snow, and hope for a productive discussion on Social Security and the mounting national debt.


From the totality of evidence, for us, that takes Landrieu out of the Fainthearted Faction.

ABCs The Note does

ABC's The Note does love the Washington establishment's CW when it comes to phasing out Social Security. Take a look at their read of the state of play today.

This is a topic I haven't discussed or dug much into in the last year or more -- the right-leaning dinner-party centrism of establishment Washington -- but it really oozes from this update linked above.

Because of where I

Because of where I was staying this morning I was able to catch only one brief bit of the Sunday shows. And that was the roundtable on Meet the Press.

It was a good panel, including one of my favorite reporters, Mike Allen of the Post. But what caught my eye were two exchanges. One was between Joe Klein and Paul Krugman on the Clinton legacy. Here's the key exchange ...

MR. KRUGMAN: I think it's just wildly up in the air. I mean, you know, there's enormous turmoil on the Democratic side trying to figure out--there's a lot of unity but there's a lot of turmoil about what the party stands for. And I just don't know. I mean, I can't--I dread the prospect of a Clinton run just because I think that would be--it would be an attempt to recreate the politics of the '90s when you had Bill Clinton, who was a president who managed to sort of triangulate. And I think we ought to have an election that's really about what what kind of country we're going to be and we won't have that if it's Hillary Clinton running.

...

MR. KLEIN: Paul, I have a question for you: What was it about the peace and prosperity of the eight years of the Clinton administration that you didn't like?

MR. KRUGMAN: No, I liked the way the country ran.

MR. KLEIN: I think that he had a real governing philosophy. It wasn't triangulation. It was moving us from the industrial age to the information age, and that's where the Democratic Party is going to have to move...

MR. KRUGMAN: There's a radical right...

MR. KLEIN: ...if it wants to have any role in American politics.

MR. KRUGMAN: There's a radical right challenge to America as we know it that's under way, and I think the Democrats--I mean, maybe Hillary Clinton can do this. I'm actually not opposed to her, right? But they need to make clear that they are going to turn back that tide, not blur it.

MR. KLEIN: The answer to a radical right challenge isn't a reactionary left response.


Marshall Wittman unequivocally gives the prize to Joe Klein on this one. But I'd like to offer what is not so much a disagreement as a different interpretation of just what was <$Ad$>being talked about here.

I won't assume I know precisely what Paul meant. But my reaction on watching this was that the two were basically talking past each other, or perhaps that Klein was attacking an argument that Paul really hadn't made.

Again, I won't presume to speak for Paul. But here's my sense of this.

I was a big fan of Bill Clinton while he was president. Still am. And that doesn't just mean I liked him in some general sense as a political fan. On most policy issues, foreign and domestic, I was in line with his administration.

But I too think Clintonism is best left in the 1990s. And that's not because I've changed my view of his presidency or his policies. I simply think we were are operating in a profoundly different political moment and that the strategies and tactics that really did make sense then do not make sense now. The key point for me is that the difference is really not at heart an ideological one. And thus, to me, Klein's reference to a 'reactionary left' I think mistakes the point Krugman was making.

I want to leave the longer discussion of this issue to another post. But just to briefly describe what I'm getting at. First, we are now involved in political contests that cut to the very heart of the kind of polity we live in. Many are simply not compromisable. And I don't mean that merely or mainly in the sense that they involve points of principle that can't be compromised. I mean many are literally uncompromisable. They involve basic decisions over which way our society will go. Decisions must be made. When the boat is leaving the dock, at one point you've got to decide: stay on the dock or hop on the boat. It can't be compromised. There has to be a choice.

Second, and of course on a related level, the Democrats' position is profoundly different than it was in the 1990s, even given the fact that they lost control of Congress mid-decade. I often think that one of the blinders of folks who cut their teeth in the Clinton White House is an inability to grasp just how many of the strategies that worked for them then were tied to the overwhelming fact of holding the White House.

I know they know that at some level. But I sometimes wonder how deeply the point has sunk in because I've seen more than a few of them using similar approaches in opposition when they have little hope of success. It's sort of like in the childhood game 'King of the Hill'. Imagine if you'd perfected tactics for when you're on the top of the hill knocking off challengers and then tried to use those same approaches when you're one of the guys down at the bottom. It makes no sense.

The other exchange came earlier in the roundtable when Klein let us know that he is still every bit a private accounts man. (One would imagine the only Woody Guthrie biographer to embrace such an unfortunate stance..) But I was struck by his rationale ...

Well, it's kind of amazing and somewhat amusing to see the Republicans so much on the defensive on this issue right now. It's an unusual circumstance. I agree with Paul in that private accounts have nothing to do with solvency and solvency is the issue. I disagree with Paul because I think private accounts a terrific policy and that in the information age, you're going to need different kinds of structures in the entitlement area than you had in the industrial age. But it is very hard to do that kind of change under these political circumstances where you have the parties at such loggerheads.


This has always struck me as the weakest of arguments for privatization and frankly it seems beneath someone like Klein.

