DISQUS

monkyboy · 4 years ago

Do you even read the articles you write about, Will? Please point out where Krugman mentions insurance.

If all you have is a hammer, every problem looks like a nail. If you are a poorly paid right-wing shill, every government program is welfare...

Will Wilkinson · 4 years ago

The rationale for the big churn of transfers from the middle back to itself is that it constitutes some kind of mysterious "insurance" system for people who don't need it and so is not "welfare." Krugman doesn't need to say it. The implict opposition to "unpopular welfare program" is not "popular welfare program." Krugman doesn't want anyone to think that SS is a welfare program at all. It's "social insurance."

Hey, let's go to the transcript. Here's Krugman in a debate with my colleague Michael Tanner:

Let me just first say what Social Security is, and just repeat - it is not a pension fund. It is not an investment project. It's a social insurance program. It is a - it's something that is there to protect people against misfortune. Now, it's a big social insurance program.

Happy?

monkyboy · 4 years ago

Two thirds of retired people today rely on SS for a majority of their income. It's a very popular and needed program. Wall street ain't gonna get their way on SS this year, why not focus on something else for a change?

If you want to be a good libertarian, Will, why not look into the pending energy bill that contains $8 Billion in "aid" to the oil companies.

Or maybe you could question why U.S. defense spending is now twice as much as the rest of the world combined.

Put away your worn out hammer :)

David T · 4 years ago

"In any case, is there any reason, other than an insane conviction in the rottenness of American voters, to buy into the prediction that citizens with unmanipulated political preferences would not support fairly high levels of assistance for the elderly poor?"

Why, people who believe *that* sort of thing might even have the insane idea that the *sick* poor would get their Medicaid cut.

Oops, the House just voted to do that...

Insiderman · 4 years ago

Will is spot on about Krugman's comments. The only thing I would add is that the government shouldn't be able to take my money away from me IN ANY EVENT and give it to ANYONE else, poor or not poor. This makes the reigning political party the head of a giant philanthropical society where increasing constituent benefits result in continued employment. Even Catholic Charities would eventually run out of money under that scenario.

Second, Krugman's own words describe the beauty of Bush's solution:

"If the Bush scheme goes through, the same thing will eventually happen to Social Security. As Mr. Furman points out, the Bush plan wouldn't just cut benefits. Workers would be encouraged to divert a large fraction of their payroll taxes into private accounts - but this would in effect amount to borrowing against their future benefits, which would be reduced accordingly.

"As a result, Social Security as we know it would be phased out for the middle class.

"For millions of workers," Mr. Furman writes, "the amount of the monthly Social Security check would be at or near zero."

I say, "Right on!" We've managed to turn a transfer program into a "scheme" that allows contributors to provide for their own retirement!

You could say that the President's plan is rather like trading term insurance for whole life insurance. Term insurance depends on my current period contributions to fund payments to those who are dying. Whole life insurance depends on my own contributions eventually funding my death benefit, and funding a living benefit if I don't use the death benefit. If I die before I'm self-funded, someone else in the insurance program helps pay my freight.

With the President's social security fix, someone else would still help pay my freight if I can't pay it myself. If I die before receiving my benefits from the self-funded portion, my heirs benefit.

Now if we could just reduce the internal charges by keeping my self-funded benefits out of government's administrative claws.

Third and final point is that the REAL reason democrats hate this fix is that it takes away SOME of their slush in funding the public trough. What if it worked so well we eventually did away with publicly funded individual benefits altogether. We'd have to rely on some other group to fund low-cost IOUs from the federal government.

Anton · 4 years ago

I don't see what the problem is here. Suppose that the "real" liberal position would be for Social Security to be a welfare program. Nonetheless, this argument would still hold:

(a) Ideally, Social Security should be a robust welfare program for the poor.
(b) Turning Social Security into a robust welfare program for the poor would not be politically feasible.
(c) Social Security as it is today is a better welfare program than the proposed feasible alternative ("personal" accounts) would be.
(d) Therefore, keeping Social Security around is the feasible second-best to a more robust welfare program for the poor.

Sounds to me like the exact parallel of this argument:

(a) Ideally, Social Security should be abolished and replaced with nothing.
(b) Abolishing Social Security is not politically feasible.
(c) "Personal" accounts would be better, from the point of view of enabling personal freedom, reducing dependence on the government, etc., than the other feasible alternative (leaving it is it is).
(d) Therefore, "personal" accounts are the feasible second best to abolition.

