social security

Picture the scene: a fairly popular President, having amassed a significant amount of political capital, decides its time to cash in and spend some on a tough reform effort for a failing, inadequate system. Many Americans agree that the status quo isn't acceptable long-term but hesitate to sign on to changes that they deem too risky. Members of Congress go out to their districts and are confronted at town hall meetings with frustrated, vocal constituents worried about the risks of the plan. The President's popularity outpaces his policies and in particular, this major reform package. Even with control of both houses of Congress, the package can't survive. The reform fails.

If you feel like you've seen this story before, you're not wrong. The trajectory of the 2009 health care debate seems eerily similar to that of the 2005 battle for Social Security reform. Taking a look at the polling from then and comparing it to the data of today shows the parallels in the situation and shows why the health care debate feels all too familiar.

Similarity #1: Presidential Popularity

First, take a look at a bit of a throwback post from 2006 at MysteryPollster.com where Bush's job approval from January 2005 forward is tracked. Bush began 2005 with job approval over 50% - slightly below where Obama started at the beginning of July (Gallup's 7/05-07/2009 poll had Obama at 56%). The trends are not dissimilar: Charles Franklin's plot of Bush job numbers from January 05 forward shows a similar shrinking of support that looks an awful lot like the Obama job approval chart on the front page. This isn't a particularly surprising finding, but provides context to the other more striking comparisons.

Similarity #2: The Agreement that the Status Quo is Unacceptable

In both the Social Security debate and the health care debate, Americans agree: the system needs major overhaul. While so many other issues fail to get Americans to agree with the crucial "we need to do something" sentiment, both Social Security and health care had that extra boost from a public that agreed: maintaining the current system is not workable long term. In February 2005, Gallup found 73% of Americans said Social Security was "in crisis" or "has major problems". (18% said Social Security was "in crisis").

Compare that to the health care debate of today. Gallup has found that 20% of Americans believe health care is "in crisis" and at least a majority believe it has major problems (unfortunately, Gallup doesn't tell us how large a majority). To flesh that out a bit, Gallup asked the question in November 2008 and found 73% of respondents said that health care was either "in crisis" or had "major problems". Does that number sound familiar?

Similarity #3: Issue Handling

By March 2005, Bush's numbers on issue handling of Social Security were brutal, with an ABC/WaPo poll showing only 35% approving and 56% disapproving. CNN/Gallup had even worse news with only 1 out of 3 approving. Compared to 49% approval shortly after Bush took office, once the issue became a hot topic, Bush's number tanked.

Similarly, Obama's numbers have plummeted on health care since before the debate. In April, during Obama's honeymoon, Pew showed Obama with a 51-26 advantage on health care job approval. By August, he had a 42-43 disadvantage - quite the fall from the earlier numbers. The idea that "the president is more popular than his policies" held true then as it does now. (Just take a look at Mara Liasson's February 2005 NPR story, titled: "Bush More Popular that His Social Security Plan").

In both cases, the President began his administration with the trust and support of the people to fix their given "crisis". In both cases, once the debate flared, their numbers dropped significantly. But it is worthwhile to point out that the comparison is not perfect - the Obama honeymoon numbers were immediately followed by the debate, while Bush had a full four years before tackling Social Security.

At any rate, this is just the basic side-by-side look at the reasons why this health care debate may seem like a bit of a "glitch in the Matrix", giving those who watch politics a sense of deja vu.

Because sometimes the more things change, the more they stay the same. (This item has been cross posted at Pollster.com)

(Yes, I know that electric trains generally only have a powered third rail. I'm just extending the metaphor.)

One of the most tired phrases in politics is "Social Security is the third rail of American politics."  The problem is that it's true - Bush figured that out by squandering all of his political capital trying to reform it back in 2005.  It turns out that old people vote and they can be easily scared when the spectre of taking away their government checks is brought up.

