Thursday, January 06, 2005

Social Insecurity
Social Insecurity

By Howard Kurtz
Washington Post Staff Writer
Friday, December 17, 2004; 9:29 AM

The editorial page editor of the Los Angeles Times has issued a challenge to the blogosphere.

Which is not so crazy when you consider that the editor is Michael Kinsley, who spent nearly a decade running Slate and is well accustomed to the give-and-take of the online world.

Kinsley has fashioned one of his liberal, economically precise, smarty-pants arguments about how Bush's Social Security plan is destined to flop. He invites all comers -- that is, anyone with a modem -- to take him on. (Of course, some of them were coming whether he wanted it or not). This to me is the essence of what's good about the Web -- a wide-ranging, no-holds-barred debate in which you don't need to work for a big media corporation as a ticket for admission.

But perhaps there's a challenge here as well for the mainstream media, which find it so much easier to go wild over Amber Frey or Bernie Kerik's mistresses or "Desperate Housewives" or Ron Artest punching out fans (that is, when they're not filled with holiday advice about the latest cell phones, digital cameras and other gadgetry that you absolutely must have).

I don't want to slight the economics writers who have done a fine job of unraveling the threads of the Social Security arguments and whether private accounts can be created without huge costs or benefit cuts. But this is dense, complicated stuff based on all kinds of economic assumptions, and I wonder whether the media, particularly television, can muster the patience to cover it in more than a superficial sound-bite way. In other words, having a liberal and conservative come on talk shows and argue that the other side wants to bankrupt the system and leave seniors out in the cold is not what we need right now.

By the way, Bush said at yesterday's economic summit: "It's so much easier in politics to pass problems on to future generations." Isn't that exactly what the whopping deficit does?

More on the president's remarks in a moment, but first here's the Kinsley argument (via Andrew Sullivan) that the Bush plan "can't possibly work, even in theory. The logic is not very complicated.

"1. To 'work,' privatization must generate more money for retirees than current arrangements. This bonus is supposed to be extra money in retirees' pockets and/or it is supposed to make up for a reduction in promised benefits, thus helping to close the looming revenue gap.

"2. Where does this bonus come from? There are only two possibilities: from greater economic growth, or from other people.

"3. Greater economic growth requires either more capital to invest, or smarter investment of the same amount of capital. Privatization will not lead to either of these. . . .

"4. If the economy doesn't produce more than it otherwise would, the Social Security privatization bonus must come from other investors, in the form of a lower return.

"5. If the privatization bonus cannot come from the existing economy, and cannot come from growth, it cannot exist. And therefore, privatization cannot work."

Before we serve up some other views, let's check in with the president, who's obviously convinced his plan can work and that he can get it passed.

"President Bush said on Thursday that addressing the long-term problems in Social Security would reassure the financial markets, offering a rationale to offset criticism that his plan to add personal investment accounts to the retirement system would require up to $2 trillion in new government borrowing," says the New York Times.

"On the second day of a White House conference on economic issues, Mr. Bush continued to lay the groundwork for a strong effort by the White House and its allies to overhaul Social Security and pursue an economic agenda next year that also includes re-examining the tax code, limiting lawsuit awards and reining in the growth in government spending."

Now comes the key part:

"As he did throughout his re-election campaign, Mr. Bush largely avoided talking about the specific steps to assure the long-term solvency of Social Security. . . . In particular, Mr. Bush never mentioned the near certainty that without raising taxes, which he has ruled out, any plan to add personal investment accounts to Social Security and improve its financial condition would include a reduction in the guaranteed retirement benefit."

The Philadelphia Inquirer strikes a different note:

"Any White House plan to let workers invest Social Security taxes in the stock market would include restrictions to prevent foolhardy investments, President Bush said yesterday.

"Filling in a key detail of his Social Security plan, Bush said workers would be given a narrow range of conservative investment options similar to the thrift savings plan for federal employees, to reduce the risk that they would squander retirement nest eggs."

Restrictions? What about the virtues of the free market?

The opposition is gearing up, notes the Los Angeles Times:

"Bush's partial privatization plan was roundly applauded by the carefully screened participants at the economic conference, but it had the opposite effect on interest groups that announced they were banding together to lobby against Bush's plans.

