Why Oh Why Can't We Have a Better Press Corps? (Yet Another New York Times Edition)

Today it's the nearly-always-unreliable John Tierney, claiming that Social security is in trouble because: Place Your Bets: "Congress spent our money, leaving the Social Security trust fund with a file cabinet full of i.o.u.'s in the form of Treasury bills."

Congress... Isn't it a fact that the *President's* signature is also required on legislation? Isn't it a fact that the President proposes to Congress a budget for the United States for each fiscal year? Isn't it a fact that those budgets--even those declared "dead on arrival" substantially guide taxing and spending decisions? That it is very, very rare for actual spending and taxes to significantly deviate from what the President wishes?

Different Presidents wish for very different things. The Congress in 2002 was very similar to the Congress in 2000; the Congress in 1994 was very similar to the Congress in 1992; and the Congress in 1982 was very similar to the Congress in 1980. Yet the Presidents were different--and the deficit outcomes were very different.

One of the most striking patterns in recent American budgetary history is the way that every newly-elected Republican President blows the budget deficit wide open in his first term. Here's the federal "on budget" budget balance--the thing that doesn't count the Social Security surplus, and that would under a good government be at or moving toward balance:

But this is not something that Tierney is anxious to tell his readers, is it? No responsibility allowed. There are no "Reagans," "Bush Is," and "Bush IIs" in the text of his article--none of the Presidents who submit the exploding-deficit budgets, are there? There are not even any of the budget-busting Republican Congressional leaders--no Bakers, no Doles, no Gingriches, no Armeys, no DeLays, no Lotts appear. Just a faceless "Congress."

But people do make a difference. In fact, let's add another President to our graph: here's what happens to the budget deficit in the first term after we elect a Democratic President--Clinton.

Again, not something Tierney is eager to remind his readers of, is it?

Bill Keller, this is pathetic: you need to change your lineup, and you need to do it fast.

Comments

[Tim H.]

Again, if SS bonds are worthless it would be nice if they would immediately stop buying them with my payroll taxes. One might assume that George Bush is condoning criminal acts.

[anne]

Brad

Really a nice response. I was too annoyed by John Tierney to bother to comment, but being mindlessly annoying always appears to be the point with Tierney.

http://www.nytimes.com/2005/04/26/opinion/26tierney.html?ex=1115611200&en=a2cca06fe83cdb4e&ei=5070

The Proof's in the Pension
By JOHN TIERNEY

SANTIAGO, Chile

I made a pilgrimage to Santiago seeking to resolve the Social Security debate with a simple question: What would Pablo Serra do?

I wanted to compare our pensions to see the results of an accidental experiment that began in 1961, when he and I were friends in second grade at a school in Chile. He remained in Chile and became the test subject; I returned to America as the control group....

http://www.nytimes.com/2005/05/07/opinion/07tierney.html

Place Your Bets
By JOHN TIERNEY

After a recent column comparing Social Security with the Chilean system of private accounts, I was deluged with letters from readers eager to explain why I am a superficial nitwit. In this case, they're at least half right.

The column was superficial because I simply looked at how much more money I'd have if I had invested my Social Security contributions in the private account of a Chilean friend and economist, Pablo Serra. The numbers were impressive - my projected pension would be triple what I'm promised by Social Security - but they're not as important as another consideration: which type of pension is riskier? ...

[anne]

http://www.nytimes.com/2005/04/30/opinion/30tierney.html?hp

Bush as Robin Hood
By JOHN TIERNEY

Democrats have good reason to be aghast at President Bush's new proposal for Social Security. Someone has finally called their bluff.

They tried yesterday to portray him as just another cruel, rich Republican for suggesting any cuts in future benefits, but that's not what the prime-time audience saw on Thursday night. By proposing to shore up the system while protecting low-income workers, Mr. Bush raised a supremely awkward question for Democrats: which party really cares about the poor?

For decades Democrats have pointed to Social Security as a triumph of communal generosity, proof that Americans (or at least non-Republican Americans) will work together to make sure that no widow is reduced to eating cat food. The program has been wonderful for liberals' self-esteem. What it has actually done for the poor is another matter.

It's true, as Democrats love to point out, that the poverty rate among the elderly has declined from 35 percent a half-century ago to 10 percent today. But when you consider how much money is being taken out of Americans' paychecks - most workers now pay more to Social Security than to the I.R.S. - you're entitled to wonder why there are any poor widows remaining.

As a poverty-fighting program, Social Security is woefully inefficient because most of the money goes to people who aren't poor....

[Pancho Villa]

'The difficulty lies, not in the new ideas, but in escaping the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.'

[marky]

Why should Keller be unhappy? The NYtimes has been pushing Bush propaganda hard for 4 years now. It's a comfortable niche.

[Carlos]

If you thought that Tierney was being "unreliable" there, you need to check Brooks latest. It's so bad I think he's trying to set some new record.

[washerdreyer]

I remember some blogger I like being quite happy about Tierney getting the job based upon his pre-NYTimes work. Was his work before hand as egregious?

[anne]

"The difficulty lies, not in the new ideas, but in escaping the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds."

