Josh Marshall

Josh Marshall is editor and publisher of TalkingPointsMemo.com.

Articles by Josh

Atrios makes the expert catch here with this comment from Wapo associate managing editor Robert Kaiser ...

Even more curiously, a "senior administration official" who briefed reporters on the Social Security proposal earlier today disclosed details of the White House plan that I don't think will play well in Peoria. Most significantly, this official revealed that most or all of the earnings from new "personal" or privatized accounts will be paid not to the holder of the account, but to the government. The senior official called this a "benefit offset." It's one way to finance the creation of these private accounts, but it's going to cause quite a political stir, I think.

That's quite a deal, isn't it?

If you really do well in the market you might even work your way back up to what you were going to get anyway. Of course, that not counting the huge benefit cuts.

Here is the exchange with the mysterious "senior administration official" in question ...

Q Putting those aside, what is the revenue implication of a fully phased-in 4 percent account of the type that you've laid out?

SENIOR ADMINISTRATION OFFICIAL: It would be very different depending overall on whether or not it was done alone or in the context of a comprehensive plan.

Q Assuming it's done alone, since that's all you're putting out here --

SENIOR ADMINISTRATION OFFICIAL: And the problem with assuming it's done alone is that we aren't advocating that it be done alone. We're advocating that it be done in the context of a comprehensive plan.

Q But people are going to want to know what is the cost.

Q But you're not saying what else is in there. You're not saying what else is in the comprehensive plan, so --

SENIOR ADMINISTRATION OFFICIAL: Well, when we have -- at the point where we can attach numbers to a comprehensive plan and model the effects of the accounts in that context, of course we'll put those numbers forward. But until that -- those specifications exist, we don't have the ability to project that.

Q In saying that there is no net added cost to the program, are you implying -- is it implicit that there is a benefit offset of one-third current guaranteed benefit because you're diverting one-third of revenues away from this program? If that's not correct, what would the benefit offset be to traditional benefits, and how would it be calculated?

SENIOR ADMINISTRATION OFFICIAL: The way that the election is put before the individual in a personal account structure of this type is that in return for the opportunity to get the benefits from the personal account, the person foregoes a certain amount of benefits from the traditional system.

Now, the way that election is structured, the person comes out ahead if their personal account exceeds a 3 percent real rate of return, which is the rate of return that the trust fund bonds receive. So, basically, the net effect on an individual's benefits would be zero if his personal account earned a 3 percent real rate of return. To the extent that his personal account gets a higher rate of return, his net benefit would increase as a consequence of making that decision.

Q So he would only get a benefit to the extent that his portfolio performed in excess of 3 percent?

SENIOR ADMINISTRATION OFFICIAL: Right. You can think of it as saying -- if you were making a decision on where to put your money going forward over the next 10 years, and you're saying, should I put it in this account or that account, if you're choosing to put your money over here instead of over here, then the net effect on you, as an individual, is to compare what would be the rate of return you get from this system, as opposed to putting it over here. And that would be the difference between the two.

Q Short of 3 percent, would he make whole or would he get less than the current guaranteed benefit?

SENIOR ADMINISTRATION OFFICIAL: Well, there's a implication at the end of your question which -- you have to remember, the current system can't pay the current guaranteed benefit, so --

Q -- is to be paid through 2042 or 2052, the point -- are you suggesting that would not be paid?

SENIOR ADMINISTRATION OFFICIAL: Well, it's -- well, actually, it's -- I don't want to get off on too far of a tangent, but the Congressional Budget Office actually put out a paper this week which made a modification to what they had previously said about what current law was. And they made it very clear that current law is actually the level of benefits the current system can actually pay, as opposed to the level of benefits the current system is promising. So if you ask the question in terms of --

Q But they also said it can pay current level benefits until 2052 -- correct?

SENIOR ADMINISTRATION OFFICIAL: But the Congressional Budget Office is also very careful to say that starting in 2019 or 2020, the resources are not there to pay those benefits.