I would like to ask Klein what it is exactly about Social Security that makes it appropriate to the industrial age but not the information age. If it is phased out in the next few years that would be one objective sign that it couldn't withstand the politics of this new economic era. But that would be a circular argument.

If anything I would think there's a much stronger argument that Social Security with its guaranteed benefits is more suited to this age than the last one, given how the increasingly transitory nature of work and the pressures of globalization are undermining the basis of defined benefit private sector pensions.

The real point, though, is that when you set aside all the practical matters of debt and transition costs, this is an ideological debate -- or to put it less antiseptically, a debate over different sets of values.

The idea behind private accounts is that people should rely on themselves alone and bear the consequences of their successes and their failures and random chance on their own shoulders. If things don't pan out for you in retirement, that's something to take up with your children.

The concept behind Social Security is fundamentally different. The first premise is that if you put in a lifetime's work there is simply a level of destitution below which society will not let you fall. Maybe you made so little during your working years that there wasn't enough to save. Or maybe you just didn't plan ahead well enough. Or maybe you suffered some misfortune. Whatever. If you worked you won't be destitute when you retire. People who made big bucks through their lives don't get a particularly good 'deal' from Social Security, if you insist on seeing it in investment terms. But that's a distorting prism, sort of like thinking you got a rotten deal on your medical insurance if you never have a catastrophic illness.

I like to think of this as the moral equality of work. In our society, we allow the market to assign all manner of different cash values to different sorts of work or even the same sorts of work under different circumstances. And by and large, within some very small limitations like the minimum wage or certain non-discrimination laws, most of us think this is how it should be. I certainly do. (In this sense, I think collective bargaining amounts to another competitive arrangement within a market economy -- though doctrinaire free market folks have always seen it in contrary terms.)

But the cash value of work isn't the same as its moral value. And if you look at the values imbedded in all those Social Security actuarial tables, you see this principle: whether you were a janitor or a fast-food worker or a doctor or a tycoon, if you worked during your working years you shouldn't be left destitute when your working years are over (retirement) or when, through no fault of your own, you can't work anymore (disability). No matter what. The common denominator is a life of work -- skilled or unskilled, impressive or unimpressive, remembered or forgotten. It doesn't matter.

In any case, that's only one way to look at it. More prosaically, you might just say that there are certain risks we choose to share across society. And this is one of them.

These are basic disagreements about how much we owe each other, how interconnected we are. And they're real disagreements with smart folks on either side. They existed in the 1930s; they exist today; and they'll exist in 2030s. The Internet and floating currencies and total quality management -- none of them settle the question. Klein should have the courage of his values and not pass this off on gizmos and gadgets.

The following is an

The following is an experiment. But one with very real and important issues on the line.

As you have perhaps noticed, in the last couple months TPM has devoted the great majority of its resources to following the crucial debate over the future of Social Security. But from time to time some TPM readers have noted that this has left other issues before Congress all but ignored -- the recent class-action bill, the bankruptcy bill and many others.

A few -- more than a few, actually -- believe that Social Security privatization is actually nothing more than a stalking horse to throw Democrats off the scent while President Bush pushes through a host of terrible bills all but unnoticed. That is a profoundly misguided view. Both sides, I think, recognize the centrality and importance of the debate over Social Security -- both in terms of policy and politics. And if the White House isn't doing well right now -- believe me, they did not expect to find themselves in this position.

But just because Social Security deserves all the attention its getting doesn't mean a lot of other important issues aren't getting eclipsed -- especially on this site.

Now, in some other post I will discuss my reasons and thinking behind TPM's focus on Social Security. But for the moment there's one other piece of legislation getting rushed through Congress that really deserves a closer look and much more scrutiny than it's getting: the Bankruptcy bill.

I'm not knowledgable enough about the subject to discuss it intelligently or usefully. And even if I did, my focus on Social Security would give it short shrift. So back to our experiment ...

Professor Elizabeth Warren is an expert in bankruptcy law at Harvard Law School. And I've agreed to set her and three of her students at the law school up with a limited-duration blog here at TPM to follow the bankruptcy bill much as I am tracking the Social Security debate.

The four of them probably won't approach the task just as I might. And I should point out that I've given them complete editorial freedom to express their views of the on-going debate. So while it's quite fair to infer my general agreement with their position, they may very well state particular views or positions that I don't agree with -- which is absolutely fine and just as I'd want it.

A bit later in the spring, if all goes according to plan, we're going to be rolling out an expanded version of TPM -- or actually an adjunct site -- that will make it possible to comment on posts, for readers to have a place to meet and post their own views and to have experiments along the lines of this one we're starting tonight. But in this case the resources (Professor Warren and her students) and the need (the little-discussed Bankruptcy bill) came together in a way that I thought it made sense not to wait.

As I said earlier, I'm no expert on this topic. And I'm looking forward to learning more from what these folks have to say. The relatively little I do know makes me pretty sure there's at least a lot in this legislation that doesn't serve the public interest. And people whose opinions I trust all think it is a classic gift to a powerful special interest at the expense of ordinary Americans. There are many things I've treasured about this site in the almost four and a half years I've been producing it. One thing it allows me to do is to give others a platform to make a case that needs to be heard. So that's what I'm doing here.