We face a similar problem with health care.  It's obvious that the system doesn't work, and not just for people with pre-existing conditions and those who lose coverage.  It costs too much and isn't portable.  The lack of a true national market and the employer coverage model is a failure.  Too many people lack coverage and those people stick hospitals with huge bills for admissions that could have been solved with a visit to the family doctor, if they had one.

That being said, there are a lot of solutions better than Obamacare.  We've heard them before on this site and others and they aren't the point of this post.  The problem is that if Obamacare is defeated, no politician in their right minds will touch the healthcare issue with a 10-foot pole.  In persuing the worthy goal of defeating one specific bill, the issue has been demagogued to the point of insanity with threats of "death panels" (Sen. Isakson (R-GA), who put the provision nominally at issue, thinks this is nuts), "keep government away from my Medicare (note: WTF?) and all sorts of hyperbole about the continued "existence of the republic."

And don't think for a minute that every accusation about killing grannies and such lobbed against government can't be lobbed at private insurers.

So instead of a debate on what to do, we have people holding up pictures of Obama with a Hitler mustache shouting down elected officials before they can answer questions.  We have liberals convinced that people who oppose Obamacare are foam-at-the-mouth dittoheads and birthers organized by lobbyists.  And they're partially correct - many (not all) town hall shouters have spouted a lot of nonsense and many are making this personally about the president and anger at losing the last election.  It's embarrasing to people who have real issues with Obamacare who want to and make something work instead of yelling until they're red in the face.

The window for reasonable debate has closed by conservatives who want to make this Obama's Waterloo and liberals who are circling the wagons against a perceived onslaught of crazies.  The next reform proposal from either side will fall into the same pattern.  Eventually, everybody with power to do anything will throw their hands up.

Now healthcare is a "third rail," just like Social Security.  There are other, smaller, third rails to contend with.  Our primary system is rigged to prevent any serious talk about ethanol.  Serious agriculture subsidies reform is stymied because the committees that make ag policy are filled with congressmen from districts that feed off the USDA teat.  We can't have a serious discussion about Israel for long without someone getting called an anti-semite or a zionist likudnik stooge.

The problem?  You can't cut the size of government with all of these third rails in the way.  Everything has to be on the table.

Healthcare isn't just a sixth of the U.S. economy, it's a very big chunk of government spending.  The problem with the deficit hawkery I've heard recently is that it's small bore.  Spending freezes avoid the difficult choices about what exactly we want to cut.  Pork appropriations, non-military foreign aid and arts funding seem like ripe targets for popular cuts, but they make up a vanishingly small part of the budget and won't change the overall fiscal picture.  Survey after survey shows that people think government is too big, but they don't want to cut funding for Medicare, Medicaid, Social Security education, defense or anything specific beyond the amorphous "waste."  The only real solution is to slow and reverse the growth of healthcare costs while still providing the care people demand, and we are in the process of blowing it for the next several decades by turning a deadly serious issue over to the loudest, angriest, least reasonable wing of the movement, destroying any hope of comprimise a la Wyden-Bennett.

In the zeal to stop a bad new policy, we have guaranteed decades of the bad old policy.  Good job guys.

[Note: Sorry, the title should read "2009 VS 2005", but I can't change it without breaking links]

Paul Krugman:

A number of people in the news analysis business seem to be equating the role of liberal activists in making trouble for Republicans back in 2005, during the debate over Social Security privatization, with that of conservative activists in making trouble for Democrats over health care reform. [...] Seriously, I’ve been searching through news reports on the Social Security town halls, and I can’t find any examples of the kind of behavior we’re seeing now. Yes, there were noisy demonstrations — but they were outside the events. That was even true during the first month or two, when Republicans actually tried having open town halls. Congressmen were very upset by the reception they received, but not, at least according to any of the report I can find, because opponents were disruptive — crowds booed lines they didn’t like, but that was about it. [...]

So please, no false equivalences. The campaign against Social Security privatization was energetic and no doubt rude, but did not involve intimidation and disruption.