Again saying the Trust Fund doesn't <$NoAd$> exist. Like we've said, it's all about trying to find a way out of paying the money back under the grand agreement of 1983.

Okay, for all you TPM readers who have been quietly tapping away at your keyboards looking for that find or catch that will earn you one of the prized Special Edition Privatize This! TPM T-Shirts, your wait is over! Or at least, it's over if you've already won one! Or, well, something like that. But the bottom line is we've got the T-Shirts.

We've already awarded a number of them to TPM readers who tracked the evolution of the Social Security speech code and we'll be giving out ten more tonight and tomorrow for eagle-eyeing the State of the Union address and its aftermath.

And of course, if you'd rather just drop down a few bucks and buy the T-shirt as a straight cash transaction, well, we can help you there too.

It turns out there's a men's version and then a women's version of the shirt. Why each gender gets their own version I don't precisely understand. But my one-and-only tells me that's how it is. So that's how we're going to do it. And if that isn't enough there's even the obligatory 'Private This' mug.

If you want to see what the thing looks like, click here to see the front and here to see the back. And to buy one you can go here.

A couple quick points. We make five bucks a piece off the shirts and the money goes to supporting TPM. On the image of the front of the shirt, you can't really make it out clearly, but the smaller text under "Privatize This!" says "*eyes and ears on loan to talkingpointsmemo.com", which we thought was kinda cute and had the added advantage of accurately describing how involved, watchful and vigilant readers are what makes this sort of enterprise possible.

In any case, on to other posts now. But politics isn't just about beliefs and policies and arguments. It should also be fun. Because fighting for things you believe in with some punch in your step, a glint in your eye and a confidence in results is fun. The center-left managed to lose a lot of that moxie over the years for a long list of reasons, some of them inevitable. But it's recoverable.

I guess they call it fact-checking ...

"Our society has changed in ways the founders of Social Security could not have foreseen. In today's world, people are living longer and therefore drawing benefits longer - and those benefits are scheduled to rise dramatically over the next few decades."

George W. Bush
State of the Union Address
February 2nd, 2005

"In 1934, when Franklin Roosevelt formed the Committee on Economic Security to design what was in effect the first federal safety net, the committee hired three actuaries to stargaze into the future. The actuaries predicted that the proportion of Americans over 65 -- then only 5.4 percent -- would rise to 12.65 percent in 1990, meaning that retiree costs would soar. They were just a tad high; the actual figure would be 12.49 percent."

Roger Lowenstein
New York Times Magazine
January 16th,2005

One of the small lies of the evening, <$NoAd$>to be sure. But then, isn't it the small lies that somehow matter most. Pardon our Hallmark moment ...

We're going to have to wait for official confirmation. But from what we're hearing from readers watching the coverage, Sen. Mary Landrieu (D) of Louisiana may have picked tonight to leave the Fainthearted Faction.

Is Sen. Carper (D) of Delaware going to be left as a Faction of one?

And we're off ...

I had the text of the speech a bit in advance. But I intentionally didn't read it because I wanted to hear it first as a speech rather than in the written word.

And I found the choices imbedded in the speech quite surprising.

First, there wasn't all that much about Social Security, and quite little that was new.

As someone who is not at all neutral on whether Social Security should be preserved or dismantled, that struck me as a missed opportunity. It's not every day that even the president gets an hour with the American people, with all the pomp and ceremony reared up in his favor. Even the privatizers have a story to tell. And the State of the Union gives the president a moment of conversational intimacy with the American people. On Social Security, I don't think he made much good use of it. And there was little on Social Security at least that was memorable.

As a final point along those lines, I also thought he did little to weave a narrative about privatization into the other themes of his presidency. The whole second half of the speech (I wasn't watching a clock; but that was my sense) was about foreign policy issues that are distant from what the country will be debating in the coming months. They remain issues of deadly importance and high ideals; everyone can agree to that. But nothing was connected together -- no bridge from the issues and touchstones which won him reelection to the policies he now wants to enact.

