Draft of 'Four crises'

(This piece is incomplete and may be junked altogether. But any comments/advice etc are welcome)
by Bruce Webb

Much of the conceptual confusion around Social Security derives from the fact that 'crisis' is defined in (at least) four different broad categories resulting in proposed solutions that don't even meet the frame of the objector. So I propose to unpack the various versions and then discuss the ways the framing shapes the resulting rhetoric.

Crisis 1: Benefits Crisis. This holds that the problem is a gap between cost and scheduled benefits that should if possible be addressed with a fix that maintained the highest attainable benefit.

Crisis 2: Financing Crisis. This holds that the problem is a gap between promised benefits and financing that if possible should be addressed with a fix that maintains affordable financing.

Crisis 3: Socialism Crisis. This holds that the problem is that the government even addressed this issue in the first place. For example Milton Friedman believed Social Security was immoral and should be liquidated by given everyone securities in exact proportion to their past contributions and projected benefits. (That is he maintains the government obligation to the past while getting it out of the business going forward.)

Crisis 4: Pure Opportunism. This holds that the problem is actually an opportunity to make a huge amount of money by privatizing the system.

For the most part people who are motivated by Crisis 3 or 4 are not able to operate in the open. Particularly these days when most Americans are not saying 'Man if we had only allowed Wall Street to take a cut out of every Social Security dollar they wouldn't have to cut back on corporate jet purchases.' And while most Americans have been conditioned to shudder when they hear the word 'Socialism' they don't by and large associate that with the multi-colored check that shows up in their parents mailbox each month. Instead Crisis 3 and 4 people have to hide themselves behind arguments derived from Crisis 1 or 2. Which brings up the problem of sincerity. How do you positively identify people who are fundamentally being driven by Ideology (3) or Greed (4) when they are using arguments drawn from Finance (2)? Well you can't, which is why I rarely try. You can suspect or know that that your debate component is just fronting for Wall Street or alternatively the Austrian Alps, but while you can make them uncomfortable mostly you can't pin them down. Instead the debate generally resolves to Crisis 1 vs Crisis 2.


Which is where the big battle is waged. Something I will discuss under the fold.

First thing to note is that Crisis 1 and 2 are almost irreconcilable. People who believe in Crisis 2 are simply not going to be convinced by arguments that fixing Crisis 1 would be cheap because they are not committed to the concept that Crisis 1 is important. For whatever reason Crisis 2 people simply don't want to pay any more now or in the future.


Starting from the bottom with Crisis 4. Supporters of traditional social security often claim opponents are only bent on getting ahold of pretty much the only huge stream of money that they don't control. And it is a big pot, in 2007 Social Security took in $785 billion in receipts and disbursed $589 billion in benefits Table III.A3.—Operations of the Combined OASI and DI Trust Funds, Calendar Year 2007 [In millions]. Surely there are opportunities for someone to skim off hundreds of millions off the top of that huge river of cash. Well there are two complications to that. One is operational, currently Social Security operates with administration costs right under 1% of receipts and less of total costs and are servicing 10s of millions of beneficiaries. But the second is rhetorical, the people who might think they can make huge money off of retirees just can't come out and admit that in the open. Which means that people who are really motivated by Crisis 4 have to hide themselves behind Crisis 1 or 2 and promise better results at a lower cost. (A result that is in my view not really possible.) In any case these people are mostly marginalized in the debate.

As are people who are really believers in Crisis 3. The American people by and large have been conditioned to think bad things when they hear the word 'Socialism', like labor camps. They have equally been conditioned to think such things when they hear 'Government Health Care'. But by and large they don't put Social Security into the first category or Medicare into the second. I remember back in the last go around of Medicare 'reform' one woman being quoted to the effect "I don't care what the government does, as long as they keep their hands off my Medicare". In the face of that the libertarian/glibertarian camp pretty much has to fall back on arguments about the superior efficiency of private markets and line up behind Crisis 1 or 2 right with the opportunists.






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2009 Report: Due March 31st

Assuming that the 2009 Report uses the same file name conventions as in previous Reports the following links should go live as soon as the Report goes up. Generally the Report is issued at the end of March but there may be some delays this year do to the three vacancies among the six Trustees (there were four until Solis was confirmed yesterday).

Entry page
Table of Contents
List of Tables
List of Figures

Economic Assumptions under the Three Alternatives
Trust Fund Ratio under the Three Alternatives

Aspect and Tense in the Simple Verb Phrase in English

Well I am sorting through some graduate school notes and ran across this handwritten deal. Plus some articles illuminating (?) it. So I suppose I will preserve it for all times on the Intertubes. Make of it what you will.

1. takes Present
2. took Past
3. is taking Present Progressive
4. was taking Past Progressive
5. has taken Present Perfect
6. had taken Past Perfect
7. has been taking Present Perfect Progressive
8. had been taking Past Perfect Progressive

Present: 1, 3, 5, 7 tense
Past: 2, 4, 6, 8

Aux2 (?) Progressive 3, 4, 7, 8 (?) usually combined into category 'aspect'
(?) Non-progressive 1, 2, 5, 6

Aux1 (?) Perfect 5, 6, 7, 8 (?) usually combined into category 'aspect'
(?) Non-perfect 1, 2, 3, 4

tense: present tense is used for any period of time, short, long or eternal that includes or explicitly concerns the present moment. Past tense excludes the present moment.

progressivity: progressive indicates activity continuing through a period of time - activity with duration. Non-progressivity merely reports activity, without indicating it has duration (but NOT indicating that the activity does not have duration.)

perfection: perfect indicates a period of time that began before, but continued right up to a point of time (either past or present).

well back in the day I was deeply involved with issues of English grammar and their relations with such things as the Sapir/Whorf theory of language. I am not sure where the 'Aux1' and 'Aux2' came from but all of this seemed important enough at the time (late 80's) to have me keep my notes. So rather than keep them on paper here they are.

LMS Tables for AB Post

The Plan Boss! The SS Plan!: Where they are and what they do.

by Bruce Webb

In comments VtCodger remarked that he had never seen the actual Bush plan for Social Security. And indeed when Bush raised the subject after the 2004 election he was careful not to push a specific plan of how own. Instead he attempted to get a consensus around 'Crisis' and get buy-in from everyone that 'Something was better than Nothing'. He did allow the Posen Plan to get floated, largely it seems because Posen was a Democrat and so allowed him some bi-partisan cover, but never explicitly endorsed it. Which was a good thing because when exposed to light it got roasted largely on the basis of 'clawback' and 'annuitization'. On which maybe more in comments.

But there was a Plan or at least a Report of the President's Commission to Strengthen Social Security (12MB) which presented three Models each meticulously scored by the Office of the Chief Actuary in fifty pages of detailed projections. And it is worth discussion. But before doing that I want to lay out some links to other plans out there. If readers know of links to others please put them in comments.

The plan I am most familiar with is Liebman-MacGuineas-Samwick Non-Partisan Social Security Reform Plan (aka LMS). It is interesting for all kinds of reasons, not least because it reveals how 'serious' 'reformers' define 'crisis'. Which turns out to not have much to do with the gap between the scheduled benefit in 2041 and projected income.

