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Sunday, September 02, 2007

Paske's Social Security Flub

by folkbum

I've watched former folkbum guest-blogger Steve Paske's year-long stint as a Milwaukee Journal Sentinel "Community Columnist" with interest. Not that I take credit for Steve's success--he was a professional writer long before he wandered onto these pages. But because he so often just barely blows it.

For example, Paske wrote a series of op-eds blaming our mutual union, the Milwaukee Teachers' Edication Association, for a variety of failings that are not, in fact, the union's fault. I wrote a long, long post a few months back that I opted to delete, trying to take on those flubs: For example, there was this:
Several years ago, the union clashed with the School Board over suggested changes to the medical plan that would require teachers to pay a deductible and co-payment for services. As part of its strategy, it came up with the slogan "Attract and Retain" as the mantra for suggesting that these benefits cuts would not attract or retain quality teachers within the Milwaukee Public Schools. [. . .]

The union engaged in a public relations disaster by sending members to the picket lines [. . .]. While the issue of our salary and benefits was enough to put thousands on the picket line [. . .]. A deductible of several hundred dollars is worth marching in the streets for [. . .].
And so on like that. I think Steve was making a very reasonable point overall--that there was not enough of a public display of unity and demand from teachers for improved school safety. However, he completely blows the fact that the single biggest motivator to get us onto the picket lines was not "a deductible of several hundred dollars," but rather something much more infuriating: The administration was bargaining in bad faith and the superintendent was bad-mouthing teachers in the press. The district negotiators were prohibited from reaching an agreement with us--they forced an arbitration because the superintendent told them not to settle, period.

So, good point, weakened by a unfounded belief in a media-created myth that makes teachers look bad.

Steve does it again in Sunday morning's MJS, buying into a completely false and destructive media myth:
In the past, you went to school, went to work and a few years later, you were probably dead. Today, odds are you'll last 10 years or more past retirement age. Combine that with the realization that many baby boomers are about to retire, and you're faced with a problem: a multibillion-dollar deficit problem.

It's a problem you're probably sick of hearing about. Politicians have turned the Social Security deficit into political hot item. President Bush tried gallantly and vainly to push for reform. Democrats and Republicans constantly attack the other side for not doing more to fix the system. [. . .]

If we continue to retire as young as we are doing and live as long as we do, there won't be any Social Security for me when I'm 80, let alone 67.
This is utterly untrue. Assuming we do absolutely nothing to the Social Security system--no adjustments to retirement age, no changes in the tax collections--51 years from now when Paske hits 80, Social Security will be able to pay him most of his promised benefits until he falls over dead. Here's the latest trustee report:
The projected 75-year actuarial deficit in the combined Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund is 1.95 percent of taxable payroll, down from 2.02 percent in last year's report. This decrease is due primarily to revisions in key assumptions and to changes in methods. Although the program passes our short-range test of financial adequacy, it continues to fail our long-range test of close actuarial balance by a wide margin. Projected OASDI tax income will begin to fall short of outlays in 2017, and will be sufficient to finance only 75 percent of scheduled annual benefits in 2041, when the combined OASDI Trust Fund is projected to be exhausted.
And, as Paul Krugman notes, that 2041 date isn't even set in stone: "The date at which the trust fund will run out, according to Social Security Administration projections, has receded steadily into the future: 10 years ago it was 2029." The same for the date at which the trust fund was destined to be dipped into, which is currently slated for 2017; if the predictions of the 1980s had come true, we'd already be sucking the fund dry.

Paske does get one thing right when he says the "crisis" in Social Security is actually a "deficit problem." The easiest way to make sure paying out the trust fund is done with a minimum of pain is to cut our debts, currently pushing nine trillion dollars. The debt service payments we're making by themselves--about 20% of our national budget--could easily cover the trust fund payments.

Check out the chart at that last link. Read the names of presidents. A simpler fix than Paske's solution--raising the retirement age to 75(!)--is repealing the 2001 and 2003 tax cuts:
To meet its unfunded obligations over the next 75 years, the Social Security trust fund needs $3.7 trillion. Equaling about 1.89% of taxable payroll and about 0.7% of GDP over the same period, $3.7 trillion is no small sum. However, it is far less than the 2% of GDP that Bush's 2001 to 2003 tax cuts will cost over the next 75 years if they are made permanent. Indeed, the CBO-projected shortfall for Social Security is only 0.4% of GDP, less than the 0.6% Bush's tax cuts will cost for the richest 1% of taxpayers alone.
In fact, when Reagan and Greenspan did their voodoo back in the 1980s, they designed a system that would place the burden on low- and moderate-income workers in the short term, and on higher-wage workers in the long term. Bush's tax cuts created a situation where the upper class reneges on their part of the bargain:
The federal budget surplus President Bush inherited came entirely from Social Security surpluses resulting from the 1984 payroll tax increase. Bush gave away revenues meant to provide for workers' retirement as tax cuts for the wealthiest 10% of the population.
So, again, Paske makes a mostly reasonable case that Social Security doesn't need to be destroyed in order to save it. But by buying into the myth that Social Security won't be there for him--and by passing up the simplest possible solution to the problem--he misses an opportunity both to get a piece of truth out there and draw attention to the real culprit in all this mess. Instead, he merely reinforces the myths. That's a big flub in my book.

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