Death of a Salespitch

I’m really hoping that Stan Collender has got it right. He’s arguing in short form today that the Cat Food Commission is dead with a promise of further details in an upcoming column at Roll Call. His first argument seems pretty reasonable.  The Report needs 14 to pass and only 11 participants seem willing to do so.  Here are his others.

• The 11 members of the commission who favored the plan likely overstates the actual amount of support.  It seems clear that at least two and maybe more announced their support only when they were certain the plan wouldn’t get 14 votes.  Their approval was more about political posturing for the future than actual enthusiasm.
• Don’t read too much into the bipartisan support for some of the options.  If these same proposals are considered at all, they will next be debated in a very different political context and in a package that will look very different from the one the commission considered.  Support for them in the commission is no indication they will be supported again.
• Don’t read too much into the enthusiastic response the plan received from various deficit hawk groups.  Many of them supplied the commission with staff, helped develop what ultimately was proposed, and had a stake in its outcome.  Under these circumstances, their enthuisastic approval and attempt to define the outcome as a success was not at all suprising.  It’s also not especially indicative of any larger movement toward what was proposed.

I’m actually finding the power of the nifty graph from Matt Ygelisias at TP an even more compelling reason.  He’s posting a response to Paul Krugman who can’t believe that the Beltway crowd is so obsessed with ruining social security.   Krugman’s blog post today also contains his thoughts and the same nifty graph.

Look at the number of seniors that rely on social security for the majority or near majority of their incomes. That’s just income quintiles.  You know that the distribution is skewed right (i.e population is largest on the lower ends.)   Who wants to turn their life savings and major income source in old age over to a bunch of Wall Street High rollers or even worse, have it diced and sliced into pieces that you may or may not receive?

Even though Social Security is only a very mildly redistributive program, inequality of wealth is such that it’s a vital element of the bottom 60 percent’s living standards but kind of small beer to the top twenty percent. But I would say the other thing here on the Medicare / Social Security contrast is that Medicare isn’t just a subsidy program for old people. It’s also a subsidy program for doctors, nurses, hospital administrators, pharmaceutical executives, etc. Those people have lobbyists, many of their professions are well-respected, and many members of the political/media elite have siblings, cousins, college buddies, and even spouses who work in those fields.

The tragedy is that this very same factor that makes it harder to cut Medicare is also why cutting Social Security is a much worse idea. Our health care sector is low productivity mess and there are a lot of health-improving things a low-income senior can buy with Social Security money but can’t buy with Medicare. Healthy food, a gym membership, home-repair, etc.

Baby Boomers may not be a monolithic group, but I have to think that since most of us had our private savings and our home values chewed up and spit out by hedge funds and investment banks, we’re not going to go quietly into the night while having our social security gutted.  I can’t imagine our remaining parents are going to be happy about it either since most of them have been paying in to the program since its initiation.  Also, remind your children that should this pass, you will be expecting a room in their house because you will need it.

The graph and a lot of good information is from Our Fiscal Security. That’s the organization that I wrote about earlier that came up with a liberal response to the Bowles-Simpson ice floes plan.  Let me just remind you of a few things from them about our Social Security.

1. Social Security is currently in surplus and will take in more than it pays out until at least 2037, more than a quarter century from now.
2. Raising the employer and employee payroll tax rates by just 1.1 percent each would erase the entire 75-year projected shortfall.
3. Inequality leads to the projected Social Security shortfall: as income growth has become concentrated at the top, more income has fallen above the payroll cap of $106,800. Congress could close the entire 75 year projected funding gap by raising or eliminating the cap on taxable payroll income.
4. Not just an I.O.U.: Income to the Social Security trust funds must be invested in guaranteed Treasury securities, which can be redeemed at any time at face value, giving the trust funds the same flexibility as cash.
5. Social Security can never add to the yearly deficit; by law it cannot draw a single dollar from general revenues, even if payroll taxes fall short of scheduled benefits.

There’s a few more points out there if you’d like to go read them.  It’s a data worth sending to your Congress Critterz.