Another important plan out there is the Diamond-Orszag Plan, which gets some extra clout due to Peter Orszag now being OMB Director.

As I run across more I will add them in.

Paradox of Poverty in a Sea of Content and Communication

Robert Waldmann put up a post at Stochastic Thoughts called Homeless Man with Cell Phone responding to some attempt by Andrew Malcolm to be snarky which only revealed him to be gormless. You should read the whole thing as Robert attacks a Right meme that goes back to Reagan era days, that you can't really be poor if you own a TV or eat at MacDonalds. Or in this case own a cheap cellphone. This just shows such cluelessness about the realities of poverty in America where often poor people can't afford to live cheaply. That is it is more expensive to live in a run down residential hotel than it does to live in an apartment, it can cost more to buy and maintain a series of beaters than it would to finance a nice used economy model. But sometimes you just can't get over the credit hurdle. While you can buy a $10 cell phone with pre-paid minutes and then pay as you go.

But the whole thing got me thinking about a topic I have been mulling over a while. Me from comments:

Robert someone should write a post about the paradox of communication and content in the 21st century.

I am struck when watching footage from overseas whether that be Africa or Asia that cell phones are almost ubiquitous in even the poorest neighborhoods. And while I suspect they don't have the same data plan I have in my iPhone we are not that far away from a world where remote villages and slums don't have access to secure food supplies or clean water but via a solar powered communal TV and a crank up PC have access to information from around the world.

Europe has a project to put all of its greatest cultural resources online and many government and major research libraries are committed to getting as much of their collections online as well.

Is this heaven or hell? I mean it is somewhat hellish to think of some Sudanese kid orphaned by rebels and hoping that the UN aid people will return one day still being able to wander the virtual halls of the Louvre and browse the stacks at the L of C. On the other hand I am on the verge of selling my 2 BR condo (in which I live alone) with plans to move to a small studio. Because as long as I have access to high-speed internet, a microwave, and a refrigerator my needs are pretty much met.

Part of this is a desire to get a little more green and reduce my carbon footprint, but a lot of it is because I don't need to have eight book shelves double stacked with books anymore, or a record collection, or racks of floppy drives, or boxes of pictures, and I can save a bunch of green by not having to set aside living space for such things.

Given the economy I too might end up living out of my car, but one way or another I will still have access to the internet. We seem to be entering an era where all things are flipped. Once only the wealthy could afford fine art and books and travel, these days those may all the poor can afford going forwards (admittedly the travel being virtual).

To which Robert responded

Alternative title -- "George Orwell Might Say."

Some decades ago, during the great depression, Orwell noted that poor people in his day didn't have access to necessities, but they did have access to luxuries. Said luxuries included Hollywood films and carryout junk food.

We've gotten used to the idea that people who watch actors on tv and eat in McDonald's aren't necessarily rich. Even the idiot conservatives among us will get used to the idea that people will cell phones aren't necessarily rich some time soon.

On a related note people marvel that poor people buy Lotto tickets. Don't they know the odds? Don't they have children that need better food and clothing? Well they may not really understand the odds but they know not everyone is getting rich off the lotto. When you are poor and buy a ticket what you are buying is a dream, if you are underpaid or out of work and unable to afford to take your kids to the multiplex odds are you can afford a cheap color TV for the kids even with the exorbitant monthly bills (even for basic cable) and you can take that lotto ticket and spend hours thinking what you would do with it if and when.

Yet wealthy people who think nothing of dropping a few hundred dollars on concert tickets with $15 Apple Martinis after the show all for just a couple of transient hours of entertainment begrudge the poor the ability to watch TV and dream of striking it rich.

The combination of ignorance and mean-spiritedness would be stunning. Except that this kind of "Let them eat cake" attitude has gone on forever.

Milton Friedman on Social Security

by Bruce Webb
(this post was originally intended for publication at Angry Bear, but I am not totally satisfied with it so will just leave it here)

Opposition to Social Security is most often expressed in terms of efficiency with assertions that ultimately it will not work at all ('bankrupt', 'dead broke') or that it will require unacceptable tradeoffs ('tax increases', 'program cuts') or that it is simply unfair burden shifting ('intergenerational inequity'). These arguments generally reduce to 'Private (or Personal) Retirement Accounts would work better'. But on examination the proposals to transition to PRAs don't actually seem to work better, not from the standpoint of individual workers. Which has led supporters of traditional Social Security to accuse opponents of being thieves dying to get ahold of the future revenue stream and/or not wanting to pay back past borrowings.

There is some justice to this charge, an appeal to the banks, insurance companies and others that would benefit from private accounts is explicitly laid out in the 1983 battle plan presented by Butler and Germanis Achieving Social Security Reform: a 'Leninist' Strategy. And a fair reading of the Liebman-MacGuineas-Samwick Non-Partisan Social Security Reform Plan (aka LMS) shows that their emphasis is first on 'sustainable solvency' which is to say putting Social Security on a new pay-go basis over the Infinite Future, secondarily 'fiscally responsible' which they define as minimizing future Fund Borrowing, thirdly on 'economically beneficial' which translates to increased national savings. But at no point if there any real emphasis on return to actual beneficiaries, all pay more and get less and all the benefits are shifted outwards and onwards.

So we cannot dismiss the profit motive OR the desire to minimize the external tax burden to finance Social Security. They are both present. But historically opposition to Social Security has been driven by deeper motives, some people led mainly by Friedman in recent decades simply believe the system is "immoral" and that arguments about efficiency and the "nuts and bolts" are just the needed tools to drain the electricity out of the Third Rail of American Politics. So below the fold I am going to give some links and quotes of people who regret we even HAVE a system of Social Retirement.

As the title suggests the foremost proponent of this view was Milton Friedman. In 1999 the rumblings of 'Reform' were getting louder as Republicans saw they were finally see a possibility of gaining control of the White House and so get past Clinton's 'Save Social Security First' and Gore's 'Lockbox'. In April of 1998 Cato published the following Briefing Paper 46 by Friedman SPEAKING THE TRUTH ABOUT SOCIAL SECURITY REFORM. Which 'truth' is summed up as follows:

A privatized SocialSecurity system should not be mandatory. The fraction of a person’s income that it is reasonable for him or her to set aside for retirement depends on that person’s circumstances and values. It makes no more sense to specify a minimum fraction for all people than to mandate a minimum fraction of income that must be spent on housing or transportation. Our general presumption is that individuals can best judge for themselves how to use their resources.
The ongoing discussion about privatizing Social Security would benefit from paying more attention to fundamentals, rather than dwelling simply on nuts and bolts of privatization.