" 'The fight against privatizing Social Security will be the fight of our lives,' said George Kourpias, president of the Alliance for Retired Americans, one of several groups that said they were not invited to present their views at the White House conference. 'Privatization will destroy Social Security.' "

Now for some other online views, starting with Arnold Kling:

"Michael Kinsley is correct to be skeptical that privatization will generate a bonus large enough to eliminate the gap between the promises made to future recipients and the likely revenue to pay for those promises. In that sense, privatization will not 'work.' Neither will the status quo.

"To a first approximation, Social Security's imbalance is not made better or worse by privatization. Instead, economic analysis suggests that the effects of Social Security privatization will be subtle and small relative to the challenges that lie ahead. A much more powerful tool for addressing the problem would be to increase the age of dependency, also known as the Social Security retirement age."

Kevin Drum has this to say: "One of the things that's slowly becoming clear in the Social Security debate is that President Bush's advisors are probably not going to risk what's left of their professional reputations by pretending that private accounts can fix Social Security's future funding shortfall. Instead, they're going to propose benefit cuts in order to balance the books.

"As my readers know, I'm not in favor of making any changes to Social Security at the moment. The 'funding shortfall' has a strong Chicken Little flavor to it, and even if it turns out to be real there's little reason to try fixing it four decades ahead of time.

"Still, the subject is on the table, and it's worth unpacking the specific benefit cut that appears to be everyone's favorite right now: indexing future benefit increases to prices instead of wages."

While not a response to Kinsley, the Nation's Dean Baker says: "The president's main pitch is that these accounts will yield higher returns than Social Security does. The pitch also includes rhetoric about the accounts being 'your money,' and giving every worker a stake in the 'ownership society.' These claims are mostly bad math, faulty logic and deception. Advocates of private accounts assume that the stock market will give the same returns in the future as it has in the past, even though price-to-earnings ratios in the stock market are far higher now than in the past, and the Social Security trustees project that profits will grow at about half the rate they did in the past.

"None of the proponents of privatization have yet passed the 'no economist left behind test,' which asks them to show the set of dividend yields and stock price increases that add up to the stock returns they assume in their analysis."

Did Bernie Kerik have a nanny at all? The New York Times sounds skeptical:

"Mr. Kerik was told that skeptics in city government circles were questioning the very existence of the nanny, and he was pressed to provide any kind of evidence to document that she was real. But after taking time to consider the request, Mr. Kerik again decided to remain silent on the subject.

"Most puzzled about the nanny, perhaps, are former neighbors of the Keriks and their kin. In the Riverdale section of the Bronx, where the family lived in a first-floor apartment for years before moving last year into the Franklin Lakes home they had extensively renovated, neighbors did not recall any household help."

David Frum and Andrew Sullivan have, shall we say, diametrically opposite views of the recent award ceremony at the White House. First, Frum:

"President Bush has just awarded the Presidential Medal of Freedom, the nation's highest civilian honor, to three architects of his Iraq policy: Paul Bremer, Tommy Franks, and George Tenet. These medals have provoked derision from critics who scoff that the president's Iraq policy isn't going very well and that rewards are premature or wholly misplaced.

"But the president is doing something important. He is declaring to the officials and soldiers who are executing this policies that he will stand behind them when things get tough; that he won't go seeking scapegoats; that he fully, strongly, and publicly supports the individuals he himself chose to carry out the tasks he himself assigned. There's a lot of loose talk about President Bush's demands for loyalty. One thing that critics of this president have never grasped is that he has been unprecedentedly successful in claiming loyalty up because he is unprecedentedly committed to loyalty down."

Now, Sullivan:

"Memo to David: a 'scapegoat' is someone unfairly singled out for criticism when he isn't the man responsible. Take just on example here. George Tenet was CIA chief when the worst intelligence failure since the Bay of Pigs led to the deaths of thousands of people at the hands of Jihadist murderers. He followed up by assuring the president that the case for Saddam's existing stockpiles of weapons of mass destruction was a 'slam dunk.' Not only is this man not fired; he is given the highest civilian medal possible. Frum's case is that what really matters is not competence or candor or effectiveness -- but loyalty. How is the ethic he praises inapplicable to, say, a successful mob boss?"

HHS secretary, the last time I checked, was a bigger job than head of the EPA. But the New Republic's Gregg Easterbrook says that's not the reason for the latest Cabinet shuffle:

"Michael Leavitt announced that he will leave the Environmental Protection Agency after just 14 months at the EPA's helm and become George W. Bush's secretary of Health and Human Services. Whether the former Utah governor is the right choice for that job will now be debated, but before Leavitt punches out at the EPA, let's contemplate why he is departing after such a short stay. He is departing because he realized that environmental regulatory reform is currently impossible. Neither the left nor the right will allow it.

