PARTIALLY PRIVATIZED, WHOLLY INCOHERENT! How would a Bush-favored plan really work? The New York Times can’t seem to say: // link // print // previous // next //

PARTIALLY PRIVATIZED, WHOLLY INCOHERENT: In May 2000, Candidate Bush proposed a set of great “principles” for partial privatization of Social Security. But he never presented an actual plan, so journalists couldn’t explore the details of any real-life Bush Proposal. But then, you know how lazy those “journalists” are! At the time, six formal plans for privatization had been presented in the Congress; at least two had been authored by big-name pols. (John Kasich had presented one plan; Moynihan/Kerrey had authored another.) The press corps could have examined those plans to give voters a general idea of what partial privatization might look like. But that approach would have involved too much work, so the nation’s journalists took a pass, reporting the 2000 Soc Sec debate in terms of the candidates’ character traits. Bush was providing “bold leadership” in proposing his principles, we were told. The offensive Al Gore was being “too negative” when he called Bush’s idea a big loser.

In the past, we have complained about the way the press corps refused to report on those plans (see THE DAILY HOWLER, 12/2/04). But now, the New York Times’ Edmund Andrews has explained a current Bush-favored proposal. And guess what? Andrews’ explanation is so incoherent that we’ve been forced to rethink our own past stand! If this is the best the press corps can do, perhaps it’s really just as well that they took that pass back in Campaign 2000. The current plan would partially privatize SS. But Andrews’ account is almost wholly incoherent.

In his article, Andrews describes “the plan the White House most often points to” when it discusses privatization. (It’s one of three plans authored by Bush’s Soc Sec commission back in November 2001). To his credit, Andrews provides a detailed look at a crucial part of this Bush-favored plan. “That proposal, which White House officials often cite as a model for how the system could be changed, would change the way future benefits are calculated,” he writes. The proposal “would change the way future benefits are calculated,” Andrews continues. And here’s the good news—the proposal would have a vast effect on projected revenue shortfalls:

ANDREWS (12/14/04): That proposal, which White House officials often cite as a model for how the system could be changed, would change the way future benefits are calculated.

Instead of setting benefits as a share of a person's pre-retirement wages—about 42 percent, for a middle-income worker today—the government would link future benefits to inflation.

Because wages generally rise faster than inflation, analysts say the savings could total more than $10 trillion and would wipe out the entire projected deficit for Social Security in one easy move.

Holy cow! The entire projected SS deficit would be wiped out with this one adjustment! But uh-oh! Benefits paid to SS recipients would be vastly cut in the process. Here’s how the numbers work for one group of future retirees:

ANDREWS: [M]any analysts contend that the change could also leave future workers with a huge drop in income as soon as they retire and would erode a basic premise of the current old-age system.

Under today's law, a middle-income worker who retires in 2065 would be entitled to an annual Social Security benefit of $26,400, or about 40 percent of the worker's wages.

Under the proposed change, that same worker's benefit in 2065 would decrease by 40 percent to $14,600, about 22 percent of the wages. That prospect troubles many experts, including some conservatives.

Yikes! No wonder this adjustment “would wipe out the entire projected deficit!” Under current arrangements, average workers born in this current decade will get $26,000 per year when they retire (that amounts to 40 percent of their wages, which are projected to be $65,000). But under this Bush-favored adjustment, that benefit would almost be cut in half! Andrews explains this in the text we’ve quoted, and he also lays it out in a chart. Go to the Andrews report, then click under MULTIMEDIA.

Yikes! It’s no wonder this proposal, which Bush seems to like, “troubles many experts, including some conservatives.” Sixty years in the future— after sixty years of inflation; after sixty years of growth in the standard of living—average retirees would only get $14,600 per year, far less than what they are currently promised. Or would they? In fact, it’s impossible to tell from Andrews’ piece how this plan would actually work. Andrews explains how this one provision works, but he explains little else about this plan. Result? Try as we might, we can’t figure out how much money those retirees would live on.

