Somebody got paid to write this!?!

As an amateur (read: desperately unpaid) writer, I find myself saying that way too often, usually over badly written television. This morning, I said it--and not for the first time--over Patrick McIlheran's column in the paper. He's writing about Social Security, as is his wont of late (for now he's given up on vouchers). Today he's off on how bad a "deal" Social Security is. But first, some history.

McIlheran started writing edtorials for the paper in the thick of the campaign last year, gratefully liberated from the paper's "design desk" where he may embarrass himself, too, for all I know, but without a byline. Trouble is, he never gets beyond even rudimentary Republican talking points. He's like Mark Belling without the microphone. For example, he tried to show that "Bush tax cuts helped poor more than they helped rich" once, and joined in the self-congratulatory chest-pounding over PowerLyin's Dan Rather character assassination.

In the past, McIlheran has compared Social Security to a Nigerian email scam and, in true dim-bulb conservative fashion, wrote a big lie like this: "We are now told that the system is really less pension and more insurance--against disability, death or penury." What does he mean "now"? Let's just remind ourselves of something: The I in OASDI stands for what again? That's right. Old Age, Survivors, and Disability Insurance. Liar.

Anyway, here's some pieces of today's pablum:

As an investment, it's a dog, only it's harder to dump than shares in www.daiquiris@work.com. Even President Bush won't let me out entirely. At most, he'd let me, should I choose, put part of the tax on my paycheck into my own account. [. . .]

As should be knuckle-whiteningly clear, Social Security's payoff is no certainty. The worker-retiree ratio's getting out of whack, and the "trust fund"--which is just government debt repayable after 2018 by me the taxpayer--runs dry about the time I'm eligible to drive too slow on the freeway in a Buick. Guaranteed? If you're 40 or younger, you're only guaranteed lower benefits, higher taxes and a later retirement.

But suppose that's wrong and it all works out. What's your rate of return under Social Security?

The Social Security Administration's own figures--these are from its chief actuary, published in August 2001--say it is (ready? helmet on? belted in?) less than 2% if you were born after 1960. Generally, the younger you are, the worse the figure. Two-income families do worse than one-income families; single people do worse yet: A single woman born in 1973 can expect about 0.6% return on her "investment."

First of all, McIlheran has bought into the big lie that somehow the "trust fund debt" is going to be such a horrible, horrible burden for the "taxpayers." Let's remind ourselves that this is the way Alan Greenspan designed the system:

• Between 1983-2018, this plan calls for payroll taxes to be higher than they need to be to cover payouts to retirees. However, because the surplus payroll taxes are handed over to the feds, it means income taxes are lower than they would otherwise be.

• Then, between 2018-2042, payroll taxes will be less than they need to be to pay benefits to retirees. However, the difference will be made up by higher income taxes, which will be used to pay off the trust fund bonds.

Payroll taxes are paid mostly by the middle class and the poor. Income taxes are paid mostly by the well off. So: for 35 years the middle class and the poor pay excess payroll taxes and the well off get a break on their income taxes. However, for the following 24 years the middle class and the poor get a break on their payroll taxes and the well off finance it by paying higher income taxes. Now, this may sound like a dumb idea to you, but that was the deal. The bottom 80% take it on the chin for a few decades, followed by a couple of decades in which the well off get socked.

Here's another description:

[I]n 1983 Alan Greenspan persuaded the Democrats who were in charge of Congress to overtax us on Social Security, that is to collect taxes in advance rather than on pay as you go system. The promise was that we would use the excess taxes to pay off the federal debt which was then about a trillion dollars. We have now paid 1.8 trillion dollars in excess Social Security taxes. This year the government will collect--if you make $50,000, about $7,500 from you. It only needs 5,000 to pay current benefits. That other $2,500 wasn't used to pay off the federal debt, which is now 7 trillion dollars, instead it is being used to finance tax cuts for the super rich. [. . .]

And now that money has not been spent to pay off the debt. Now Mr. Greenspan says you are not going to get those benefits but we should not raise taxes on those that make millions of dollars a year. It seems to me what Senator Daniel Patrick Moynihan predicted in 1983 has come true. He said this was thievery and the middle class were going to have their pockets picked by the rich.

So I guess if McIlheran is in favor of reneging on this social contract, that's his business. And if he doesn't mind the super-rich soaking the working poor and middle class, that's his business, too. But to suggest that for some reason that returning tax levels on the wealthy to where they were pre-2001 is somehow the end of the world, that's ridiculous. I mean, in 2004, our budget deficit (which is caused significantly by spending on Bush's Iraq folly and the tax cuts) was 3.6% of GDP. Our total Social Security payouts in 2004 were only about 2.5% of GDP. In 2018, when the sky falls, the project Social Security Spending is just 4.5%, and it levels off at just over 6% around 2030. If McIlheran is willing to deficit spend now--and he has not written word one against it since he started at the paper--why would deficit spending, at levels perhaps less than we do it now, be so bad then? After all, if we had to make up a shortfall in Social Security, it wouldn't be the first time, and we came out okay then.

And no one except Republicans are suggesting that we cut Social Security benefits. That suggestion was a significant piece of Bush's press conference last week, and has been a factor in a number of Republican plans floated in the last year. Democrats maintain that we can keep benefit levels where they are with some small patches and fixes. Democrats also generally do not support increasing the retirement age, though I have occasionally wondered if a slow extension over the next 40 years might not be appropriate. But for now, we say we can hold the course without reneging on our promise to current workers and retirees.

As for the "return" that makes Social Security such a bad "deal," if I had back the many thousands of dollars I've paid American Family Insurance over the last decade or so, I could have invested it and gotten quite rich off the returns. But that's not what I use my insurance for. Perhaps more importantly, the reason the "return" might be lower on the government bonds becuase the Bush administration started cutting rate of return in 2001. Remember, as well, that your Social Security is a guarantee (unless the Republicans who want to cut those benefits win the fight), while any market-based system is inherently risky. Think, for example, about how the Dow right now is still 1500 points off of its 2000 high. Some people have even done the math.

Finally, and this is perhaps the biggest lie in all of McIlheran's column, he makes no mention that the estimated $2 trillion transition to his precious private accounts does nothing to address the solvency issue! He went on and on and on about how Social Security's insolvency is the end of the world, and his preferred solution doesn't actually fix the problems he laments! He's not only advocating borrowing or taxing today to finance the transition but neglecting to mention that we'll still need to borrow or tax that much later! He does, however, toss this one off at the end of his column:

The one reform on which the left won't compromise is exactly that: There can be no money set aside for you - no personal accounts. One argument is that money going to my account can't pay off current retirees.

But reform plans universally account for this with borrowing or tax hikes, which are going to happen anyway. [. . .] Go on, tax us to keep widows from having to eat cat food.

If I were king--and, sadly, I'm not--it would seem smarter to borrow or tax that $2 trillion to shore up the trust fund now, saving that money later. Or at the very least, use that money to pay off the deficit and cut our anticipated debt service costs. That alone will leave us in the kind of financial position that we could absorb the costs of an increase in Social Security payments four decades hence.