People who wish can examine the details of the Friedman plan, basically it makes implicit debt explicit and then eliminates Social Retirement altogether, he doesn't want your money and he doesn't think anyone can provide a more efficient solution than the market. And Friedman was even more blunt in the following exchange from 2005 Milton Friedman: Eliminate Social Security, Medicaid, Medicare

Friedman, Paul Snowden Russell Distinguished Service Professor Emeritus of Economics at the University of Chicago, shared his economic theories over lunch October 15 at a California restaurant with nearly two dozen alumni and students who are members of the Milton Friedman Group, the student-led organization that promotes Friedman’s free-market approach.
The event gave participants a chance to pose questions that Friedman had fielded for years from critics. “If you’d abolish Social Security for everyone, what would you do with people who are indigent and incapable of taking care of themselves if they didn’t save during their younger days?” asked second-year student Andrew Van Fossen.
“Social Security isn’t a program for them, it’s for everyone,” Friedman replied. “There’s a much stronger case for government having a program for them than for everybody. But if you look at the record, private charity is a much more effective way of helping people.”
“If you’re going to go from where you are to where you want to go, in the process you’re going to have to have programs of that kind to do it,” Friedman continued. “That’s why, in order to get rid of Social Security, you’re going to have to have private accounts.
“What you should do, in my opinion, is to give every person who now has a claim on Social Security bonds equal to the value of his claim, and set him free. Let him save. Let him do what he wants with it. That would not add a dollar to the debt we now have; it would just convert an unfunded debt into a funded debt,” Friedman said.
Van Fossan asked, “If you did that, how would you protect people from making really stupid decisions?”

“I don’t!” Friedman replied. “Why should I?” a response that drew laughter from the group. “You mean freedom does not include the freedom to make a stupid decision?”

Now I would have a little quarrel with that "private charity is a much more effective way of helping people" piece, after all the guy was born in 1912 and experienced the Depression in full, but at least you can't accuse this guy of hiding behind 'intergenerational inequity' or ducking past debt.

Butler and Germanis on Social Security in 1983

Social Security Reform: Achieving a Leninist Strategy

Marx believed that capitalism was doomed by its inherent contradictions, and that it would inevitably collapse—to he replaced by the next stage on the ladder leading to the socialist Utopia.

Lenin also believed that capitalism was doomed by its inherent contradictions, and would inevitably collapse. But just to be on the safe side, he sought to mobilize the working class, in alliance with other key elements in political society, both to hasten the collapse and to ensimre that the result conformed with his interpretation of the proletarian state. Unlike many other socialists at the time, Lenin recognized that fundamental change is contingent both upon a movement’s ability to create a focused political coalition and upon its success in isolating and weakening its opponents.

As we contemplate basic reform of the Social Security system, we would do well to draw a few lessons from the Leninist strategy. Many critics of the present system believe, as Marx and Lenin did of capitalism, that the system’s days are numbered because of its contradictory objectives of attempting to provide both welfare and insurance. All that really needs to be done, they contend, is to point out these inherent flaws to the taxpayers and to show them that Social Security would be vastly improved if it were restructured into a predominantly private system. Convinced by the undeniable facts and logic, individuals supposedly would then rise up and demand that their representatives make the appropriate reforms.

While this may indeed happen, the public’s reaction last year against politicians who simply noted the deep problems of the system, and the absence of even a recognition of the underlying problems during this spring’s Social Security “reform,” suggest that it will be a long time before citizen indignation will cause radical change to take place. Therefore, if we are to achieve basic changes in the system, we must first prepare the political ground so that the fiasco of the last 18 months is not repeated.

First, we must recognize that there is a firm coalition behind the present Social Security system, and that this coalition has been very effective in winning political concessions for many years. Before Social Security can be reformed, we must begin to divide this coalition and cast doubt on the picture of reality it presents to the general public.

Second, we must recognize that we need more than a manifesto—even one as cogent and persuasive as that provided by Peter Ferrara. What we must do is construct a coalition around the Ferrara plan, a coalition that will gain directly from its implementation. That coalition should consist of not only those who will reap benefits from the IRA-based private system Ferrara has proposed but also the banks, insurance companies, and other institutions that will gain from providing such plans to the public.

As we construct and consolidate this coalition, we must press for modest changes in the laws and regulations designed to make private pension options more attractive, and we must expose the fundamental flaws and contradictions in the existing system. In so doing, we will strengthen the coalition for privatizing Social Security and we will weaken the coalition for retaining or expanding the current system. By approaching the problem in this way, we may be ready for the next crisis in Social Security—ready with a strong coalition for change, a weakened coalition supporting the current system, and a general public familiar with the private-sector option.

JS-Kit work around edition

Okay lets take a simplified example which is close to the numbers of say 2006.

Before: Total public debt $10 trillion
Debt held by the Public $6 trillion
Intragovernmental holdings $4 trillion
( which includes SS Trust Fund $2 trillion)

Current Year: Proposed general fund spending $5 trillion
Tax revenues $4.9 trillion
SS cash surplus $100 billion
SS interest @ 5% $100 billion

Unified surplus for the current year +$100 billion ($5.1 trillion - $5 trillion)
Borrowing needs from the public +$0 ($4.9 trillion income tax + $1 billion FICA cash surplus - S5 trillion general fund spending)
Total public debt -$200 trillion ($10 trillion rolled over + $100 billion in Special Treasuries for the cash surplus + $100 billion in Special Treasuries for the interest accrued)

After: Total Public Debt $10.2 trillion
Debt held by the public $6 trillion Total Intragovernmental holdings $4.2 trillion
(which includes SS Trust Fund $2.2 trillion)

In this scenario the General Fund is running a mild deficit of $100 billion totally financed by the cash surplus from FICA. From the perspective of the bond market the budget is balanced with only existing maturing debt needing to be refinanced. On the other hand the Unified Surplus/Deficit scores at +$100 billion because interest is included as revenue even though not financed out of the public markets. Leaving total public debt up +$200 billion.
So it is simple! General Fund in deficit by $100 billion, Unified Budget in surplus by $100 billion, Social Security Trust Fund in surplus by $200 billion, Public Debt in deficit by $200 billion. Net borrowing needs $0.

Balanced cash budget plus Unified Budget and Social Security both in surplus = $200 billion in additional long-term debt. Why is my head throbbing a little bit?

Angry Bear Social Security Blogging: Spring 2009

Looting Social Security: (the Basics Revisited)

Social Security in a Time of Recession

Why the 'Prefunding Boomer Retirement Myth' is Dangerous

Late to the Seminar: (Guide to the series)

Social Security: Simple Story vs. Myth Busting

Social Security has no Unfunded Liability

Social Security and the Debt Clock

Social Security 101: Arming for Battle

The Fierce Urgency of "Nothing"

Who gets to define Social Security 'crisis'

Low Cost and the 100/100 Plan Revisited

Half of workers would opt out of Social Security if they could

Bipartisanship and "Temporary" Payroll Tax Holidays

Lady Liberty Douses Her Torch: Social Security and Immigration Policy

Diagnosing the Dynamics of Social Security

Bestest Day of the Year: SSRR Day

New Tactics in an Old War: Vanishing the Social Security Surplus

World Economic Meltdown: Crisis for Social Security? or Opportunity to Kill it?

Tables Tell Tales: Did the Social Security Surplus Vanish in February?

