Does Social Security Really Face an $11 Trillion Deficit?

FactCheck.Org, that organization which received a lot of publicity during the campaign when Dick Cheney mistakenly directed people to another website which called for defeat of the Bush Cheney ticket, has an interesting post regarding Republican claims that Social Security faces an $11 trillion deficit.

It turns out that this deficit is spread out over an infinite horizon. In fact, over the next 75 years, the deficit is likely to be 3.7 trillion dollars. The website argues that the $11 trillion figure is potentially confusing. But it's more than that - it's downright misleading. An infinite horizon isn't even theoretically possible since the life of the sun is a finite number. The probability of an asteroid hitting the earth between now and the end of time and obliterating all life as we know it is probably close to 100%. An infinite horizon requires so many assumptions about demography and history which could easily be overturned over the next 100 years so as to be rendered moot. What is most ironic about the $11 trillion figure is that Bush is willing to look infinitely into the future with regard to Social Security but won't look past tomorrow with regard to global warming.

There exists no logical, moral or scientific basis to make policy on the basis of an infinite horizon.

There is a growing consensus among the punditry that Democrats cannot oppose Bush on this by just saying no and arguing for the status quo. It seems the punditry have bought into the crisis talk. Instead, the reasoning goes, Democrats need to come up with an alternative and more viable proposal. This requires that you accept the crisis talk. But again, the crisis they are describing happens almost 50 years from now according to the Congressional Budget Office. Is something that is projected to happen in 50 years really something that is in crisis?

Hidden behind all of this is a truth Republicans don't want to admit. Ever since the mid 1980s we have been financing government activity through the payroll tax by using the Social Security surplus to reduce the apparent size of the deficit. The Social Security surplus that has been accumulating since the 1980s doesn't run out until 2052. What happens in the much discussed year of 2018 is that Social Security revenues will no longer exceed expenditures or outflows so the Social Security Administration will have to dip into the surplus to pay out benefits owed.

The real policy problem is the deficit problem. Because the surplus isn't sitting in a bank somewhere -- Thanks to Alan Greenspan's support for the Bush tax cuts and opposition to investing the surplus in economic investments such as the stock market and private bond market. Instead, Congress will have to use general revenues to pay out these obligations. Here the problem becomes obvious,

We don't have a social security crisis, we have a general revenues crisis and the solution is to address the budget deficit not the supposed 'Social Security shortfall.' The true problem is that general expenditures by the government far outstrip general revenues -- government income derived from income taxes and other taxes and fees. The crisis everyone fears is when that surplus disappears and no longer helps them hide the deficit and when they have to raise more in general revenues than they plan to spend in general funds.

I earlier wrote along the lines of the punditry that Democrats had to come up with an alternative to the Bush plan on Social Security since this also addresses a fundamental problem people have with our Party -- that we just don't stand for anything but the status quo and a few special interests and that we pander.

I have now come to believe that Democrats should cast this debate in this way -- that we really face a general funds crisis and need to get our fiscal house in order. As a Party we have no obligation to come up with an alternative Social Security proposal. I can't recall the Republican plan on health care that was posed in response to the Clinton plan. Besides, imaginable alternatives to lessen any possible crisis in the middle of the Century are easy enumerate -- a minor increase in the payroll tax, a gradual increase in the retirement age or age of vestment, and removing the cap on income subject to the payroll tax.

And to think I used to admire Apple and Steve Jobs

Apple Computer made news this week by unveiling a $499 version of their popular but expensive iMac computers. Unfortunately, an intrepid blogger got a hold of this information and leaked it. Sadly, the company decided to retaliate for spoiling the surprise by suing the blogger.

It turns out that the blogger is a student and a freshman at Harvard University. Typical. Actually it makes a lot of sense. Many smart students go off to work for the tech companies over their summers and come back with lots of proprietary information that could come out in a conversation over dinner in the cafeteria.

But it's really concerning that yet another company confuses patent protection with total autocratic control over the environment. The design of the iMac could certainly be a trade secret although anyone who ever opened a PC can see that you could probably teach yourself to assemble one in a matter of minutes and get the parts at the local MicroCenter. But is the mere fact that you made a computer which will cost $499 a trade secret? I don't see how much competitive advantage Apple gets from being able to unveil it when no one in the world knows it's coming but I grant stah spoiling the surprise could theoretically reduce publicity. Still, I barely have time to read the papers or see TV news these days and I noticed a photo of Steve Jobs holding one and even read the caption so it certainly got my attention.