Reality:

• NW Progressive Institute, March 2005: "a boisterous crowd which frequently interrupted the discussion with shouts and hard nosed questions. ... Democrats in the audience who were interrupting the panel.... the crowd erupted in anger... Democrats in the audience started shouting him down again."

 

• Savannah Morning News, March 2005: "By now, Jack Kingston is used to shouted questions, interruptions and boos. Republican congressmen expect such responses these days when they meet with constituents about President Bush's proposal to overhaul Social Security."

 

• USA Today, March 2005: "Shaken by raucous protests at open "town hall"-style meetings last month ... Santorum was among dozens of members of Congress who ran gantlets of demonstrators and shouted over hecklers at Social Security events last month. Many who showed up to protest were alerted by e-mails and bused in by anti-Bush organizations such as MoveOn.org and USAction, a liberal advocacy group. They came with prepared questions and instructions on how to confront lawmakers."

If you can make it through the puerile and prurient ravings of David Shuster, sitting in for the normally oh-so-(mentally)-balanced Keith Olbermann, you find this nugget at 5:50 into the 8-minute-long stream of sexual jokes:

Lawrence O'Donnell, "[Medicare and Social Security] are well-working Socialist programs within the American government.  There's absolutely no other description of them."

Nice to hear a liberal admit this instead of trying to pretend these programs are anything but government taking from some to give to others.

Since none of our so-called leaders are going to present an alternative economic recovery package, I'll do it myself.  Items are in no particular order except the order in which they came to me.

1) Slash the Corporate Income Tax Rate to 15% - The United States currently has the Second Highest Corporate Tax Rate in the World.  This puts our companies at a gigantic competitive disadvantage internationally and retards both job growth and the stock market here at home.  Cutting corporate taxes will spur a business led investment boom in the United States.

2) Make Bush Reductions in Capital Gains and Dividends Permanent - While I would love to slash these grossly counterproductive rates further, that's not feasible politically at the moment.  The next best thing would be to send a permanent signal to financial markets.

3) Abolish the Employer Half of the Payroll Tax - As liberals frequently point out, 80% of taxpayers pay more in payroll taxes than income taxes.  They deserve a big tax cut.  This will also act as a major job creation mechanism.

4) Pass Colombia, South Korea, and Panama Free Trade Agreements - This move is more symbolic than substative, however, it is crucially important.  Passing these agreements would signal to our trading partners that the United States will not turn protectionist like we did in the 1930's.

Passing the Colombia agreement would also weaken an increasingly despotic Hugo Chavez.

5) Establish a 15% flat rate on All Income - This will leave Americans with more money to spend, invest, or do whatever the heck they want to do with it.  It will also do away with the deadweight loss from tax code complexity.  Many other Countries have done this successfully.

Should this prove politically unfeasable, we should still strive to do this for everyone except the top income tax bracket.

6) Create A National Market for Medical Insurance - Rising Medical Costs have been a major economic drag for the past decade.  While the reasons for this are worthy of their own blog post, creating a national market for Medical Insurance instead of 50 separate state markets is the easiest way to lower costs.

7) Drill, Baby, Drill - In addition to harming those nice guys in Tehran, Moscow, and Caracas, increased energy production at home will create oodles of jobs.  It might even make the auto bailout a moot point.

8) Immeadiate Expensing for Business Investment - This will also create a boom in business investment.

9) Boost Defense Spending - This is a policy I support for other reasons.  That said, defense spending has a higher Keynesian Multiplier than anything President Elect Obama is proposing.

10) Abolish the Alternative Maximum Tax - This wildly unfair tax should just be abolished.  I don't care about the rationale.

11) Abolish Sarbanes/Oxley - This onerous regulation, passed during the Enron panic, drives capital and businesses overseas without preventing fraud at home.  Repeal of SarBox would ignite a stock market boom!

12) Abolish Mark to Market - This obscure accounting rule forces companies unnecessarily to lower the value of their assets relative to what they could be sold for.  This was a major factor in the credit freeze.

13) Abolish the Death Tax - Any change in tax policy that both antagonizes liberals and hurts Warren Buffet must be a good idea.