Trust Fund Operations and Assets: Why 2017 Doesn't Matter

Political Calender Calculus: How Social Security Reformers Got Hemmed In

Vanishing Surplus-Revealed

DI: Sick Man of Social Security

'Headline' Surplus/Deficit and 'Headline' Debt

Vanishing Surplus-Yet Again

1981-1983 Social Security Commission: Myths and Realities

CBO Presentation to the Social Security Advisory Board

Social Security Report Release; plus the Gathering Storm

Figures for AB 'Social Security has no unfunded liability' post

Coberly on Social Security at Angry Bear

Jan 16, 2008 Coberly on Social Security

July 15, 2008 Money and Childhood Understandings

Sept 9, 2008 Op Ed on what Social Security is for

Oct 8, 2008 Social Security: unpacking the lies

Oct 12, 2008 Here it comes

Nov 16, 2008 Dancing around on one nail not Social Security

Nov 24, 2008 Why Bill Gates gets Social Security

Jan 16, 2009 Retirement is not a game...The Choice

Feb 19, 2009 No Crisis in Sight

Feb 22, 2009 Will you still feed me in 2041

Mar 27, 2009 Social Security: Return on Investment

May 13, 2009 Misdirection: How They Keep You from Seeing the Good News

May 13, 2009 One of the Less Noticed Passages

Social Security: 2009 myth busting edition

The BruceWeb started out in Nov 2004 in response to then President Bush's call to 'reform' Social Security in response to 'crisis'. I put the two terms in scare quotes because on examination we see that 'reformers' use 'reform' and 'crisis' in quite different ways that regular people do, and indeed much of there argument comes down to a bait and switch. To understand this we have to lay out the standard narrative and then set it in actual numeric context.

The standard narrative is simple and well understood. It holds that the pending wave of Baby Boomer retirements will inevitably overwhelm Social Security and ultimately drive it to bankruptcy. Moreover promoters insist that we can't just tax our way out, nope we need to take action as soon as possible even if that means accepting painful cuts in benefits. In fact they insist that the whole system is so flawed that we need to transition it to a new sustainable form based on a system of PRAs (Personal Retirement Acounts).

What is missing from this picture? Numbers and dates. This is actually pretty typical of the debate, dollar figures are rarely used and when they are tend to be stated in mysterious ways like 'unfunded liability over the infinite future horizon", and when dates are deployed they are rarely put in real context. Does crisis start in 2017? or 2023? or 2041? or 2049? or has it started already? Well it depends on who you ask and how they define crisis.

So lets put some dates and numbers in. The Social Security Act of 1935 established two different programs, one under Title 1 and the other under Title 2. Title 1 was a straight out government pension funded directly from the General Fund and meant to replace a hodge podge of inadequate state plans. It was designed to phase out over time and be replaced by a new worker funded Title 2 insurance plan. Which is the source of MYTH 1 that FDR envisioned Social Security as being temporary and that PRAs are just what had been planned all along. Instead the replacement is precisely what we know as Social Security today, i.e. Title 2 insurance. Title 2 was set up on a Pay-Go basis, while your benefit was determined by your worklife contributions, the actual funding would mostly come from current working people making contributions to the Social Security Trust Fund via payroll reductions. Which leads to MYTH 2 that the Trust Fund is just a product of the 1983 Reform. Instead it has always served its function as common pool and reserve and allowed to grow and shrink as needed to meet projected needs. The first benefit checks under Title 2 did not go out until 1941 with people retiring before that point relying on Title 1 while waiting for the Trust Fund to grow to a size to support Pay-Go. Just as banks have to be capitalized and have specific reserves so too did Social Security.

Which leads us to MYTH 3 that early retirees got much better rates of return than later ones do. These calculations never seem to measure the taxes being paid to support Title 1 benefits which continued to make up a larger share of overall Social Security benefits right up to 1951. This seems also the source of MYTH 4 that FDR promised that payroll taxes would never exceed some low percentage of your first X dollars in income. Instead there was the recognition that over time as Title 1 retirees died then payroll taxes could be raised to offset income taxes no longer needed. In any event any legacy costs were met by 1980 (assuming a typical entry into the work force by 21 year olds in 1936).

Giving us MYTH 5 that current problems in Social Security were caused by over-generosity to people in the past. This where it is not just driven by confusion over the terminology is shown to be strained argumentation. Take the following numbers which show total benefit payouts under Title 2 since program inception.
OAS 1941-1956 $25.6 billion
OASDI 1957-1968 $181 billion
OASDI 1969-1980 $793.1 billion
OASDI 1981-1992 $2.476.5 trillion
OASDI 1993-2000 $2.829.3 trillion
OASDI 2001-2007 $6.330,9 trillion

For a grand total of $12.636.4 trillion. Total benefits paid out by 1980 totaled $999.7 billion dollars. All of it paid out under a Pay-Go system. All legacy costs associated with people not being covered under Title 2 their entire working lives have now been liquidated. There are still certainly a handful of people collecting benefits who entered the work force before 1936 but the youngest would be 93 years old. To suggest as some people do that the $1 trillion in benefits paid out by 1980 somehow leapfrogs over the current $2.4 trillion surplus to create a $17 trillion dollar gap over the infinite future is absurd. Yet some people solemnly point to Table IV.B7 as if it were proof of what they call 'Backwards Transfer', when instead it is a failure to understand what the Trustees mean by 'past and current participants'.

And lastly MYTH 6 that Social Security should be viewed as an investment fund and Myth 7 should be measured against a theoretical standalone retirement plan set up in 1936. Myth 7 blows away when you realize it takes into no account the transition costs stemming from the need to pay for Title 1, all of which was paid by the same people who are blamed for getting over generous returns under Title 2. In any event a transition to PRAs has to include some way to cover people too close to retirement to benefit, which fact tends to sink all such privatization plans. Fundamentally they face the same problem getting rid of Social Security that the crafters of the original system did, what do you do about people who are already old? MYTH 6 largely blows away on the same grounds but also ignores the fact that the Trust Funds never served as an investment fund to begin with. Certainly the balance in the Trust Fund has always drawn interest and that interest was drawn down during years when the system ran overall deficits as for example in the 1959-1965 span and in the 1971-1981 Table VI.A4.—Historical Operations of the Combined OASI and DI Trust Funds, Calendar Years 1957-2007 [Amounts in billions]. But at no time were those interest earnings really important, indeed I see no year before 1983 where interest was more than 5% of all income. People can do all the calculations they want but Social Security remains what it always has been since Title 1 phased out, a worker funded Pay-Go insurance plan.

Having hopefully disposed, or at least cast doubt on, the prevailing myths we can proceed to talk about what Social Security is rather than what is is not

Freedom vs. Four Freedoms

(Ouch. This post was designed to go up on Angry Bear but went some other directions. I stand by it but want to rework it in more economic terms.)

My last post (ed. at Angry Bear) led to some confusion. I was trying to suggest that much of the current debate over the stimulus package boiled down to world view. Well lets take it to the basics. What does freedom mean? For Democrats it boils down to this taken from the State of the Union in 1941:

In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

The first is freedom of speech and expression -- everywhere in the world.

The second is freedom of every person to worship God in his own way -- everywhere in the world.

The third is freedom from want, which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants -- everywhere in the world.

The fourth is freedom from fear, which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor -- anywhere in the world.

