Hopefully, talking about Social Security will be marginally less inflamatory than evolution or global warming, and it illustrates many of the points made in various discussions. First, though, I want to clear the deck about some misconceptions about Social Security (I have a lot of the links here and here, so I won’t repeat them below):
1) Social Security will most likely be solvent in perpetuity without any need for tax increases or benefit cuts. No, really. For even marginal tax or benefit alterations, the economy has to grow at a rate about 20% lower than the average U.S. historical growth rate… for forty years straight. Even then, any needed payroll tax increases would be far lower than previous payroll tax increases (50-100%). Even the mediocre performance during the reign of El Jefe Maximo is good enough.
2) Related to point 1, the dire forecasts are mandated by law. Were either the historical growth rate or the even higher estimates that the Congress and the president postulate when constructing their five year estimates used, Social Security is solvent.
3) Social Security generates a large annual surplus (about 25% of revenues). That surplus doesn’t wind up under a mattress out at Area 51, but is used to purchase government securities, which, if need be, can be liquidated to pay out benefits (see point 4). Essentially, the government loans itself the surplus. Alternatively, think of the annual Social Security surplus as the world’s largest municipal bond issue… held by you. The real crisis is not the solvency of the program, but the drop in excess revenue that will most likely occur. That would affect the general (national) debt (and budget deficit obviously).
4) In the bad case scenarios, Social Security will no longer generate enough surplus revenue, and would probably have to dip into the Social Security surplus to pay out benefit. This would represent the U.S. liquidating the debt that it holds…in itself, raising the official U.S. debt (if you hold your own debt, it doesn’t really count as debt).
5) While the Baby Boomers are responsible for a great many things, they will not be the primary reason that Social Security will no longer generate surpluses and have to dip into the securities (they’ll be dead by then).
Ok, so now, some discussion of framing. Overall, the Social Security discussion is a good example of either failed framing, lying, and blindness.
Failed framing: I’m not making up any of the points above because this is all based on the Social Security Board of Trustees’ report. Certainly, this view has not been successfully promoted. Lord knows, Dean Baker has tried (an aside: Baker is a liberal economist, but conservatives have reviewed his work, and found nothing significant wrong with his analyses because he’s using the same figures everyone else is).
Outright lying. Both political parties have been lying about this. To switch from Social Security to private accounts would cost trillions, and, in other countries were this had been tried, it has performed poorly. If part of the surplus were to be invested in something other than government securities, that might not be a bad thing per se, but there’s no need for ‘private’ accounts or ‘choice’; one is simply trying to maximize the return on the surplus to provide higher government pension benefits*. Why would we think individual people would make better choices, particularly when trying to minimize long-term financial risk which is the whole point of the program.
All that Social Security ‘lockbox’ stuff? It’s bullshit too. I suppose it’s a success of framing, at least politically, and I didn’t mind the outcome, but, in the long run, lying doesn’t help. The argument that ‘Social Security is really precarious, so don’t mess with it!’ might have been a good short-term tactic, but, in the long-term, it simply reinforces the idea that Social Security is doomed, when, in fact, that’s not true.
frame lie is that ‘entitlements’ are in troubled. Yes, if you combine Social Security and Medicare, then things look dire. But they’re separate programs with separate revenue streams. It would be like arguing if we lump together Social Security and defense spending, there’s insufficient revenue, and, consequently we need to cut defense spending….HEY, WAIT A MINUTE!
This is framing, used for Evil.
Blindness. More than once, I’ve seen Baker make his points, moderators and fellow commentators agree, and then they continue the discussion as if what he said had never been uttered. I don’t think it’s lying, as much as it is an inability to perceive what’s happening, in much the same way that the Punditocracy for so long thought of Bush as a popular wartime president, even when his polling numbers sucked. No level of ‘framing’ will crack through that level of obtuseness.
So, anyway, my frame: “Social Security–it’s the surplus, stupid!”
Discuss. It’s Friday.
*We don’t like to think of Social Security as a government pension (for everyone). It sounds, well, Communist, but that’s what it is.