The more concerning fact is that this is a matter of free speech for a person who is engage in a journalistic enterprise. If that person does not work for a company and can get ahold of certain information as a journalist, he has every right to publish it. When the person works for the company and the company is doing something illegal we call this whistleblowing and say it should be protected. If the US government wants to run a special military operation and some journalist finds out there isn't a whole lot they can do about it. But Apple can penalize this poor 18 yr old kid? Come on! Shame on you Steve Jobs. You make Bill O'Reilly look so much less petulant.

Are You Red, Blue, or Purple? Just Where Are We Politically as Nation?

There is a marvelous new group starting in the mountains and on the ranch ranges of Idaho that's been initiated by a great friend and well respected colleague. .:: Government by the People -- TheCommonInterest.com ::. They are dedicated to trying to bridge the shrill partisan gap between Republicans and Democrats and help all of us find common ground and opportunities to move on and move forward as a nation in areas that urgently need our attention. They are look across Party lines for the best ideas and the best intentions in everyone. They know that most people are folk of good spirit and good faith who simply want what is best for the country.

There is a lot of evidence that they are on to something potentially big and potentially important. In the midst of the campaign, before the election results were spun as confirmation of a polarized country that is riven by divisions of religion and culture, the New York Times ran an article that challenged whether we truly were as polarized as it has become popular to declare. A former teacher of mine, sociologist Paul DiMaggio has just completed extensive survey work on American culture and his findings show narrowing gaps among different groups of Americans along many cultural issues. Morris Fiorina, a noted political scientist, has just written a book with two colleagues entitled, Culture War? The Myth of a Polarized America. The book argues that across many political issues, in both Red states and Blue states, majorities form around similar positions. And Louis Menand's recent article in the New Yorker about the election pretty much put the kibosh on the idea that this election turned on cultural and moral divisions among the people. He reports that most people who have looked at the numbers say in fact, the War on Terror and Iraq were the crucial issues that swung voters. Perhaps these findings explain that anamolous University of Maryland poll that showed majorities of Republicans would have opposed the war if they knew there were no weapons of mass destruction (further confirmed now that the weapons inspectors have thrown in the towel), would further oppose the war if they knew that the links between Saddam and Al Qaeda were tenuous at best, would oppose Bush's Global warming position, and would disagree with Bush on numerous other things as well including multilateralism.

So if everyone agrees why would we need this group? Because in Washington, the divisions are real and profound. Due to structural and social changes in American politics, the Parties have moved towards extremes and away from the center, hence they are less able to find common ground. House and Senate races are less and less competitive, Party bosses have less power, and money elevates the vocal groups that have it.

The key thread linking most Americans right now is the sense that both Parties are pandering and captured by their extreme wings. The only thing that currently bridges the people's sense of alienation from each Party is the politics of personality because this communictaes beyond ideology and issue. This is where George Bush trumps what the Democrats have so far been able to throw him -- Al Gore and John Kerry. Let's face it, as much as most Democrats despise the man and as often as I find myself screaming "Liar! Liar! Pants on fire!" when I hear him on the radio or TV, most Americans genuinely like the guy and trust him to do what is right. (Samuel Popkin has written importantly in this resepect on how people choose candidates on the basis of personality as a proxy for how that person will react on issues that are not yet central in the discourse but which may come up in the future as important - aka - 9/11.)

The Common Interest and moves like it are really the only move possible (really the move most necessary -- taking on the cast of a categorical imperative) in our current political environment. One thing that seemed clear to me this year was that even if Kerry had won he wouldn't have been able to do anything and that the Republicans, particularly under Delay, wouldn't have given him a moment's peace. Any kind of victory by either side was going to do nothing to assuage the terrible polarization which afflicts us now. As was clear during Clinton's terms, the deep abiding passionate hatred of him and all things Left was profound and implacable. I remember one quote I read in a paper from some young Republican buck saying "Clinton is evil! He is just soooo evil." I know many Dems, myself included, feel the same way about the current White House crew. We somehow have to find a way to get back to the space in which there was some consensus about the basic rules of interaction and the structure of the process -- ideas of fair play and a shared commitment to unite around - exactly - the common interest.