A few other observations.

First, now we know how much phase-out the president wants: 1/3 of Social Security. He said so tonight. So at least that nugget of his plan is clear.

Second, there were a slew of bones tossed to the cultural right pretty clearly aimed at bringing them back on board the phase-out bandwagon. Again, it didn't seem woven together, all disconnected.

Third, the president is now saying -- and saying emphatically and militantly, with an eye on his critics -- that if you're 55 you're home free, nothing to worry about when it comes to phasing out Social Security.

One might observe that this is a rather unfortunate dividing in half of the country. If you're 50 today, you spent most of your highest earning years not only paying into Social Security, but advance-paying even more, under the 1983 Social Security Commission which put in the extra level of tax to build up the Trust Fund. Now you're hosed. Too bad.

The important point though is that this is simply not true. And the defenders of Social Security would be straight-up fools to let the president get away with a guarantee as obviously bogus as that one.

The president can say whatever he wants. But the truth is he's going to try to siphon off one out of every three dollars that goes into Social Security -- the money that goes to pay those benefits he's telling you 55-and-over folks not to worry about.

Remember, he says the program's in trouble in 13 years and bankrupt in less than forty as it stands now. And now he's telling people who are 55 and over that they can rely on the program with complete confidence even though, under his new plan, it'll have to make do with 2/3 of its current revenues.

Does those two facts compute to you? You think that might put a little stress on the system? Even if the president just decides to pull out the national Visa card and borrow a few trillion more dollars to make up the shortfall, that will just come back and hit the program in other ways and more than soon enough to hit people a decade from retirement. People who are 55 today will be alive in 10, 20, 30 and more years from now. And like so many of President Bush's promises this is one he couldn't keep even if he wanted to.

With Social Security phase-out, we're all in the same boat. Actually, let me rephrase that: With Social Security we're all in the same boat. With phase-out, it's everyone overboard and every man for himself.

"New Details Indicate Administration Social Security Plan Would Entail Several Trillion Dollars In Borrowing."

That and more just out from the Center on Budget and Policy Priorities.

See it now.

(Tim, you could read it so quickly. And so many errors could be avoided. Pass it on to Fineman when you're done. Also, remember the CPI calculation debate and the wage or inflation indexing debate are two different issues. I'm just trying to help! I'm on your side!)

If we're not mistaken, tonight's State of the Union address (aka, the kick-off of the Bamboozlepalooza Tour) should knock the Fainthearted Faction and the Conscience Caucus into utter turmoil. And pretty much every member of Congress is going to be asked by some reporter somewhere what they think of President Bush's Social Security phase-out plan.

And let's be clear, that's what this is. The idea of phasing out only part of Social Security is just a con. The plan here is to get rid of Social Security entirely and replace it with a government system of private investment accounts in which everyone can sink or swim as well as they can manage.

If you don't make enough during your working life to save much, you're out of luck. If your investments go bad or you die young, you and your kids are out of luck too. On the margins there may well be a new system of elder welfare for those who can prove they would die or be without any means of support absent a government hand-out. But gone entirely will be the current Social Security system in which every American who pays into the system over their lifetime has a guaranteed bedrock of retirement security which can't be taken away ever, not as a matter of a handout or disgrace or pity, but as a matter of right to a modicum of comfort and dignity in retirement after a lifetime of work.

If you doubt that the plan is to get rid of Social Security entirely you are simply naive. Look at the structure of all the phase-out proposals. They don't really envision a hybrid system for the longterm. They are all designed to siphon money out of the system, weaken it, trigger the crisis President Bush now falsely claims exists and create an accelerating pressure to complete the process of phase-out.

If you think about it, nothing else would really make sense. If partial phase-out is a good thing, why isn't total phase-out even better? This isn't about solvency; it's about the ideology of people who don't believe in or approve of the near-universal, defined-benefit program America has had for seven decades.