Now some of us believe this is just an attempt to fill out the plain reading of the Preamble to the Constitution

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Whereas the right wants to reduce everything to Friedman's Capitalism and Freedom

The citizen of the United States who is compelled by law to devote something like io per cent of his income to the purchase of a particular kind of retirement contract, administered by the government, is being deprived of a corresponding part of his personal freedom. How strongly this deprivation may be felt and its closeness to the deprivation of religious freedom, which all would regard as "civil" or "political" rather than "economic", were dramatized by an episode involving a group of farmers of the Amish sect. On grounds of principle, this group regarded compulsory federal old age programs as an infringement of their personal individual freedom and refused to pay taxes or accept benefits. As a result, some of their livestock were sold by auction in order to satisfy claims for social security levies. True, the number of citizens who regard compulsory old age insurance as a deprivation of freedom may be few, but the believer in freedom has never counted noses.

My obligation to free this group from any social responsibility to provide for retirement security for others somehow doesn't equate to a right to ask them to get the hell off the public road because they were interfering with the Commerce Clause in that same Constitution. For some people freedom only flows one way.

To put it another way the right has reduced 'freedom' to 'personal autonomy

Pick your Pork Series at Angry Bear

There is an ongoing discussion of the effects of the stimulus package at Angry Bear. My contributions have focused on claims that the bills are larded up with liberal pork, which I maintain is just not true. In any event here are the links.

Pick your Pork: an Open Invitation

Results of the Pick your Pork Wonkathon

Ruben Navarrette Picks his Pork

GOP Senators Pick their Pork

Columbus Dispatch Picks its Pork

Senate Version of Stimulus Bill

Senate Package Infrastructure

Pick your Pork: semi-final edition

Senate Stimulus Package: CBO Summary

Will the stimulus package be a pork fest?

by Bruce Webb
reader Buffpilot in comments insists the answer is clearly yes on the grounds

The Dems, have NEVER, shown fiscal responsibility when in charge of the purse strings (or at least since before LBJ). So you have zero track record to back you up on thinking that the Dems will suddenly cut back government expenditures and raise taxes to at least get close to balancing the budget. Can you imagine the Dems actually cutting the size of the Federal governemnt? Or reducing its power? Neither do I. BTW the Rs have not been any better.

Well the historical record tells us something different. If we examine Total Debt as a percentage of GDP it went down or stayed even under every post-war President not named Reagan or Bush. We were able to fund the post-war GI bill, the Marshall Plan, Korea, the Great Society, Vietnam, navigate the first Oil Shock all of it except for two years with a Democratically controlled house. And came through the whole thing with debt as a percentage of GDP bottoming out in 1980. I am afraid the old narrative of Democrats as the party of tax and spend policy leading to ever increasing deficts while Republicans being the party of fiscal responsibility has really not been the case since Eisenhower left office. Instead the whole concept of Small Government has since 1964 and the birth of the Modern Republican Party meant "don't spend tax money on undeserving poor people".

CBO Director Testifies on Economic Impact of HR1

by Bruce Webb
Movie Guy further requested some discussion on CBO Director Elmendorf's testimony to Congress from yesterday. The whole text is here Elmendorf testifies before House Budget Comm I didn't have time to go thourghly through the whole thing but these tables were interesting enough to put up for comment.

CBO Letter to Rep. Ryan re Stimulus Debt Service

by Bruce Webb
Reader Movie Guy suggest that the following letter and table merit some discussion. It seems to speak for itself but the whole thing is short enough simply to post (I deleted some returns and added some commas to save space, the original PDF is here CBO Letter to Rep. Ryan). Please add any contributions in comments.

Honorable Paul Ryan, Ranking Member, Committee on the Budget, U.S. House of Representatives

Dear Congressman:

As you requested, the Congressional Budget Office has estimated the costs of additional debt service that would result from enacting H.R. 1, the American Recovery and Reinvestment Act of 2009. Such costs are not included in CBO’s cost estimates for individual pieces of legislation and are not counted for Congressional scorekeeping purposes for such legislation.

Under CBO’s current economic assumptions and assuming that none of the direct budgetary effects of H.R. 1 are offset by future legislation, CBO estimates that the government’s interest costs would increase by $0.7 billion in fiscal year 2009 and by a total of $347 billion over the 2009-2019 period (see enclosed table).

If you would like any additional information, we would be happy to
provide it. The CBO staff contact is (redacted).

Sincerely, Douglas W. Elmendorf, Director

CBO Tables: Bigger Images

CBO Estimate for HR 1: Jan 26th, 2009: the Tables

For some reason the outlay/revenue tables vanished from the PDF. Which has led to more tin foil hats. In the interest of sanity I have put up a version here:

It can't happen here(?)

Prescient Young Blogger Did What S. Korea Couldn't -- Foresee Global Financial Crisis

He had been a so-so student who studied communications at a so-so junior college in a backwater town south of Seoul. Thirty-one years old and single, he spent much of his time alone in his room. As his father noted, "He can't even get a job."

But he knew a global economic smack-down when he saw one.

Minerva saw it coming last fall, far earlier and with far more acuity than the South Korean government, which his blog has humiliated and angered.

Besides getting mad, the government got even. In a move widely perceived by the public as a chilling echo of the 1970s, when a military dictatorship ruled South Korea, the government detained Park this month, invoking a seldom-used telecommunications law that charges him with harming the public by spreading "false rumors."

Well I doubt that any Angry Bears needs to fear being locked up. On the other hand the following from Sec 802 of the Patriot Act could be pretty broadly interpreted.

5) the term `domestic terrorism' means activities that--
`(A) involve acts dangerous to human life that are a violation of the criminal laws of the United States or of any State;
`(B) appear to be intended--
`(i) to intimidate or coerce a civilian population;
`(ii) to influence the policy of a government by intimidation or coercion; or
`(iii) to affect the conduct of a government by mass destruction, assassination, or kidnapping; and
`(C) occur primarily within the territorial jurisdiction of the United States.'

.That is if Larry Summers thinks that your comments have the appearance of being intended to influence the policy of the government and decides he is in some way 'intimidated' you could be picked up and detained just like poor Mr. Park.

I'll admit the concept is kind of far-fetched. But then again just three days ago former NSA analyst Russell Tice dropped a bomb shell on CountdownNSA Whistleblower. What he alleges there couldn't happen either, not here. Except maybe it did.