I suspect you, or at least many people you know, like, and respect subscribe to the second argument, so what's wrong with the first?

Eric H · 4 years ago

Wow, it only took mb two posts to completely refute the original justification for SSI (aka Supplemental Security Income). It was only supposed to help out, but over the years, politicians gradually increased the payout (payoff?) to the point that many people rely on it. Now, if you can't maintain your pre-retirement lifestyle, it must be due to evil capitalists. In reality, the angelic Rooseveltists created a basic incentive problem: why would you actually save your own money when (1) you have less to save (large portions have been siphoned off for the Viet Nam conflict, for example), and (2) you can vote to have everyone else contribute to your retirement? You wouldn't, and therefore it's no surprise that many people choose to forgo saving in favor of living on an expanding entitlement program.

Meanwhile, older Americans are among the wealthiest citizens. Apparently, they need to save their assets for their family while living on the backs of ... well, their family and everyone else still working.

Xavier · 4 years ago

Anton: Those arguments are not parallel. The first choice of libertarians is to eliminate social security, but that's impossible because of political opposition from the left. So libertarians instead fight for a second-best option.

Liberals, on the other hand, create the political opposition to turning social security into a pure welfare program. The right would be happy to go along with it. Your argument seems to be that the first choice of the left is to turn social security into a pure welfare program, but can't because of their own political opposition to it.

For those two arguments to be parallel, we would have to see the left propose abolishing social security and then libertarians opposing it on the grounds that it is not politically feasible. Of course that's not happening and it would be completely absurd.

Brian · 4 years ago

Excellent piece. Julian Sanchez makes a similar argument in Reason, also using the Rube Goldberg analogy. It's astounding to me that liberals will howl in protest any time any tax change happens to benefit anybody who they consider rich, yet have no problem dispensing checks to wealthy retirees. Letting a rich guy keep more of what he earns is horrible; confiscating 15% from a burger flipper's paycheck and handing it to the same rich guy: no problem. It's not about rich and poor, it's about encouraging dependence on government.

Anton · 4 years ago

Xavier: Not so. The problem is that Social Security can't be turned into an acceptable pure welfare program. Historically, programs for the poor have been much tougher to fund and considerably easier to cut than have middle-class entitlements (look at Medicare vs. Medicaid), so, given political realities, a Social Security that became a pure welfare program wouldn't be generous enough for liberals to consider it acceptable better than what we have today. It's a different kind of infeasibility, but infeasibility nonetheless.

You sometimes see the same kind of argument levied against vouchers - that, given political realities, widespread voucher programs would lead to intense government regulation of private schools, which would be worse than what we have today.

monkyboy · 4 years ago

I don't see the Rube Goldberg analogy.

Right now, the investment side of SS is handled by one woman in the Office of Public Debt. Private accounts, in addition to handing billions of dollars to Wall Street, would create a huge new government bureaucracy. Hardly a libertarian ideal. And we'd have to borrow a few trillion to get private accounts started...

Are there any honest libertarians left in America, or have the Bushies bought them all?

Anton · 4 years ago

Monkeyboy: not fair. Libertarians came up with the idea of private accounts; Cato was pushing them in the '70's, back when it was a tiny, marginal, underfunded ally of the libertarian party.

That said, there's nothing particularly liberty-promoting about them, since the only additional choice they offer you is the choice to pick your own fund manager. Matt Yglesias once likened this to demanding that the IRS allow people to request their 1040's in their choice of any of fifty different colors of paper, and calling anyone who complained about the expense an enemy of freedom.

monkyboy · 4 years ago

Anton - I would support Libertarians if they were as rabid in rooting out the day-to-day pork in the government spending as they are in supporting the latest Republican plans to reward their supporters.

Cato seems to have turned into a training facility for right-wing bureaucrats.