One thing my studies have taught me is that when you become disappointed about the way an organization is functioning you need to look at how the organizational structure conforms to the environment. And what incentives all of this presents to participants. When you do this with regard to the American political process, you see that everything today favors the Fox News, the Tom Delays, the Air Americas, the Michael Moores, The New York Posts of the world. I don't think I know all of the structural reasons why things have gotten to this point but the issue merits a lot of thought. If we can find structral changes -- steps like rules against gerrymandering, campaign finance reform that takes big money and special interests out of the process, mechanisms to help move things again in Washington, then we will make headway in this ares.

Until then, it will be the initiative of groups like the Common Interest that begin the process of bringing us together a little more. In graduate school I took a a course in Social Psychology and I remember the professor discussing situations of severe strife among groups, situations when groups and people hate and scapegoat the other. He told us that such conflicts are always destructive spirals that don't stop until one side unilaterally ceases and extends an olive branch that is honestly seen and taken by the other side. One thing they recently considered in Colorado was giving the vice-chairmanships of legislative committees to Republicans which is truly remarkable when you think about how vituperative the previous Republican group was when they were in the majority here. It would have been a good idea but at the recent opening of the legislative session partisan bickering flared over the election of the Senate President. One positive note was that the Republicans replaced their strident far-right leaders with a more moderate, consensus oriented group.

At this point I just don't see either side extending any kind of olive branch at the Federal level. As Dean's candidacy showed there are just too many people on the left who feel like I do these days and who simply want to destroy the other side. But it's really so much deeper than that. Dems want to roll back what the Republicans have pushed through and Republicans want to continue to roll back what Dems pushed through over 6 decades. And there are many honest disagreements about some fundamental issues that are seen as non negotiable on both sides -- abortion, civil rights, equal rights for gays, guns, taxes and social spending. So given how deep the passions run on these issues I don't see how we get conciliation or reconciliation. One side needs to take the first move and I don't see either side stepping forward. Until then, we need groups like The Common Interest to gather people in enough numbers that the leaders will follow.

Stuff that Has to End

Today's ABC News web site has a story about the Chairman of the Massachusetts Democratic Party Opposing the DNC Chairman candidacy of former House Rep Timothy Roemer. Why? Because the guy is pro-life/ antichoice/ anti abortion whatever.

Wanna know why the Democratic Party keeps losing national election after national election? Wanna know why most Americans don't trust the Democratic Party to keep them safe? To look out for their interests? To have a vision about the future of America? Because the Party has become, in the words of James Carville, a litany rather than a vision. Democrats have got to stop presenting themselves to the American people as a collection of issues by which we pander to different interest groups. That's why everyone thinks we pander. Because we do. What kind of control over abortion policy would the DNC chairman have? Where would he have any role in setting or framing policy? One reason I think Dean's announcement that he will seek the job is such a mistake is because the job isn't worth anything and isn't all that important. It's a fundraising job and an organizing job. The person does not speak for all Democrats nor would a person who has that job be allowed or be likely to confuse his position on an issue with the National Party's position. Setting the national party message is a collaborative affair and not something the DNC chair can do by heading out on his or her own. And in a presidential election cycle, there is no national party message until we have a national presidential candidate.

I think having a Pro-life DNC chair would be a great idea. I don't care one way or the other if Roemer is the Chair, or Weisberg or whomever.* But Roemer as chair would show people that Democrats don't hew to one narrow doctrine, don't all read off the same scripture and are a large inclusive party. National policy as stated in who knows how many platforms remains pro-choice. Isn't that enough? Why do we have to have some kind of narrow doctrinaire thresh hold for all people of any substance in the Party? Know what that is called? It's called a litmus test. At least that what it is called these days. But historical precedents give far uglier terms. The idea that all people in the Democratic Party have to think the same way on every issue smacks of the worst kind of totalitarian thinking. I can think of only a few principles and issues where we would expect conformity to some kind of doctrine and this generally would be the kind of ideas that cut across Party lines.

* My original position vis as vis Dean's candidacy still stands. I would have preferred to see him run for President in 2008 and don't think he can do that from the Chairman's spot and I don't think he will do anything but weaken his capital in this role. But he must have some other ideas going on. That said, I still love the guy.