Obama thinks he can take Florida and demonstrates he is willing to tell outright lies to do it. Scaring elderly voters is despicable but if you are an "end justifies the means" kind of pol, it's apparently perfectly acceptable.

TigerMeg

Barack Obama's chief economic advisor, billionaire investor Warren Buffett, unleashed a howler which is a thousand times worse than Phil Gramm's "whiners" remark.

Gramm suggested we stop complaining about economic hardship.

But Buffett suggests that it will be unavoidable and we ought to get used to a permanent level of quasi-recession.

I know Barack Obama thinks pretty highly of Warren Buffett's economic wisdom. The so-called Oracle of Omaha has helped persuade Obama that higher taxes will have no effect on economic growth. Obama mentions it in his book, The Audacity of Hope. And in a recent New York Times interview, Obama said the following: "If you talk to Warren, he'll tell you his preference is not to meddle in the economy at all—let the market work, however way it's going to work, and then just tax the heck out of people at the end and just redistribute it."

But I wonder if Obama also buys into this little bit of Buffettology that the billionaire unleashed at a symposium on the U.S. indebtedness to promote I.O.U.S.A., a new documentary: "Even if we grow at 1 percent per year, we double the GDP per capita in 75 years. The pie will grow enough that everyone will get more of the pie."

http://www.usnews.com/blogs/capital-commerce/2008/8/25/obama-adviser-buffett-to-america-youre-rich-enough.html

One word, Warren : NOT!

James Pethokoukis points out that one inevitable result of accepting such tepid long term economic growth will be the Social Security Trust Fund will be fully depleted by 2030, and as their annual mailer cheerfully predicts, massive tax hikes or benefit cuts will be required at that point.  

Now let's look at the other results herein. U.S. GDP is about $14T/year and China is about $4T/year http://en.wikipedia.org/wiki/List_of_countries_by_future_GDP_estimates_(nominal)

In 2013 China is estimated to reach $7T.  Even assuming a slow down over time, let's assume a maturing Chinese economy continues to gain $600B/annually in economic performance. Do the math. The US is outpaced by China within a generation.

Now if the US managed a 4% growth rate, due to our larger existing economy we would stay well ahead of the PRC indefinitely.   Even a 3% rate keeps us well ahead of the PRC over the relevant time horizon. 

Over a 20 year period 4% growth yields a $30T US economy, 3% growth yields a $25T US economy  1% growth yields a $17T US economy. That will be smaller than China's by 2030, with massive and unpalatable geopolitical consequences for the nation.

Perhaps the principal behind the GEICO lizard ought to think about this one again.  With health care inflation running at double digits, what a 1% overall growth rate means is that other sectors of the economy will need to shrink outright to pay for health care. Then, with less investment in infrastructure---educational, public works and industrial----our national productivity goes down, thus creating a self-fulfilling prophecy.

What good is it to promise public services when the overall economy will grow so slowly as to make it impossible to pay for them? What good will be open borders if we have a stagnant economy?

Consider this as well; historic U.S. population growth from 1960-2000 averaged about 1% per year. http://en.wikipedia.org/wiki/U.S._population#U.S._Population_Growth and this is not expected to abate in the next generation http://www.census.gov/compendia/statab/tables/08s0010.pdf

A 1% annual GNP growth coupled with 1% population growth means arithmetically living standards will never improve ( Given the aging population this also means young working people can expect lower wages and higher tax burdens).  

I look forward to the next Obama ad for the swing states in the Rust Belt

"My ecomomic advisor promises to have America be a second tier world power with a stagnant standard of living"  

  .

Although you may not know it if you only read Newsweek, the Democratic party has often engaged in the same sort of fear-mongering that they complain that Republicans engage in when talking about the war on terror.

I'm talking about social security of course. Every four years the Democrats claim that the Republicans are going to gut the social security system, and this year will be no exception. They know that private accounts are not popular with seniors and will run attack ads against McCain to remind people he supports them. They think this will reduce his large lead among elderly voters.

