AS HIS COLLEAGUES GENTLY SLEEP! How have foreign plans worked out? As usual, only Krugman will tell:
FRIDAY, DECEMBER 17, 2004
AS HIS COLLEAGUES GENTLY SLEEP: Finally! Here at THE HOWLER, we have long noted the press corps failure to report on foreign privatization plans. How have such plans fared in other countries? The slumbering press corps took a pass on the topic during Campaign 2000, focusing instead on Bushs bold leadership in promoting his vague, misleading principles. As Social Security has come center stage once again, weve been waiting to see reporting on this obvious topic.
But of course, as usual, it had to be Krugman who started the search for the truth. And uh-oh! In todays column, he seems to start with a bit of a shot at his papers own op-ed page:
KRUGMAN (12/17/04): As the Bush administration tries to persuade America to convert Social Security into a giant 401(k), we can learn a lot from other countries that have already gone down that road...Uh-oh! That sounds like a jab at the Times itself, whose op-ed page published a piece by Jose Pinera extolling the Chilean plans deathless brilliance. (See THE DAILY HOWLER, 12/2/04. Pinera, who devised the Chilean plan, is now a fellow at Cato.) For his part, Krugman is unimpressed with the foreign experience. Here are his two central points:
KRUGMAN (continuing directly): In particular, the public hasn't been let in on two open secrets:Aside from that, how did you like the play? As Krugman reviews the Chilean and British experience, he notes the way those management fees eat into privatized systems:
KRUGMAN: More than 99 percent of Social Security's revenues go toward benefits, and less than 1 percent for overhead. In Chile's system, management fees are around 20 times as high. And that's a typical number for privatized systems.And he notes that, more than twenty years down the road, the Chilean government is still pouring money into its privatized system. Why? Because privatization would have condemned many retirees to dire poverty, and the government stepped back in to save them, he writes. Its good that Chiles government keeps stepping back in. But this experience might provide a bit of a warning about how these established systems really work.
During Campaign 2000, Bush presented a set of pleasing spin-points, most of which were baldly misleading—spin-points designed to mislead the public about the shape of privatization. But Krugmans colleagues stared into air, and their staring and snoring continue apace. Indeed, its all too typical—that Krugman had to start this discussion at the Times, and that he starts it with a jab at the paper for presenting a screed by a Cato dude who designed the system whose merits he extolled. But then, to all appearances, your celebrity press corps just doesnt care about the future of Social Security. They snored and belched through Campaign 2000, and they still snore and belch to this day.
Could it be that they just dont care because of those famous Millionaire Pundit Values? Could this be the source of their grinding indifference? Theyll never need that SS money. Human nature being what it always has been, could it be they just dont care if your boondock-based grandmother does?
WHILE WASHINGTON BURNS: Meanwhile, for every entertaining jot and tittle about the Bernie Kerik excitement, turn to talkingpointsmemo.com (a site we start with every day because its excellent author, Josh Marshall, does so much invaluable work). Given the way our world really works, liberals and centrists will have to fight hard to establish the facts about SS. But if youre the type who doesnt want to be bothered, you can turn to this entertaining site for all the days latest thrills and amusements. Or you can read that arcane mess Michael Kinsley uselessly offered. What in the world—what on earth—ever became of this pundit?
The public has heard two decades worth of spin about the coming demise of SS (a term Jonathan Weisman inexcusably uses in todays Post). Theyve heard the system is going bankrupt (broke; belly-up). Theyve heard SS wont be there for them. Theyve heard a bunch of free-money nonsense from their endlessly dissembling chief exec. Its obvious where these deceptions will lead unless liberals and centrists work with great skill. We find the Kerik tales comical too. But how amusing will they seem when Congress, bowing to a rubified public, gives Bush the things he wants? And yes, this is the path we seem to be treading. Do we have huge time to spend on the Kerik-ter problems of this amusing but shipwrecked buffoon?
