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Josh Marshall

Josh Marshall is editor and publisher of TalkingPointsMemo.com.

Articles by Josh

Bless their hearts. The Times states the facts correctly: "Starting last year, as the groundwork was being set for the emerging debate, the Social Security trustees took the liberty of projecting the system's solvency over infinity, rather than sticking to the traditional 75-year time horizon. That world-without-end assumption generates the scary $10 trillion estimate, and with it, Mr. Bush's putative rationale for dismantling Social Security in favor of a system centered on private savings accounts."

The whole editorial is well worth your reading.

What follows also tells an important part of the story ...

The American Academy of Actuaries, the profession's premier trade association, objected to the change. In a letter to the trustees, the actuaries wrote that infinite projections provide "little if any useful information about the program's long-range finances and indeed are likely to mislead any [nonexpert] into believing that the program is in far worse financial condition than is actually indicated."

As it often does with dissenting professional opinion, the administration is ignoring the actuaries. But that doesn't alter the facts or common sense. If the $10 trillion figure is essentially bogus, so is the claim that Social Security is in crisis. The assertion that doing nothing would be costlier than enacting a privatization plan also turns out to be wrong, by the estimates of Congress's own budget agency.


I wouldn't imagine that the American Academy of Actuaries annual convention would be the one you'd want to go to for the most rockin' parties. But presumably this is a topic they know something about.

As pretty much all the sensible articles on Social Security have made clear, to the extent that we have a problem, it is not a Social Security problem, but an accumulated national debt problem. And this isn't just a looking at one side or the other of the coin issue, but a category difference.

There are various ways to illustrate this point. But the following, I think, is the best.

The United States has a bit over $7 trillion in accumulated national debt. You can say that's been built up over the history of the country. But overwhelmingly it was borrowed over what happens to be the span of my lifetime -- the last thirty-five years -- and especially over the last twenty-five years.

After 1980 we started borrowing money big-time to finance our deficits -- in large part because of tax cuts on high-income earners. However you want to slice it, we started spending substantially more than we were taking in in tax revenue.

So where'd we borrow the money?

This is from memory, so I may have the numbers a bit off. But I believe about $4 trillion of that debt was borrowed on the open market -- individual Americans have them in their investment portfolios, or pension funds hold them, or the Chinese, Japanese and the Saudis and others have them in bonds.

But about $3 trillion of those dollars we needed to fund the 1980s and 1990s deficits we managed to borrow closer to home. We borrowed it from the Social Security (and a few other government) trust fund(s).

Almost the entirety of President Bush's Social Security phase-out plan comes down to a simple proposition: finding out how not to pay it back.

Now, admittedly, this is an approach that the president is rather familiar with from his own business career at various failed energy companies. But it is, in so many words, a straight up con -- one of vast scale, and one which virtually no one in the media ever frames in just these terms.

Before discussing that aspect of the question, consider a hypothetical. Let's say there'd not been a Social Security -- President Bush's dreamworld. We'd still have had the same deficits. The difference would be that we'd have had to borrow from private borrowers in the US and abroad.

Think we'd just be able to decide not to pay them back? Not likely. The Joneses and the Smiths with their 401ks probably wouldn't like that. And the Japanese and Saudis probably wouldn't like it much either. Of course, defaulting on our entire national debt would also certainly trigger a seismic international financial crisis. So you can probably figure that no one would be a huge fan of it.

So why does the president figure he can get away without making good on the debt to the folks who pay Social Security taxes, who are overwhelmingly low and middle-income wage earners (since no one pays Social Security tax on investment income or wage and salary income over about $85,000 a year)?

Isn't it obvious? Because he thinks they're an easy mark.

If anything, the fact that a sizeable portion of our huge national debt is owed (in the aggregate) to ourselves would seem to be a good thing since it gives us in extremis at least some flexibility on repayment. But to the president this is a reason to abolish Social Security so the money doesn't have to be paid back at all.

As I said at the beginning of this post, the challenges we face over the next several decades aren't really Social Security problems but national indebtedness problems, though the issues are clearly related.

One obvious and immediate way to relieve long-term pressures on Social Security financing is to reduce the national debt ... by ending our habit of running huge annual deficits or even better by paying down some of our accumulated debt (there are complicated macro-economic questions related to this second point; but in general it's correct.)

But what has President Bush done? He's presided over the biggest fiscal turnaround in American history, taking the country from modest annual surpluses to the biggest deficits -- at least in non-adjusted dollar terms -- in American history. And that's only one reason why you can make a decent argument that President Bush has done more than any other president and perhaps any other single American ever to endanger Social Security's future.

Across the board, it's just one big scam.