January 2008: A flurry of Social Security Posts at Angry Bear

Hoo boy, Social Security is back in the news with the MSM trying to whip up the idea that Obama is going to prove Bush right by going after Social Security (similar narratives are floating around about Iraq and torture all in an effort to prove that Bush was never, never actually wrong about anything). I do some push back.
Social Security Monthly Balances: Nov update
Social Security 'Reform': the Undead Return
Bruce Webb and Barkley Rosser and Social Security Not actually by me, but if you think I am going to pass that title up you are nuts. My Mom reads the site.
Obama and Social Security: why NOT to worry
2008 Social Security Balances: Projections vs. Actual
Recalculating 'Nothing': Social Security in a Time of Recession
Social Security?: It's Stochastic!!
Social Security: Goldilocks curves, Not too hot, not too cold
Is Obama echoing Bush on Social Security?
Orszag (and Diamond) Flunk Reading & 'Rithmetic: SS Legacy Debt
Unleash Your Inner FDR: Social Security as Political Opportunity

Even More Posts from Angry Bear: late Aug to Dec 2008

In late August I stopped numbering my Social Security posts, because it had gotten increasingly pretentious And cut them back somewhat. Which made them harder to distinguish as a block. So as a public service (?), I'll try to gather all the links here.
AUG: CBO: Updated Long-Term Projections for Social Security
Social Security 2027: A date for action?
Backwards Transfer is Back: Social Security's Unfunded Liability
SEPTUnfunded Liability Bookended
Intergenerational Equity, Unfunded Liability and Selfish Boomers
R.I.P. Social Security Crisis: "We hardly knew ya" This was the point I thought the series would go on hiatus. Who could have known that the MSM would blow up some post-election comments by Obama and get this issue right back on the table? I thought the Wall Street meltdown would put an end to all this. But clearly not.
Social Security Actuaries score the Warshawsky Plan
OCTSocial Security Checkup: Monthly Trust Fund Reports
NOVWhy Conservatives Hate Social Security
Social Security: Inter and Intra-Temporal Contingency
DECSocial Security Monthly Balances: Oct update
Is it true that foreigners finance American debt?What does this have to do with Social Security? Well nothing. But an interesting topic.
2008 Financial Report of the United States
Why does Santa hate poor kids?Nothing about Social Security here either. I rant on how we use things like Santa to teach the poor that life is just unfair, suck it up and accept the fact that rich people get a better deal from Santa, the Easter Bunny and the Tooth Fairy.

I skipped some non-financial posts, but I think this includes all the relevant ones for this site.

Unfunded Liability, aka Legacy Cost

This graph is being used in a forthcoming post on Angry Bear called 'Orszag and Diamond Flunk Reading'

Alternative Shapes

(Update. Commenter RDF points out that these graphs mean nothing for those who don't have the context. And I plead guilty. Some of my posts here are just prep pieces for longer work over at Angry Bear. For example these graphs were incorporated into Social Security: Goldilocks Curves, Not Too Hot, Not Too Cold. And for the record the 2004 and 2007 curves were originally reversed, something I fixed Jan 18.)
1997 II.F6

2000 II.F6

2004 II.D7

2007 II.D7


2008 II.D6

Trust Fund Monthly Reports: 2008 Preliminary

OAS::Opening balance//Projected year end balance-Intermediate Cost//Y-O-Y Increase//Year end balance-Low Cost//Y-O-Y increase-Low Cost
$2.023 trillion // $2.216 trillion //$193 billion// $2.221 trillion// $198 billion

DI::Opening balance//Projected year end balance-Intermediate Cost//Y-O-Y Increase//Year end balance-Low Cost//Y-O-Y increase-Low Cost
$214.9 billion//$218.7 billion//$3.8 billion//$221.3 billion// $6.4 billion.
Per IV.A2 the opening balance for DI was $214 billion, projected year end under IC $218.7 billion, under LC $221.3 billion

June 30th/Mid-year: OAS $2.140 trillion// DI $220 billion

Aug 31st/Two-thirds: OAS $2.164 trillion// DI $219 billion

Sept 30th/Q3: OAS $2.177 trillion// DI $219 billion

Oct 30th/Five-sixths: OAS $2.187 trillion// DI $218 billion

Nov 30th/Eleven twelvths: OAS $2.197 trillion//DI $217.5 billion

Dec 31st/Year End: OAS $2.203 trillion//$215.8 billion

Social Security: 'Crisis' and 'Reform'

In a rational world there would be no need to talk about Social Security. The combined OASDI program is currently running a surplus and is projected to be in Short Term Actuarial Balance (the legal test for solvency) until at least 2028. Yet Dean Baker at Beat the Pressis constantly having to stamp out fires lit by people at the NYT and the WaPo. Fires which are serving to light up the blogosphere. The other day their was a dKos diary on Obama and Social Security that had nearly 600 comments. And David Sirota had a similar thing up on Open Left. And just this morning Digby talks about CNN bloviation on 'Entitlements'. To understand why they are so persistent you have to start with the language. So in this post I want to talk a little about the various definitions of 'Crisis' and 'Reform' as they apply to Social Security.

Social Security 'crisis' has typically been framed as crisis at Trust Fund Depletion. Rarely are the specifics spelled out, instead there is a lot of loose talk using terms like 'bankrupt' and 'flat broke' which naturally has led many, many people to translate as 'no check', 'Social Security won't be there for me'. Now a few seconds of reflection on the mechanics of Social Security shows this to be nonsense, as long as the FICA payroll tax exists Social Security can be paid out at some level, the real question is what will that level be and do we need to do anything about it. But instead of diving into that lets just stipulate that a gap between projected revenue and cost is the definition of 'crisis at depletion'. And right now that gap is projected to be 22% starting in 2041, or to turn it around a 78% payout of the scheduled benefit.

In more recent years a new definition of 'crisis' has surfaced. This is 'crisis at shortfall' which is the point at which revenue from taxation fails to meet costs. Now while it is really, really odd to call this a crisis given that Social Security is projected to have about $5 trillion in US Treasuries when this event is projected. But for the purposes here we will simply grant the crisismongers the point and pretend that the Trust Fund doesn't exist.

So that is the two 'crises' we are dealing with: 'crisis at depletion' which at root is defined as inability to pay benefits and 'crisis at shortfall' which is defined as inability to finance benefits, two slightly different concepts.

When we turn our attention to 'reform' we once again see two different frames. One would think that the goal of any 'reform' would be to fix the crisis. But that assumes we all share the same goal and the same interpetation of what the crisis is, something that as it turns out is not true at all among reformers.

When I look at 'crisis at depletion' I see it as a potential for a benefit cut that would be if not fatal be certainly painful to retirees in whatever year it occurs and for whatever years it persists. If the gap can be avoided altogether or mitigated at a reasonable cost I would prefer to try to close the gap as much as possible. But certain reformers don't see that benefit cut as a problem in and of itself, instead they see it as a threat and a call for a bailout. Thus you get a certain tension between people like Coberly who insist that the cost of the fix is cheap and people like FA who don't even like what they are paying now and certainly don't want to pay a penny more, not now and not in 2041. Now we know what the Coberly cost would be, a 1.7% point payroll increase now or roughly double that if we simply let 'crisis' run its projected course and avoided a tax increase until the last minute. But this assumes that we stick with the scheduled benefit which itself is based on a formula where initial benefits are based on real wage increases and subsequent benefits by CPI. Alternatively we could alter the schedule by changing the formula and so close the gap from the opposite direction. That is we can simply lower people's expectations about the replacement value of their retirement check in the interests of avoiding any need for a sudden bailout down the road. Now this approach is not inherently cruel, there are ways of doing it right and ways of doing it wrong, a lot of it comes down to achieving a good faith consensus on what our targeted outcome should be. If 78% after 2041 is not enough, what compensating benefit reduction between now and 2041 would place Social Security back on a pay-go basis under existing rates with permanent outcomes better than 78%. But whether we are talking a tax increase or some sort of benefit cut the goal here is to provide a fix for that sticker shock. This is 'reform' as 'fix' for 'crisis at depletion'.