That's the plan and that's what's at stake.

We could have an honest debate about whether we'd be better off with Social Security or a system of government-regulated 401ks in its place. But the president knows that's a debate he can't win. So he's trying to scam the public into helping him destroy what the vast majority want to protect.

Social Security can be put on the course to complete phase-out in the 109th Congress, or the effort to phase-out Social Security can be put to rest for decades. If a newly-reelected president, with compliant majorities in both houses of congress, and all the weight of his office put behind the effort gets stopped in its tracks by a battered, but recovering party like the Democrats now are, no one will try it again for a very long time.

So, tonight ... As I said, everybody's going to get asked about phase-out tonight. And we want to hear what you hear. We can only follow so many news outlets. We have our special email address still set up (lyingprivatizers@talkingpointsmemo.com). So if you see some member of the Conscience Caucus going all wobbly and sidling up to the president's phase-out proposal, let us know. If others give it the thumbs down, let us know that too. We'd like to hear about it even if it's just existing members of the Caucus reaffirming their membership.

Same goes for the Dems. If someone starts to go wobbly, we'd really appreciate your telling us.

So we can make use of it in our efforts to cover the legislative battlein its totality, please give us as much detailed information as possible about when it was, where it appeared, and so forth. If possible, send us a link.

And watch the press. The president already got knocked on his heels for his 'crisis' malarkey. Will that affect the degree of credibility the media imputes to him now on related issues?

The White House has already signalled that a big part of the speech will be rolling out his new Social Security speech code. So if you see Tim Russert running away from the phrase 'private accounts' like it was the bubonic plague, can you let us know? Thank you. We'll be in your debt.

And if the dingbat neologism 'personalization' even crosses Andrea Mitchell's lips, can you tell us that too?

The Republicans have every right to use their own rhetoric to describe their own policies. But it's ridiculous for them to think they can force the press to adopt a new lexicon every time the pollsters come back to Karl's office with a glum face. And it is shameful when members of the press comply. So keep an eye out and let us know.

We'll be giving away 'Privatize This' TPM T-shirts for the top ten catches of the evening (ed.note: just remember that they have to go to the special email address to be considered)...

As we noted earlier, Rep. Jim Kolbe (R) of Arizona and Rep. Allen Boyd, the Dean of the Fainthearted Faction, held a press conference yesterday on Capitol Hill to unveil their Social Security phase-out legislation which they call the "Bipartisan Retirement Security Act of 2005."

They handed out a detailed summary of the legislation, a document describing its purported effect on women and another describing its purported effect on people with low incomes. They also put out this 'Short Summary' of their legislation, which we've posted here in annotated form for your reading pleasure.

Her own private Fainthearted Faction?

The Times-Picayune gives the run-down on Louisiana Dems and where they come down on Social Security phase-out ...

Sen. Mary Landrieu, D-La., who represents a state Bush won by 15 percentage points and is often a swing vote in the Senate, said Tuesday she had not formulated a position on private investment accounts. A spokesman said Landrieu would oppose anything that calls for benefits cuts or that increases the deficit.

Landrieu's legislative director, Jason Matthews, said she is unlikely to support letting workers divert a portion of their payroll taxes to accounts that they could invest on their own.

Matthews also said he has seen no sign that the White House is trying to build a bipartisan consensus.

"Where is the bipartisan solution? There are only six or seven (swing) votes, and we're one of them," Matthews said. "There hasn't even been a preliminary 'Hey, how do you do?' with anyone from the White House."

By contrast, the two other Democrats in Louisiana's House delegation, Reps. William Jefferson of New Orleans and Charlie Melancon of Napoleonville, said they were firmly against the creation of private accounts. The lawmakers said that no matter how they are structured, the accounts offer too much of a risk to retirees, many of whom are dependent on Social Security for their sole means of support.

No 'how do you do'?

Mary Landrieu, looking for love in all the <$NoAd$> wrong places?