The guy who's the biggest threat to Social Security says he wants to 'save' it by abolishing the program and replacing it with private accounts.

A grievous blow: Rep. Bob Matsui, 26 year veteran of the House, a one-time Japanese-American internee during World War II and now the Dems point-man on Social Security, has died at the age of 63.

According to this late wire story, he was diagnosed "several months ago with [Myelodysplastic] Disorder, a rare stem cell disorder that reduces the body's ability to produce red blood cells, white blood cells and platelets. Victims of the disease are left more susceptible to other illnesses, with less ability to fight them off."

He entered the hospital on Christmas Eve and died last night.

I met Matsui last year at a dinner party in Washington. And then we got together for breakfast on Capitol Hill a few weeks later to talk about politics, the election and new media activism. This was a sharp, kind, warmhearted and unpretentious man. As I said, a grievous blow. He will be sorely missed.

Here is a link to the announcement of his death on his congressional website.

One of the lines you'll hear again and again from supporters of phasing out Social Security is, 'Well, what possible problem could you have with letting people decide what they do with their own money? You think they're not smart enough? They can't be trusted?'

People who make this argument seem to have forgotten that -- the efforts of some malefactors notwithstanding -- we live in a democracy. They are deciding and will be for most of the next two years.

I have little doubt that if the American people decide that they don't like the Social Security program and would like to replace it with a system of 401-k like private investment accounts, that they'll do it. Certainly, if that's their choice, they'll have the help of the president, all his big financial backers and the leadership of the majority party in both houses of Congress in putting their judgment into effect. So I somehow doubt the popular will would be thwarted in any way.

The truth is that it's the president, more than anyone else, who doesn't trust people to decide what to do with their own money and their own futures. If he did, he wouldn't be lying to them so much about Social Security. He'd be arguing for his phase-out plan on the merits.

George W. Bush, being more truthful than he probably intended. From the Post ...

"Many times, legislative bodies will not react unless the crisis is . . . upon them," Bush warned Congress at a news conference late December. "I believe that crisis is [upon them]."


Many times you cannot pull off a big con, saith the ancient proverb, unless you telleth a lot of lies to the folks you're trying to swindle.

In Sunday's Post Jonathan Weisman has a piece on whether or not there's a Social Security 'crisis'.

And look at the lead graf<$NoAd$> ...

In just 14 years, the nation's Social Security system is projected to reach a day of reckoning: Retiree benefits will exceed payroll tax receipts, and to pay its bills the system will have to begin redeeming billions of dollars in special Treasury bonds that have piled up in its trust fund. To redeem those bonds, which represent money taken in years when Social Security ran a surplus and used for other government operations, the federal government would likely have to cut other programs, raise taxes or borrow more money.


It's not like he's prejudging the question or anything, right?

A 'day of reckoning'?

Where to start? In addition to adopting rather dramatic language that reads like it comes right out of the privatization playbook, just what does 2018 represent?

The first thing worth noting is that there's nothing unexpected about this. Indeed, it is part of the plan under which Social Security's financing was restructured in the early 1980s. Payroll taxes were intentionally raised substantially over and above current needs so as to build a 'trust fund' that could be drawn down when the surge of baby-boomer retirements began early in the 21st century. In essence, babyboomers were asked to overpay into the system to create a reserve to cushion the stresses that would be created when their oversized generation retired.

Coming to that date isn't any more of a 'day of reckoning' than it is when you get out of college and have to start paying your loans back.

Indeed, it's less dramatic since the date represents a tipping point. It's not as though anything will happen dramatically in a fiscal sense at that one moment. The fiscal stresses created by the retirement of the baby-boom generation will build slowly over-time as the generational cohort moves through retirement.

Needless to say, none of this means that some funding tinkering won't be necessary in the system down the road. And Weisman's article covers many of the issues I've discussed further down into the piece. But in writing an article that poses the question of whether or not there's a 'crisis' it probably makes sense not to start with loaded terms and phrases that prejudge the question in the affirmative.

A Faction defection?

TPM reader RK notes <$NoAd$> this statement on Faction member Rep. Ron Kind's (D-Wisc) website.

The statement suggests two things -- first, that Kind's staff may have some problems with the 'cut and paste' function on their office computers; but, second, and more importantly, that he may be inclined to oppose President Bush's Social Security phase-out plan ...

The long term solvency of Social Security is a much-debated issue. The Social Security Board of Trustees estimates that if the program continues unchanged, the trust fund will be depleted by 2042. The past few years have seen numerous proposals for Social Security reform ranging from an increase in payroll taxes to overhaul and partial privatization of the system.