On the other hand there are those who define 'reform' quite differently, instead of a 'fix' they look for a 'transformation'. If that transformation supplies a fix then great, but for some of these guys 'crisis' translates to 'opportunity'. That is there is a substantial group of people who hate Social Security for reasons that have nothing fundamentally to do with solvency. And while many of them may sincerely believe that their preferred system will out perform Social Security as currently configured, that belief is clearly secondary to their policy preferences. This becomes apparent when you look at plans like LMS whose outcomes for most seniors are not much better than simply letting the system go and whose interim costs are much higher than a simple Coberly-like fix would be. Now I suspect there are some mixed motives going on. Some free-market purists simply prefer privatization as an end in itself, the anti-socialist solution as it were. Other supporters of privatization seem more motivated by a desire for tax avoidance down the road, the no-bailout solution in this case. But neither group is really focused on maximizing retirement security for all, although they recognize that paying lip service to it may be politically unavoidable. When evaluating 'reform' plans you need to see if the reformers are really looking for a 'fix' or just a 'transformation'.

Okay that is 'reform' as it applies to 'crisis at depletion'. Fix Social Security or transform it. But what about 'crisis at shortfall'?

Well this one is a lot more cynical. After all at least at depletion we have an undoubted event: benefits and revenues have to be brought into line one way or another, there is a real imbalance internal to the program. Shortfall is different. A plan was put in place in 1983 designed to mitigate the impact of future revenues falling behind future costs. And that plan wasn't free, instead future retirees who were then working took on an additional tax burden in order to postpone benefit cuts for as long as possible. And those additional taxes, which are still being collected, have grown with accumulated interest to $2.3 trillion today and are projected to total more than $5.6 trillion by the peak in 2023. An amount sufficient to pay full benefits until 2041 (SSA) or 2049 (CBO) or potentially through some sort of reform continue to pay out some benefit better than 78% for the foreseeable future. But for some people 'crisis at shortfall' simply means being unwilling or perhaps unable to pay back the money they borrowed and their proposed 'reform' comes in the form of short to medium term changes in taxes, benefit levels or retirement age. In this case 'reform' pretty much boils down to 'tax avoidance' with 'fix' meaning 'not with my dime pal'. Note that in this case there is no immediate appeal to private accounts, no one even pretends they could be a solution to a cash shortfall projected to happen in less than ten years. This can't be excused as just an exercise in preferences for free market solutions, it is just out and out theft. Some will argue that they have no choice. Which doesn't change the moral equation.

Social Security 'Reform': the Undead Return

They won't give it a rest.

Dean Baker in his post The Post's Jihad against Social Security points to this article Obama Predicts Years of Deficits over $1 trillion and notes that they don't hesitate to single out the usual suspect. Is it the cost of the war? The cost of the bailout? The cost of the stimulus package? Nope apparently those are just short term problems. Instead as always the first stop for deficit reform is Social Security.

WaPo: The mounting debt has raised an alarm on Capitol Hill, where some Republicans and moderate Democrats are pressing Obama to tackle the looming challenge of skyrocketing Medicare and Social Security spending, and to adopt tough new budget rules to prevent future deficits from ballooning.

Which leads Dean to reply with some exasperation:

The article includes a comment about "the looming challenge of skyrocketing Medicare and Social Security spending. " Of course Social Security spending is not projected to skyrocket. It is projected to increase gradually, and its costs are fully covered by its own tax stream until 2048, according to the Congressional Budget Office's latest projections.

In a related note Paul Krugman poses the question in a Jan 5 post A Bullet Dodged

What would have happened if George W. Bush had actually succeeded in his plan to privatize Social Security?

and suggests an answer 'Ask the Italians' Bloomberg News: Italian Pensions Sapped by Private Funds Bush Backed

In my view it is practically criminal for policy makers to be wasting a second talking about Social Security given the very real possiblity we are headed for a new Great Depression. And so equally criminal for opinion makers to be twisting current events to pursue this old vendetta. It is a shame that people like Baker and Krugman still have to keep a vigilant eye out for the zombies intent on eating the flesh of Social Security. Maybe we can make a deal. If the Right will simply stop taking every possible opportunity to take a bite at Social Security then I promise to shut up. And then maybe we can let Krugman and Baker continue the really important discussion.

"Social Security 'reformers'! Report back to your graves!"

Italian Pension Privatization: a Cautionary Tale

Krugman: A Bullet Dodged

What would have happened if George W. Bush had actually succeeded in his plan to privatize Social Security? Ask the Italians.

Italian Pensions Sapped by Private Funds Bush Backed (my extract is a little different than Krugman's)

Jan. 5 (Bloomberg) -- Italy did for retirement financing what President George W. Bush couldn’t do in the U.S.: It privatized part of its social security system. The timing couldn’t have been worse.

The global market meltdown has created losses for those who agreed to shift their contributions from a government severance payment plan to private funds meant to yield higher returns. Anger is rising both at the state, which promoted the change, and money managers such as UniCredit SpA and Arca Previdenza, which stood to profit.

Prime Minister Silvio Berlusconi’s administration is now considering ways to compensate as many as 1.2 million people who made the switch, giving up a fixed return for private plans linked to financial markets. It’s also letting people delay redemptions on retirement funds to avoid losses after Italy’s benchmark stock index fell 50 percent in 2008, destroying 300 billion euros ($423 billion) in wealth.

“The reform didn’t help anyone,” said Gabriele Fava, who heads the Fava & Associati law firm in Milan and writes about labor law. “Not the government, which was hoping everyone would make the switch to take the strain off its coffers, nor the workers who have not resolved the problem of needing a supplement to their social security pensions.”

Are Economic Arguments just Beards for Ideology?

Right now the United States is either near the trough of a recession that will yield to recovery sometime at the end of this year, or it is just at the beginning of a multi-year recession not much different than other post-war ones, or it is on the verge of a Second Great Depression. And if you are not worried about which of these paths the country is on then you just are not paying attention because it is really important that we get this right. So why would anyone even be concerned about a government program that is currently in surplus and whose problems (if any) are ten to twenty years down the road? Yet against all odds the issue of Social Security 'crisis' simply refuses to die, you think you have driven a stake through its heart and it just rises again.

In the wake of the "There is no Social Security crisis" struggle of 2005 a commenter at DeLong asked this question in re Social Security 'reform'

"What puzzles me is energy and persistence of this propaganda campaign with scant positive results."

. Well I made a stab at answering that question in that much different economic environment: Why are they so insistent? and then made the same case at greater length at AB with What does Lenin have to do with it? in May 2008. Yet in comments on my previous AB post Social Security Monthly Balances, a dry as dust reporting of some not really interesting numbers, the whole argument blew up again this time in the context of a dollar meltdown. Those interested can follow the more heat than light discussion which rapidly broke down (as almost always) in ad homs and accusations of ad homs. Personally I would advise you not to waste your time. But it does raise the same question posed by that commenter at DeLong's three-plus years ago. Of all of the possible political and economic crises that we are well and truly facing why would anyone (except obsessives like me) even enter in on a discussion of Social Security? Well I suggest it is for many of the same reasons that Congressional Republicans are threatening to derail the current stimulus package in the face of near consensus from both left and right economists that something needs to be done and that currently the federal government is the only entity with the means (and hopefully the will) to do that something. These people would rather lose the battle and take all of the resulting collateral damage than give up the war.