Here’s the problem: Is that $14,600 all a retiree would get? Or is that what he would get in a guaranteed benefit—an amount that would be supplemented by income from his private account? As near as we can tell, Andrews never explains this matter—not in his 1600 words of text, not in his accompanying chart. Would retirees live on $14K—or would they live on $14K plus the income from their private accounts? And if they were getting income from those accounts, how much would that additional income likely be? We’ve read and read the Andrews piece, and we don’t have the slightest idea about either one of these basic points. Andrews seems to describe “deep cuts” in the income of future retirees. But just how deep would those cuts really be? As far as we are able to tell, there’s no way to know from this article.

So if this is the best the press corps can do, maybe it was for the best when they took that pass during Campaign 2000. Maybe it was best that they stuck to what they knew—stupid, ginned-up tales about “character.” Had they tried to explain the existing plans, maybe they would have just gummed it all up. Maybe it’s best that they kept inventing tales about Good Bush and Vile Old Al Gore.

But we’ll say this concerning our current predicament: Bush will soon propose a major change to our most important social program. Is American democracy, in 2005, capable of holding a real discussion? The stupid spin-points will fly all around (see below); citizens will be misled by these points every day. But will America’s press corps have the skill to lay out the facts about Bush’s proposal? If Andrews’ piece is any sign, your press corps is ready to fail this test. Result? SS will be privatized—partially. And your discourse will mix you up totally.

GOOD LORD: We can hardly find a part of this piece that doesn’t leave us confused. And some of its claims are simply inaccurate. In his chart, Andrews provides four bullet-points about the plan he describes. Here is the very first point:

ANDREWS: [The plan] would allow workers to divest 4 percent of their payroll taxes up to $1,000 into a private account.

But under this plan, workers aren’t allowed to divest four percent of their payroll taxes; they’re allowed to divest four percent of their wages. This is a rather big chunk of their payroll taxes; in fact, it’s almost two-thirds of the 6.2 percent workers currently submit. (Employers submit an additional 6.2 percent.) This is a major, bone-simple distinction—and yes, it plays into an important spin-theme. (Proponents want you thinking that only a tiny fraction of payroll taxes will be diverted from the ongoing system.) But so what? Three years after this proposal was made, here is the mighty New York Times, almost defiantly getting it wrong. When we see such basic errors in the work of our most self-impressed paper, we ask again if our press corps is able to execute its time-honored tasks. How can the paper’s SS reporter not have this point clear in his mind?

THERE THEY WENT AGAIN: Why do so many younger people think SS “won’t be there” for them? Perhaps because of world-class pundits like “Fox liberal” Juan Williams. Last night, the resident genius of NPR sounded off on Special Report:

WILLIAMS (12/15/04): It's interesting. About 45 percent say it's time to create some change [in Social Security]. Now, who are the 45 percent? They tend to be younger Americans who don't believe Social Security will exist when it comes time for them to collect it.

BRIT HUME: Are they right to believe that?

WILLIAMS: I think well, that's right. Because as you just pointed out in introducing this topic, if you look down the line—not in the immediate terms. And lots of Democrats make this point to me, it's not in the immediate there is an imminent crisis with Social Security. But there is a crisis coming in the long term that something has to be done.

Good Lord! And don’t worry, Fred and Charles went there too. (Mort was yelling the points out at home.) “I want to elaborate a minute on what these polls show,” Fred exclaimed. “One thing they show over and over again, people like the Social Security system but they recognize it's going to go bankrupt.” Meanwhile, if Gen X was playing some Hardball last night, they heard Chris Matthews recite the script too. “Well, won`t [Bush] get credit for having guts?” he asked, reviving the pointless “bold leadership” theme. “Absolutely!” replied GOP ex-solon Susan Molinari. Chris just kept expounding:

MATTHEWS (12/15/04): I think he might have guts. He might get lasting credit for people under 35 today, who say, you know, I know the system is not going to be there for me, but it might be if this guy succeeds.

What an idiot! As we’ve explained, if Social Security is left alone, there is no chance it “won’t be there” when Gen X retires (see THE DAILY HOWLER, 12/14/04). But Gen X-ers have heard this scripted twaddle as long as they have been taking air, and there is no sign that your scripted “press corps” will ever stop reciting these points. By the way: Hillary Rosen represented Dems on Matthews’ panel. Read the transcript—she was totally clueless.