"Leavitt was a governor, and governors are like little presidents. They issue orders and heels snap; their hometown press is usually good; no one is above them in the organizational chart. Bush has named two governors to run the EPA, Christine Whitman and Leavitt. Both soon discovered to their frustration that an EPA administrator is not a little president. Members of Congress constantly hector the EPA, usually in melodramatic faux-outrage; the actual president does not give the EPA the time of day; the East Coast media methodically and I think deliberately twist EPA reporting in the most negative possible terms, desperately trying to make the agency look bad. This is bipartisan; the East Coast media desperately tried to make Clinton's EPA administrator Carol Browner look bad, and she was a four-star super-competent leader who deserved great press . . .

"The EPA has had five consecutive good administrators: Lee Thomas at the end of the Reagan presidency, Bill Reilly under Bush 41, Browner under Clinton, and Whitman and Leavitt under Bush 43. But why, in the current political environment, would a top person even want this job?"

Washington Monthly's Amy Sullivan has thoughts on abortion:

"Wow. I sat up when I read this in Newsweek: When John Kerry stopped by a meeting of the liberal 527 America Votes two weeks ago, EMILY's List president Ellen Malcolm asked him about the future of the Democratic Party. Kerry 'told the group they needed new ways to make people understand they didn't like abortion. Democrats also needed to welcome more pro-life candidates into the party, he said.'

"Standing up and saying that to the head of the pro-choice group that holds the biggest purse strings for the party takes some guts. (Not as many guts as it would have taken to say it during the election, but these are baby steps.)

"What's more, Kerry is right. And before you start spamming me with hate mail, listen up. No one is suggesting that the Democratic Party change its platform or abandon the pro-choice cause or become, as one congresswoman mischaracterized Kerry's advice, 'fake Republicans.' That would be stupid and, even worse, wrong.

"But it's long past time for the Democratic Party to realize that they continue to lose voters who aren't one-issue abortion voters but who feel unwelcome in the party because of their beliefs. Rhetoric that verges on being pro-abortion rankles even pro-choice Democrats like me."

I wrote the other day of the suicide of California journalist Gary Webb, he of the discredited "Dark Alliance" series linking the CIA to crack peddling. A colleague, Scott Herhold, reflects:

"I know something about this. I was Webb's editor for a year after he came to the Mercury News in 1989. And I'm convinced that part of what made him great destroyed him.

"He was an immensely talented reporter, a good writer and a sometimes-difficult human being. In many ways, he represented the best of our craft -- its compassion, its obligation to speak truth to power.

"His flaw was the flip side of his virtue. Once convinced he was right, Webb didn't budge. It wasn't that his facts were wrong: It was the lines he drew between them. His lack of doubt demanded a firm editor to challenge him.

"In Dark Alliance, Gary didn't get that from any level. Suffice it to say that he did have a story, if a less ambitious one. The series suffered chiefly from sweeping generalizations.

"When the Mercury News backed away from the series in 1997, Gary's journalistic career was essentially ruined. Gary left the paper not long afterward and took a job as an investigator for the Legislature. More recently, he began writing for an alternative weekly.

"Maybe that's why the knife twists: Dark Alliance was as much an institutional failure as it was a personal one. Yet Webb bore the chief consequences."

First John McCain, then Bill Kristol. Now, the AP reports, it's Trent Lott saying that Rumsfeld can stay as long as he wants, as long as it is not very long.

The next election may be four years away, but the New York Post is already dreaming of an all-New York showdown:

"The stink of Bernard Kerik's rotten bid to become homeland security czar hasn't stuck to his chief cheerleader, Rudy Giuliani, who is a top pick for the presidency among Republicans, a new poll shows.

"A whopping 68 percent of Republican voters want to see Giuliani run for the White House in 2008, according to a new Quinnipiac University poll -- showing little fallout among the party base in the wake of Kerik's embarrassing exit. . . .

"And it shows that if party faithful get their way, Giuliani would face off against Sen. Hillary Rodham Clinton in an Empire State showdown -- which Giuliani would win, 45 percent to 43 percent. Clinton was the presidential pick for 67 percent of the Democrats polled."

And polls, as we all know, are never wrong.