Click here to see what they're doing.

So there you have

So there you have it.

Private accounts, at best, do nothing to make Social Security solvent. Yet, according to his Treasury Secretary John Snow, President Bush considers private accounts "an absolutely essential part" of the changes he wants to make.

He's committed to phase-out; not solvency.

Yes, I know it sounds stark and dramatic. But it's true.

Listen...

"The president's committed to these personal accounts. I'm committed to them. They've got to be part of any solution, because without them, we can't offer the promise of fixing and preserving Social Security and the purpose of Social Security for younger people."

He won't even consider a plan to extend and assure solvency; it has to be phase-out. So what is there to talk about?

But let's go beyond that. The president is traveling all across the county, hitting every marginal Republican district he can find, to sell his plan.

But what plan?

Before anyone takes him seriously, doesn't he have to disclose the size of the benefit cuts he wants?

He's like Nixon; he's got a secret plan to end Social Security.

The more he sinks

The more he sinks the more he lies. In fact, I'm not even sure 'lying' quite does it justice. He just makes it up as he goes along now.

With apologies for re-covering old territory, for upwards of a decade there's been a debate, largely between Republicans and Democrats, over private accounts carved out of Social Security or 'add-on' accounts, accounts in addition to Social Security.

The add-on terminology has become close to universal in large part because it accurately describes what is being discussed.

Indeed, as recently as yesterday, Secretary Snow said that while the president greatly prefered private accounts as part of Social Security and believed that they would eventually become law, he was willing to put add-ons on the table if Democrats would negotiate.

Here's how the Times described what Snow had to say ...

Mr. Snow said the administration wanted to encourage the development of as many ideas as possible and that it was open to looking at personal accounts that would supplement Social Security rather than, as in the plan President Bush has proposed, replace a portion of the traditional government-paid benefit.

Mr. Snow made it clear that Mr. Bush would prefer his approach, which is built on diverting a portion of a worker's payroll tax into a private investment account, and he predicted that the president's plan would win out in the end. And Mr. Snow cited what he said were shortcomings with the supplemental approach, which would require workers to make contributions into private accounts in addition to paying the existing payroll tax.

But his willingness to consider the alternative, known as an add-on account, suggested that the administration was intent on retaining as much flexibility as possible to overcome the political and substantive obstacles that have slowed Mr. Bush's drive to overhaul Social Security.


On the same day, the Post helpfully pointed out that though Snow was sent out to signal willingness to compromise, the president was only doing this to lure Democrats to the table ...

Snow told reporters that Bush also has not ruled out embracing a plan backed by many Democrats to create government-subsidized personal savings accounts outside the existing system. White House officials are privately telling Republicans that Bush is opposed to the idea but does not want to say so because it would appear he is not willing to compromise.


But that was yesterday.

Now, realizing that the add-on terminology is less toxic than his Social Security privatization policy, the president has decided that privatization really is an add-on after all.

From the Bamboozlepalooza event in New Jersey ...

This is a retirement account we're talking about. But it's your money, and the interest off that money goes to supplement the Social Security check that you're going to get from the federal government. See, personal accounts is an add-on to that which the government is going to pay you. It doesn't replace the Social Security system. It is a part of making -- getting a better rate of return, though, so -- to come closer to the promises made. That's important to know.


Now we would be remiss if we did not note that the Times article covering the day's events adopted what can only be called a singularly generous approach to the president's word games ...

Despite widespread evidence that the public is wary of changes to the benefits system, Mr. Bush did not retreat from his plan to divert some payroll taxes into individual accounts. Instead he shifted his language a bit to emphasize the parts of Social Security that would stay the same, describing the popular program as a "safety net" and borrowing a term for the types of accounts some Democrats have favored, "add-on" accounts outside the Social Security benefit system, to now describe his version of private accounts.


Where to start?

In a case where A and B are fundamentally different and you take the term for A and apply it to B, that is not usually known as 'borrowing'. I'm not sure whether 'lying' or 'deceiving' or something else altogether is a better term for it. But this isn't borrowing. It's simply an effort to mislead.

There's a clearer way for any newspaper to describe what happened: President Bush misidentified his proposal as an add-on to Social Security.

That covers the whole thing.

Simply look at the president's proposal, as the White House itself explains it, and you will see that the accounts are funded by diverted Social Security payroll taxes. And those who chose private accounts have their guaranteed benefit cut by an amount that is supposed to be roughly equivalent to what their account might be expected to make under favorable conditions. Under any version of the English language we're familiar with, that's not an add-on to Social Security. That comes out of Social Security.

Until today of course when the meaning of all the words changed.

Admittedly, these word games are nothing new. And perhaps men of destiny define words rather than being defined or constrained by them. But just as you cannot have a constructive discussion about strengthening Social Security with someone who wants to phase it out, you also cannot have an honest or meaningful discussion about anything with someone who on a daily basis changes the meaning of the words being discussed.

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