25 Aug 2010 at 23:28
Eric Laursen
Social Security
No Comments
Former Sen. Alan Simpson, co-chair of the president’s National Commission on Fiscal Responsibility and Reform, was up to his usual antics the other day, calling Social Security “a milk cow with 310 million tits.” He’s apologized for that, after a fashion. The important thing, however, isn’t what he thinks, but whether his colleagues on the commission share his views.
When a child misbehaves serially at school, one of the first things his or her teachers ask themselves, understandably, is what’s going on at home. Where did he get that mouth? Where did she learn to fight like that? From his parents? From her older brothers and sisters?
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Dick Armey certainly thinks he does. As a self-appointed spokesperson for the movement, he’s trying hard to make Social Security privatization one of the big issues in the upcoming midterm election. It’s not clear his Tea Party comrades are behind him, however.
The silly season is upon us, when the Democratic and Republican establishments become obsessed with wedge issues and rallying their respective “Bases.” In the case of the Republicans, keeping the Tea Party movement enthused and eager to vote this November are crucial. Understanding who these people really are and what they want is essential.
What do the Republicans think they know, and what is the reality?
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09 Aug 2010 at 00:02
Eric Laursen
Economics, Social Security
No Comments
Friends of Social Security on the whole should be pleased by the numbers in the trustees’ annual report. Except for one thing: they continue to include a dubious “infinite” projection in the report alongside the traditional 75-year forecast. This Bush-era innovation in Social Security accounting should be eliminated.
The trustees’ annual report is generally regarded as the best benchmark of Social Security’s long-term fiscal health. (There are a number of very good reasons to take it with a grain of salt as well, but we’ll leave that for another time.) And this year, the numbers look pretty good. Despite two years of a terrible economy, with payroll tax receipts down and the depressing effect of high unemployment likely to continue for some time, the most important number in the report actually got better.
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04 Aug 2010 at 16:48
Eric Laursen
Economics, Recession
No Comments
What Krugman suspected – that high unemployment just doesn’t matter that much anymore to our political leaders, and in fact is the new normal – appears to be just what Tim Geithner is willing to settle for.
Paul Krugman was saying what a lot of people were already thinking on Sunday, when he described
a sick feeling … that a once-unthinkable level of economic distress is in the process of becoming the new normal…. I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is ’structural,’ a permanent part of the economic landscape — and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.
Reading between the lines just a little bit, this is the scenario Treasury Secretary Tim Geithner laid out in Krugman’s newspaper, the New York Times, just two days later. Continue reading →
If the deficit commission doesn’t attack entitlements, what will it cut instead? One alternative would be “tax expenditures” like the dependent care tax credit and the earned income tax credit. But cutting these would weaken Social Security and Medicare in indirect but very important ways.
The redoubtable Martin Feldstein, Harvard professor, former Reagan advisor, and longtime career-maker in the economics profession, has some advice for our National Commission on Fiscal Responsibility and Reform. If it wants to reduce spending and can’t muster the votes to attack Social Security and Medicare – this being Washington, military spending reductions are, of course off the table – why not cut tax expenditures? Feldstein wrote, in a Wall Street Journal op-ed last week, Continue reading →
27 Jul 2010 at 09:20
Eric Laursen
Social Security
No Comments
That seems to be the message that Neel Kashkari, who served as financial bailout czar in the waning years of the Bush Administration, was trying to convey in an op-ed in today’s Washington Post.
TARP was “deeply unpopular.” It “betray[ed] our sense of fairness.” But once “people could feel the crisis,” it was clear that “we all had to sacrifice” to stop the 2008 financial-sector meltdown. With Social Security, it’s the same thing, says Kashkari, a former Goldman Sachs banker and now a managing director at bond-market giant PIMCO.
Cutting entitlements would “again betray our sense of fairness.” But “the promises our country has made over the past few decades, combined with changing demographics and rising costs, have put us on a path to national insolvency.” We must get past our “’me-too’ mentality” and “think beyond what is in our own immediate self-interest.”
Who does he mean by “we”? And who is Kashkari, a former Goldman Sachs banker, to lecture the public about civic virtue? Continue reading →
23 Jul 2010 at 14:38
Eric Laursen
Retirement, Social Security
1 Comment
What would the world be like if Social Security was privatized, or merely slashed and phased out? A satire by a French intellectual suggests what we might do with all those old people. Erskine Bowles, Alan Simpson, and their colleagues on the National Commission on Fiscal Responsibility and Reform might want to take note.
Regis Debray is a French intellectual and journalist. Once renowned as one of Che Guevara’s companions at the time Che was captured and executed (Debray himself served three years in a Bolivian prison before an international appeal secured his release), he has since become known as an incisive thinker on “mediology”: the ways in which cultural meaning is transmitted in society.
He’s also a wicked satirist. Four years ago, Debray produced a short satirical book, Continue reading →
19 Jul 2010 at 23:46
Eric Laursen
Retirement, Social insurance
No Comments
It’s amazing how persistently certain elements of popular myth hang on: for example, in the pages of the Washington Post.
A Sunday Post op-ed by retired NPR producer Jonathan Kern uses some tough love to convince feckless members of Generations X and Y (if not Z) that they need to “seriously bulk up savings,” now, or risk not being able to eat in their old age. He writes:
“If your junior-high soundtrack was more Bangles or Britney than Beatles, I am going to try to scare some sense into you with three words about life in retirement, based on personal experience: The paychecks stop.”
Kern cites a recent study from the Employee Benefit Research Institute to the effect that Continue reading →
16 Jul 2010 at 13:10
Eric Laursen
Retirement, Social Security
2 Comments
Trendy economics trains us to overlook the most obvious explanations to big problems in favor of subtler and perhaps just distracting alternatives. For instance, why don’t people save more for their retirement? Probably, because they just aren’t making enough money to save.
But in the current political environment, a lot of economists find it easier to pore over such clever but minor-league matters as the propensity to procrastinate, or “choice overload” when workers’ 401(k)s offers them too many investment options. What it doesn’t do is solve the problem.
George Loewenstein and Peter Ubel, an economist and a business and public policy expert, respectively, published an excellent op-ed in yesterday’s New York Times. Briefly, they criticized the very fashionable discipline of behavioral economics. If you haven’t run across it before, behavioral economics
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14 Jul 2010 at 11:14
Eric Laursen
Social Security
No Comments
Just because the AmericaSpeaks “Our Budget, Our Economy” forum produced encouraging results are Social Security’s friends, doesn’t mean we should assume that deliberative forums like this one are a reliable tool for determining what the public really thinks about this issue – or any other.
What do three high-profile, deficit-related projects – the National Commission on Fiscal Responsibility and Reform, the June 26 AmericaSpeaks “Our Budget, Our Economy” forum, and the 2010 Fiscal Forum (held April 28) – have in common? All are fully or partially funded by Pete Peterson, the multi-billionaire co-founder of the Blackstone Group. Together, they form a three-pronged strategy to get around an intractable problem: namely, that while the Washington/Wall Street elite are in agreement that Social Security must be cut, the public are not.
That’s clear from “Understanding Public Opinion on Deficits and Social Security,” the excellent paper that Benjamin I. Page and Lawrence R. Jacobs published just before the AmericaSpeaks event. In it, Continue reading →