What follows below the fold is just a reprise of my May 'What does Lenin' post, and really just is intended as a case study to illustrate the following question. Can we ever truly separate an economic argument from the underlying ideologies? Or are we doomed to simply fight the old politico-ideological battles in new economic uniforms? Or you could ask a parallel question. Why is Amity Shlaes et all still trying to beat up on FDR?

What does Lenin have to do with it?
It is clear to me that most of the people who are pushing privatization are fundamentally opposed to Social Democratic solutions generally. There is a large group of people who never liked the New Deal, continue to argue against historical evidence that it was a fundamental failure, they hated Social Security from the start, and indeed ran against it as their central platform plank in the election of 1936. They expected it would fail, they see the various rounds of tax increases over the years as proof that it will fail. The 1983 reform was particularly bitter to them, to the point that they gathered all the anti-Social Security folk to a conference in DC organized by Cato. The results of that conference were published in the Fall 1983 issue of Cato Journal under the title Social Security: Continuing Crisis or Real Reform but which might as well been called "Never again! We'll get you next time FDR!"

You can get a flavor of this by reading through the introduction. There is zero interest expressed in the idea that worker retirement be in any sense a social responsibility long term, instead Social Security is described entirely in terms of diluting investment and retirement planning and of increasing the ratio of labor costs to capital. Most telling is point 2 of their 8 point conclusion:
"2. Social Security is ultimately a manifestation of the welfare state. Real reform, therefore, may require constitutional change that effectively limits the taxing and spending powers of government."
The Cato types see it as welfare, they disagree with government welfare programs in general, and would like to see all of them vanish over time. To use the words of Newt Gingrich to see them "wither on the vine"

Now in reading this from 1983 you can see that these people, while a little bitter at missing their shot in 1982 when Social Security crisis hit, were convinced they would get another shot at some point. But they also saw they needed more than hope. They needed an alternative vehicle and they needed a plan. They had the alternative vehicle, the IRA-the Individual Retirement Account, and they got busy pushing those. But they also understood they needed to win the message war, and so they turned to strategy crafted by Stuart Germanis and Peter Butler. On the title page of the journal the article title was softened somewhat by prefacing it with 'Social Security Reform: but the article itself's title page was more blunt Achieving a "Leninist" Strategy. While they had the minimal grace to put Leninist in scare quotes a reading of the whole article revels that they meant it. At a certain risk to free use doctrine I am going to quote at some length.

Marx believed that capitalism was doomed by its inherent contradictions, and that it would inevitably collapse—to he replaced by the next stage on the ladder leading to the socialist Utopia.
Lenin also believed that capitalism was doomed by its inherent contradictions, and would inevitably collapse. But just to be on the safe side, he sought to mobilize the working class, in alliance with other key elements in political society, both to hasten the collapse and to ensure that the result conformed with his interpretation of the proletarian state. Unlike many other socialists at the time, Lenin recognized that fundamental change is contingent both upon a movement’s ability to create a focused political coalition and upon its success in isolating and weakening its opponents.

As we contemplate basic reform of the Social Security system, we would do well to draw a few lessons from the Leninist strategy. Many critics of the present system believe, as Marx and Lenin did of capitalism, that the system’s days are numbered because of its contra dictory objectives of attempting to provide both welfare and insureance. All that really needs to be done, they contend, is to point out these inherent flaws to the taxpayers and to show them that Social Security would be vastly improved if it were restructured into a predominantly private system. Convinced by the undeniable facts
and logic, individuals supposedly would then rise up and demand that their representatives make the appropriate reforms.

While this may indeed happen, the public’s reaction last year against politicians who simply noted the deep problems of the system, and the absence of even a recognition of the underlying problems during this spring’s Social Security “reform,” suggest that it will be a long time before citizen indignation will cause radical change to take place. Therefore, if we are to achieve basic changes in the system, we must first prepare the political ground so that the
fiasco of the last 18 months is not repeated.

1. Create a political movement
2. Weaken and isolate your opponents
3. Prepare the public ground
Oh and make it clear that the 1983 Reform was in fact from your perspective a "fiasco"

I would urge anyone really interested in Social Security to read the plan in full. Because you will see that the Economic Right followed it to the hilt, for example you hear clear echoes of Butler and Germanis in every speech Bush has made on this. I am not sure that everyone that draws from the messaging plan created at that 1983 conference is as directly and openly cynical about means and motives as these two. Operationally it doesn't matter much. Butler and Germanis' is a hugely successful marketing scheme and it worked. Brilliantly. The old were reassured, the economic stakeholders were drawn on board, the young were convinced that Social Security just wouldn't be there for them, and all blame conveniently placed on the Boomers. Evil genius to be sure, but marketing genius none the less.

Trust Fund Monthly Reports: Nov update

OAS::Opening balance//Projected year end balance-Intermediate Cost//Y-O-Y Increase//Year end balance-Low Cost//Y-O-Y increase-Low Cost
$2.023 trillion // $2.216 trillion //$193 billion// $2.221 trillion// $198 billion

DI::Opening balance//Projected year end balance-Intermediate Cost//Y-O-Y Increase//Year end balance-Low Cost//Y-O-Y increase-Low Cost
$214.9 billion//$218.7 billion//$3.8 billion//$221.3 billion// $6.4 billion.
Per IV.A2 the opening balance for DI was $214 billion, projected year end under IC $218.7 billion, under LC $221.3 billion

June 30th/Mid-year: OAS $2.140 trillion// DI $220 billion

Aug 31st/Two-thirds: OAS $2.164 trillion// DI $219 billion

Sept 30th/Q3: OAS $2.177 trillion// DI $219 billion

Oct 30th/Five-sixths: OAS $2.187 trillion// DI $218 billion

Nov 30th/Eleven twelvths: OAS $2.197 trillion//DI $217.5 billion

'Natural Born Citizen' Nonsense: Donofrio v. Wells

Trust Fund Monthly Reports: Oct update

OAS::Opening balance//Projected year end balance-Intermediate Cost//Y-O-Y Increase//Year end balance-Low Cost//Y-O-Y increase-Low Cost
$2.023 trillion // $2.216 trillion //$193 billion// $2.221 trillion// $198 billion

DI::Opening balance//Projected year end balance-Intermediate Cost//Y-O-Y Increase//Year end balance-Low Cost//Y-O-Y increase-Low Cost
$214.9 billion//$218.7 billion//$3.8 billion//$221.3 billion// $6.4 billion.
Per IV.A2 the opening balance for DI was $214 billion, projected year end under IC $218.7 billion, under LC $221.3 billion

June 30th/Mid-year: OAS $2.140 trillion// DI $220 billion

Aug 31st/Two-thirds: OAS $2.164 trillion// DI $219 billion

Sept 30th/Q3: OAS $2.177 trillion// DI $219 billion

Oct 30th/Five-sixths: OAS $2.187 trillion// DI $218 billion

Galloping Gertie: Tacoma Narrows Bridge Collapse