Christopher Monnier · 4 years ago

Monkyboy, Social Security is Rube Goldberg because its inputs are hidden (how many Americans know their employers have to match the amount each employee gets taxed?), the money moves all throughout the government from program to program after its been taken in (there is no such "lockbox"), and dozens of years later it comes out having barely increased in value. It's Rube Goldberg because it's inefficient, particularly when compared to private accounts and/or investments into financial markets--even conservative ones!

monkyboy · 4 years ago

Christopher - We can forgive Will for churning out lumpen and intellectually dishonest analogies so Fox TV's founder will continue sending Cato checks, but come on!

You want to talk about Rube Goldberg contraptions talk about the Federal Corporate tax laws, the income tax laws, no-bid combat support contracts to Haliburton, Tom DeLay selling influence to the highest bidder or Medicaid.

In comparison, Social Security is crystal clear. The government takes a percentage of your income while you're working then sends you a check every month when you retire. The SSA publishes its numbers monthly and anyone with a high school level of maths can easily see what's going on with it.

Social Security is many things, but it ain't complicated...

sheesh · 4 years ago

"I suspect you, or at least many people you know, like, and respect subscribe to the second argument, so what's wrong with the first?"

show me where the first one even attempts to mention "enabling personal freedom" or "reducing dependence on the government"

Christopher Monnier · 4 years ago

"In comparison, Social Security is crystal clear..."

Well, in comparison. I agree with you that all those government programs you listed are quite Rube Goldbergian...especially income tax laws. If I were president, social security wouldn't have been my first target, but since that's on the nation's agenda we might as well go with that.

monkyboy · 4 years ago

Christopher, you have hit on the nugget I was struggling to get across: How does a particular piece of government business get on the "Nation's Agenda?"

The 109th congress has been in action about 3 months now and they have already intoduced about 2700 bills. How many of these get national scrutiny? I have read through every one, and there is some bad business in there! Billions and billion of dollars being wasted and nobody says anything about it...

If you want a good example of a Rube Goldberg program, look at the most expensive *thing* the government purchased this year...the "missile defense" system. We forked over $10 billion for 7 missiles that even their designers admit will never work.

If you want to lead a libertarian protest of these boondoggles, I'll be happy to join you. We could join hands around one of the silos and chant, "Hell no, wasteful government spending has got to go!" :)

sheesh · 4 years ago

"We forked over $10 billion for 7 missiles that even their designers admit will never work."

when did they say this?

T · 4 years ago

You read all 2700 bills? Wow. You must read really fast.

Do you think that maybe the idea is to go after the bigger line items before going after the smaller ones? $10 billion out of a total budget of $2.3 trillion is not that big a deal. $540 billion out of that same $2.3 trillion is another matter.

Bostonian · 4 years ago

If you don't like private accounts, then don't have one.

What's so hard about that?

monkyboy · 4 years ago

Are you volunteering to pay for everybody's account, Bostonian? Or will we still need to borrow $3 trillion to pay for this boondoggle?

Wild Pegasus · 4 years ago

Libertarians do oppose pork-barrel spending, and many of us have said many things about it over the years. In fact, mb's bête noire Cato has kept track of stupid government expenditures for years and years. It opposed the biggest boondoggle of them all, the Iraq War, and has repeatedly attacked government waste and fraud, especially in the byzantine mess of the Pentagon. I learned about the Pentagon being unable to audit its books or to account for a trillion dollars over the preceding decade through Cato's daily reports.

Right now, though, the chattering class is talking about social security reform. It would be crazy for Cato and its people not to put forth their proposal when the POTUS is talking the same line that they are. If you've been pushing for a policy for the last 25 years, and the president starts agreeing with you, it makes sense to talk about the policy.

I don't happen to support the partial privatisation for the same reason I don't support school vouchers (he who pays the piper calls the tune), but mb's attacks on Cato are unfounded. And I don't see why Will puts up with his repeated insults.

- Josh

monkyboy · 4 years ago

Josh,

Under the Bush administration the federal budget has gone from $1.8 trillion to $2.6 trillion.

The Cato SS plan will force the federal government to borrow $2 trillion dollars and create a huge new government bureaucracy.

Forgive me if I have failed to award the appropriate libertarian kudos to these two champions of smaller government...

Wild Pegasus · 4 years ago

I don't think any libertarian has argued that Bush's domestic policies are libertarian. I certainly haven't and neither has Cato or Will.

That $2t, of course, will have to be borrowed no matter what.

- Josh

idiot · 4 years ago

i am an idiot and i am lead by richard simmons

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