THE WHOLLY INCOHERENT AWARD: Liberals and centrists will have to fight if they want the public to hear real reporting. How incoherent can our Big Top Scribes be? Heres how John Roberts began a report on the CBS Evening News:
ROBERTS (12/15/04): Franklin Roosevelt's Social Security safety net is quickly developing huge financial holes. In 1935, the system was flush, 16 workers paid in for every one that drew retirement benefits. That ratio is now just a little more than 3 to 1. By the time all the baby boomers have retired, just 2 to 1. In 2042, Social Security will become insolvent, and today's young workers risk losing their benefits.For the record, Roberts is using the gloomy projections of the SS trustees—projections based on gloomy assumptions about economic growth (more below). But then, Roberts is hopelessly gloomy himself. The system is quickly developing huge holes, he says, and he says young workers risk losing their benefits, a deeply misleading construction. (If nothing is ever done about SS, these workers may lose a small proportion of their promised benefits.) But good old Roberts! Having misled young workers again, he turned to open Bush-pimping and engaged in some vast incoherence:
ROBERTS (continuing directly): President Bush wants to mend the holes, allowing workers to invest a small portion of their weekly payroll taxes in stocks and bonds that will grow or fall with the market. Those accounts would become the employee's property. At retirement, government-paid benefits would be reduced according to how much was put in the personal account. But private accounts don't address the overall funding problem. Without broader reforms or a rise in the payroll tax, the government side of Social Security will still run out of money. Increasing taxes could easily extend the life of Social Security, but President Bush won't even consider that.By ineptitude or by design, Roberts pimped every step of the way. Bush wants to mend the holes, he pleasingly said, telling viewers that Bush would let workers invest a small portion of their payroll taxes. (As we noted yesterday, Bushs most-favored plan would let workers invest two-thirds of these taxes.) And then, of course, complete incoherence: Private accounts don't address the overall funding problem, Roberts said—having told us, two sentences earlier, that Bush wants to mend the holes with these very accounts. Finally, Roberts offered another hugely selective assessment:
ROBERTS (continuing directly): So there's some tough choices ahead. Will the White House propose to raise the retirement age, cut benefits or, in the worst of all political worlds, institute so-called means testing where more affluent seniors, who have contributed all their lives, will never see a penny from the government? Dan.Phew! The problem really must be massive! Gloomily, Roberts envisioned a form of means-testing in which affluent seniors will never see a penny from the government! Even though theyve contributed all their lives!! But how about something a little less scary? How about a form of means-testing in which these affluent seniors see somewhat less from SS than theyre currently getting? Apparently, that prospect wouldnt seem scary enough, so the hapless scribe deep-sixed it. When Roberts pimps huge holes in SS, no non-catastrophe need apply.
Theres a term for work like this: total garbage. Indeed, if a college sophomore submitted such work, would any professor ever accept it? In fact, Roberts report was so cock-eyed that Dan Rather offered sub rosa apologies. You may want to note that many critics of the president's ideas insist Social Security is not in nearly the trouble that Mr. Bush and some others say it is, he quickly said. Mr. Bush—and some others? Among those unnamed others, of course, Rather might have included his gloomy reporter, who heroically went to every length to overstate the size of the problem.
And note those Millionaire Pundit Values! Which group has Roberts worried? Of course! Hes worried about those affluent seniors, who might get the shaft in this troubling mess! Why, it would be the worst of all worlds if these people got a bit less! Increasingly, it seems to come naturally to Millionaire Scribes to bleed for this poor oppressed class.
THOSE GLOOMY ASSUMPTIONS: Weirdly, Jonathan Weisman refers to Soc Secs demise in todays report in the Post. But he also provides valuable info about the assumptions used by the SS trustees in making their budget projections, and you ought to read his report. Remember—even using these gloomy assumptions, Social Securitys revenue shortfall doesnt occur for 38 years! (Using slightly less morbid assumptions, the CBO says the shortfall doesnt start until 2052.) No wonder Roberts tells us, right up front, that SS is quickly developing huge holes in its deeply troubling financing. And yes, this is the way your liberal press corps is reporting this critical story. Showing off their strident liberalism, theyve reported it this way for years.