guy44

This kind of discussion is great, I love arguing over policy specifics and detail and nuance with people, and I appreciate KMA giving my post so much time. This level of discussion is far too rare. I'd like to reply to KMA-628s post here:

First, he took issue with the statement:

KMA wrote:

This statement is not the exact verbiage used by the non-partisan Congressional Budget Office (Congress' version of the Office of Management and Budget), but it is a sentence summarizing the conclusion of the CBO's report. It is not a CBBP fact - it is what the CBO said. The sentence I used from the CBPP was completely absent of partisan rhetoric. Furthermore, immediately after proclaiming that the CBPP report did not discuss the Social Security Trust Fund or the balance of the Trust Fund, KMA wrote:

How can the CBPP report NOT be discussing the Trust Fund's balance while simultaneously including what KMA calls "telling statements" about Social Security solvency? These are all the same issue - whether or not Social Security will have money, in particular, whether or not the government will make good on its debt to Social Security. If it does pay back the money it owes, Social Security will remain solvent. If it doesn't, Social Security won't. KMA can't have it both ways - either the article is discussing the Trust Fund balance/solvency, or it isn't.

Then KMA questioned the credentials and appropriateness of referencing Matthew Yglesias, and claims that he can't trust him over a trained economist (Luskin, whose article I was examining). I'll number my reply:

1) I only quoted Yglesias to ask whether or not Bush planned to default on the money the government owed SS - the very issue central to Luskin's argument. Luskin says, more or less, that if the government pays back the money it owes, it will be disastrous because it is such a large amount. If it doesn't pay SS its money, then SS will be insolvent. The quote I used from Yglesias didn't take any position; instead, it merely pointed out that there is only a financial problem for SS if the federal government doesn't plan on paying back its debt. Which is no different than what Luskin wrote.

2) Yglesias writes for the respectable This American Prospect, and has a very popular blog. Apparantly his political leanings - according to KMA - make him too biased to be trusted over an "economist." Well, Luskin wrote this article for the National Review, one of the biggest right-wing mags out there. I don't begrudge him this, and I won't invalidate Luskin's views simply because of this. I hope KMA won't invalidate Yglesias' views simply because he also writes for an ideologically-oriented magazine. Furthermore, while Yglesias' website has anti-Bush ads on it, the NRO website has "Liberal Most Wanted Cards" ads on it. So KMA, please don't attack Yglesias on something that could just as easily be aimed at Luskin.

3) Yglesias is NOT an economist, that is true. So I thought I'd link the opinion of a trained economist - just like Luskin - on this issue. Here Duncan Black, aka Atrios, a trained economist, seconds Yglesias statement that I quoted earlier. There - now we both have a trained economist's opinion to rely upon.

Next, KMA criticizes the CBPPs solution the Social Security's problems. I don't want to get into that here, and I never advocated for their plan in my earlier post, and I don't feel like defending it here. I didn't rely upon their solution earlier, and I don't necessarily agree with it. Really, the only reason I used the CBPP webpage was for the Congressional Budget Office quote - I couldn't find the actual report myself. I wasn't using CBPP suggestions in the first place, so I don't take KMAs critique of them - whether I agree with him or not - as a critique of my post. KMA then wrote:

I agree with most of what KMA wrote here. Only, though the claim that Luskin (and KMA) make that SS actually has no money is technically true - its like they hold an ungodly amount of IOUs from others - the manner in which they use that information is misleading. Just because SS doesn't actually have money in the bank doesn't mean they don't have anything - just like liquid assets are assets nonetheless. So saying SS has no money is technically true, but since SS can call in IOUs when they need to, they have funds to continue providing benefits. Next:

I agree with this. One of the two will have to happen. But KMA has compeletely ignored my solution for this problem that I wrote extensively on in my original post. KMA says "the money that was borrowed has been spent. it is not sitting around waiting to be used to pay back the loan." True. But there is a way to get the government more than enough money to pay back what it owes. And that would be to not make permanent Bush's tax cuts. As my original post showed, the amount of money this would save the government is almost unimaginably huge. (See my original post, posted earlier by KMA, for links.) For example, the cost of the tax cuts over the next 75 years, should they be made permanent, would be five times that of the Social Security shortfall over the same time period. Just rolling back the tax cuts on those making over $350,000 a year would almost completely cover any Social Security shortfalls.

The point is, repealing Bush's tax cuts would give the government more than enough money to pay back what it owes Social Security. If just the cuts on those making over $350,000 were enacted, then KMA's second option - covering Social Security shortfalls while not paying it back - would be doable without having to raise caps or payroll taxes, as KMA suggests. Next:

OK, I did use somewhat faulty language here. Beginning in 2009, the Trust Fund size will decrease each year until Social Security is forced to call in its IOUs from the federal government in 2018. This is what I meant. But there is no contradiction: unlike Luskin or KMA, I believe in the full faith and credit of the federal government, and that the Treasury bills I refer to in the last sentence that SS will redeem are good money. After all, it is generally pretty bad policy for the federal government to just start defaulting on our loans. So what has actually happened is that the Trust Fund size has decreased and, as Luskin, KMA, and I have agreed, the government will either pay back or default their SS debt. The point I was trying to make here in the original post was that the term crisis was incorrect beginning in 2009, because the simple reduction in Trust Fund size is not a disaster - as long as the federal government doesn't default in 2018.

OK, finally:

My point here was actually to mention that the crisis forecasted by people such as Luskin is, in the end, an 80% payout rate of Social Security. SS will NOT stop paying benefits - instead, it will at worst payout 80%. But in real terms, by the time we get to the point where SS starts paying 80% of benefits, in 2042, that 80% will be worth more to recipients than 100% of benefits do to recipients today. So the worst case scenario - even Luskin says that this is where SS is headed, and I don't disagree - is that recipients lose about 20% of their benefits but are still better off than recipients today who get all of their benefits.

Which is why I don't believe there is a crisis.

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