So if the McCain campaign is smart (a characteristic that they have shown only in rare quantities up till now) they will pursue an aggressive campaign explaining that he is really trying to save social security, won't cut benefits, and attack Obama for the crippling tax increase that his plan espouses. It might not work but it would be better than ignoring a potentially volatile issue.

This is a new viral email going around. I hope it's not true.
**********************************************************************************

           As stated below, the Senate voted this week to  allow 'illegal' aliens access to Social Security  benefits.
           Attached is an opportunity to sign a petition  that requires citizenship for eligibility to that social  service. Instructions are below.   
           If you don't forward the petition and just  stop it, we will lose all these names. 
           If you do not want to sign it, please just  forward it to everyone you know. 
 

           Thank you! 
             
           To add your name, click on 'forward'. 
Address it to all of your email correspondents, add your
 name to the list and send it on. 
             
           When the petition hits 1,000, send it to
 comment@whitehouse.gov 
             
           PETITION for President Bush: 
           Dear Mr. President:
           We, the undersigned, protest the bill that the
 Senate voted on recently which would allow illegal aliens
 to access our Social Security.  We demand that you and all
 Congressional representatives require citizenship as a
 prerequisite for social security in the United States 
             
           We further demand that there not be any amnesty
 given to illegals, NO free services, no funding, no
 payments to and for illegal immigrants. 
             
           We are fed up with the lack of action about this
 matter and are tired of paying for services to illegals.
 
           1. Mary Takami , Calif.
           2. Connie Dodd.. Calif.
           3. Frank Beirau , Calif.
           4. Barbara Murray , Calif.
           5. Dody Farha , Okla.
           6, Woody Farho, Okla...

ex animo

davidfarrar
 

I hope that this won’t sound like too much of a ramble that you hear while you’re sitting at a bar getting drunk, but it needs to be said.

The longest lasting issue that will affect every other aspect of the American way of life is the economy.  I’m not saying that we’re going into the next Great Depression, but we’re in a bit of a slump, it happens.  The best way to solve that problem is to go back to the basics and start over.  The Government has taken so much control over everything that can be done and “should” be done American entrepreneurs can’t excel.  The biggest hurdle to jump is the tax system that is currently set in place.  There are so many issues and impediments that you need to hire an extra tax attorney just to make sure that you’re not breaking any laws.  The simple solution is the FairTax.   

The FairTax is the simplest, most effective, and most efficient idea that a politician has ever conceived and supported.  With the weight taken off everyone’s shoulders so that they get all of their paychecks every week, people will want to spend money.  The idea with the monthly pre-bate check also encourages the low income families to either save for the future (maybe for college so we actually have more kids learning), or purchase things now so they go ahead and contribute back to the system. 

After becoming the world’s tax haven, more factories come back home while more come here for the first time.  We open up thousands of new jobs across the country (no more unemployment issues!).  And if as the economists who have studied the FairTax are right, then the economy doubles in 15 years!  This then fixes the bankrupting Social Security that I won’t get a piece of otherwise.  It helps with welfare, the country’s growing deficit, war funding, and anything else that our economy can spit out.  No one can avoid taxes on the FairTax, even those illegal immigrants who should have been deported. 

Next issue, illegal immigration.  It’s illegal, what’s the issue?  Deport them.  If we want to give them an amnesty program just to appease people, here’s my proposal.  We pay for the materials for a Great Wall of Mexico (I want to see it from space), but we get the Mexicans who want to come into the Land of the Free to build it.  In return, they become fully legalized immigrants.  We could even let them build apartment complexes for them to live in as long as they pay the Federal government rent.  With the apartment complex built near the wall, we then can hire them as border patrol.  We also would have to put a much smaller contingent of other American citizens behind that line to keep them honest from letting their cousin Jose in.  Maybe even just a load of cameras with automatic gun turrets to keep down on the number of Americans who would be sweating in that heat. 

Next and last issue, the Iraq War.  We are there, finish the job.