I regard the protection of Social Security as a top priority, and I am concerned about its long term solvency. The past few years have seen numerous proposals for Social Security and Medicare reform ranging from an increase in payroll taxes to overhaul and partial privatization of the system. I do not believe that a radical overhaul of the Social Security system is the way to ensure payments for current and future retirees.

The national debt is now $7.1 trillion. Paying down the national debt would help up shore up Social Security and assure that it will last for future generations.


Certainly not as specific as one might like. But definitely a step in the right direction. And quite a bit more that Rep. Moran is willing to do.

A number of readers, particularly current and former Hill staffers, have written in to say that we're reading too much into Rep. Jim Moran's constituent letter professing an open mind about President Bush's Social Security phase-out plan.

As a general matter of congressional office practice, I think this is right. A good staffer never wants to lock his or her boss into a position in response to a constituent letter, absent some pressing reason to do so.

But abolishing Social Security isn't just any issue. For Democrats, it's an issue of fundamental importance and core values. And it promises to be the legislative issue of the next congress.

With that in mind, I think it's well for constituents to insist on a clear and unambiguous statement of where their representatives stand on this issue -- not the standard 'glad to hear your views; it's an important issue; we'll see what happens.'

Since the last time we ran down the list of the Fainthearted Faction, <$NoAd$> there have been a few changes. Rep. Harold Ford, formerly the Dean of the Faction, has lost his leadership post because of his statement opposing the Bush and Cato plans for phasing out Social Security. And now Rep. Jim Moran of Virginia is making a play for the leadership.

Furthermore, out of the blue, Gov. Ed Rendell has joined the Faction under the bylaws allowing 'Associate Member' status for active politicians not currently serving in Congress. And finally Rep. Ike Skelton confirmed his status in the Faction by expressing what the AP has called "wariness rather than outright opposition" to the Bush plan to phase out Social Security.

So, without further ado, here's the current membership list of the Fainthearted Faction according to the latest tabulations of the TPM research and analysis department ...

Fainthearted Faction



Rep. Marion Berry (D-Ark)
Rep. Allen Boyd (D-FL) (L&P!)
Rep. Robert "Bud" Cramer (D-AL)
Rep. Harold Ford (D-Tenn) (*)
Rep. Ron Kind (D-Wisc)
Rep. James Moran (D-VA) (*)
Sen. Ben Nelson (D-NB)
Rep. Collin Peterson (D-MN)
Rep. Ike Skelton (D-MO) (*)
Rep. Adam Smith (D-WA)
Rep. John Tanner (D-Tenn)
Rep. Gene Taylor (D-Miss)



Associate Members

Gov. Ed Rendell (D-PA) (*)


[ed. note: "L&P!" denotes members who are 'Loud and Proud' and now actively supporting the Bush Social Security phase-out plan. Asterisks by the name of members link to recent events which have led to their promotion, demotion or other status updates within the Faction.]

As you know, we're always looking for more information on the Fainthearted Faction. So if you know of a Democrat who belongs on the list, please let us know. We're also eager to find out more about possible primary challengers to Faction members.

Back in the late 1990s, Democratic policy types gave a lot of thought to various 'asset-building' policy initiatives -- the idea being to encourage and even supplement investment and asset-building across a broad spectrum of the population, particularly among middle and lower income Americans who have been limited in their opportunities to do so, both by a simple lack of money and because many of the tax deferred investment options which have been created in recent decades aren't that accesssible to them.

As the Social Security debate heated up, a number of those policy types started wedding the two ideas together -- a particularly influential one was President Clinton who announced such a plan during his second term. Whereas Republicans wanted to phase out Social Security and replace it with private investment accounts, Democrats wanted to preserve Social Security and supplement it with investment accounts, often with the idea of setting up every child at birth with an account and a small contibution to start them on their way to building their own savings either for college, a first home, a business or even for retirement. Some suggested doing it at birth; others thought to have it kick after each child finishes high school, thus adding an incentive to finishing a basic education.

If you look on his website, Rep. Harold Ford has one of these plans that he's clearly very interested in. He calls it the Aspire Act and you can see the details on it here on his site.

He and Rep. Patrick Kennedy are cosponsoring the bill with Reps. Petri and English in the House and Sens. Santorum and Corzine (another odd couple) have introduced similar legislation in the Senate.

I mention all this because if folks like Rep. Ford want to get people investing and building assets from early in life, they don't have to abolish Social Security to do it. Plans like this are right there on the shelf to get behind. And Ford's isn't even on the shelf. He's already working on it.

And after all why would any Democrat ever give a dime or lift a finger for any pol who voted to phase out Social Security?

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