John Maynard Keynes :)

[pgl]

Angrybear reader Jennifer tried to me me that Tierney writes well. Perhaps if one does not judge writing on content. This fellow would not even be hired over at NRO.

[A. Zarkov]

Those are fair criticisms of the fiscal irresponsibility of Republican presidents, but I don’t think that’s pertinent to the Tierney article. If the SS Trust Fund managed a portfolio of assets like the University of California Retirement System instead of buying special-issue Treasury Bonds, future taxpayers would have less of a burden. The portfolio could even buy foreign equities. Would professor DeLong like to give up his UCRS pension plan for a pay-as-you-go type system? More specifically if he were back in 1976 would he have elected to “coordinate” with SS? The people I know who made that election are really sorry they did that. If you don’t believe me, go to the UC Benefits web site http://atyourservice.ucop.edu/ and run some retirement calculations. Try it with and without SS. That way you can see how much all those FICA taxes get you if you were retiring today. Circa 1990 the UC HR retirement seminar came clean and told the attendees that they were foolish if they elected coordination back in 1976. But they forgot to remind the attendees that HR was really pushing election back then.

[Ari]

A.Zarkov

Please explain your argument for those of us who are at other universities. Are those covered by the University of California Retirement System not covered by Social Security? I do not understand.

[howard]

As far as i can tell, A. Zarkov seems to misunderstand social security, which is an annuity, not an investment program.

And as far as i can tell, Half Sigma knows nothing. His descriptions of the circumstances under which clinton and bush ii came to office are, at best, a time zone away from accurate.

[anon e mouse]

Yeah, divided government would be wonderful. Republicans always seem to love spending as long as it's one of their own doing it.

Remember back when they were calling for a balanced budget amendment & wanted to abolish entire departments? Can we get that again, please?

[John Emerson]

The Times is a crooked operation. They're not going to improve.

[ProfWombat]

Seems to me John Tierney's quite reliable, actually, if he's nearly always bad...

[billy]

Unless the Times runs its show differently than other newspapers, it's Gail Collins and Sulzberger, not Bill Keller, that bears responsibility for anything egregious on the editorial page. Keller has at various times prior to taking the top news job written for the ed. page. But I don't think he had any direct influence on who or what goes on that page.

[A. Zarkov]

The University of California has a defined benefit pension system that covers both faculty and staff. All UC employees hired before (about) 1977 did not have to pay any FICA tax. At that time they paid about 7% of salary into the retirement fund. After about 1977 all new employees had to coordinate and pay full FICA. Since 1989 the UC pension fund got so large employees paid in nothing. A really sweet deal for the uncoordinated folks, no FICA tax, no contribution. An employee reaching the age of 60 with 30 years of service gets 75% of his salary (actually the average of three highest pay years). You can retire before 60 with a pro-rata reduction in benefit. Those employees get no SS benefit. In 1976 UC employees were given the option of “coordinating” with SS, meaning they pay full FICA tax and get SS benefits (but with possible offsets). For example, our uncoordinated 60-year old with 30 years of service and a salary of $8,000 per month gets a $6,000 per month retirement benefit. If he coordinated in 1976 he gets a monthly UCRS benefit of $5900 per month and UC supplement of $99 per month between ages 60 and 65. Thus the coordinated employee gets the same benefit as the uncoordinated employee between ages 60 and 65. After age 65 the supplement stops because SS kicks in. Thereafter he gets just the $5,900 from UC instead of $6,000. If the uncoordinated employee qualifies for SS from other non-UC work where he paid FICA his SS benefit is reduced. This is the so-called “windfall elimination provision. Here the first factor in the three-factor SS benefit formula is reduced from 90% to 40%. Thus the uncoordinated retiree takes a hit if he should decide to get a post UC retirement job. The coordinated employee takes a hit on his UC pension. Most people I know strongly regret electing coordination in 1976.

[Pete Coffee]

FWIW, I think that it's extremely important to fight this propaganda's terminology, not just the broad-based effects. The continued description of Treasury bills/notes/bonds as "i.o.u.s in a file cabinet" is vulnerable language which should be exploited at the base level: "Republicans propose US default on national debt: paper currency to be worthless."

[Bruce Webb]

Zarkov. Bullshit. I was working for UC Berkeley in 1989 and I paid FICA. I have the retirement statement to prove it. It is true that the retirement system was producing returns that let the University and the workers stop making contributions, man that was a good day, but we still paid FICA. And I am glad for it because I was not vested under the Cal plan and I needed the money when it came to the time I cashed out. But I still earned quarters and paid into FICA during my time there.

You present a blizzard of numbers and "offset this" and "offset that" but your $8,000 a month salary assumes $96,000 annual. I doubt seriously that this represents any kind of mid-line at UC Berkeley and would have been more than the average full Professsor made in my time.

Does the average UC Berkeley employee make close to $100k? Can I have my old job back? And no despite what they say I really don't owe that $800 to UCB but I will be glad to pay it if Library Assistant IV is now pulling down anything close to what Zarkov is claiming.

[Bruce Webb]

And I have no idea how good Pete's Coffee may be, but I am living in epicenter of Starbucks, and 99.9% of people here don't understand that Peet's was way ahead of them. And I don't remember a lot of flavor shots, when I ordered a Doppio I had to add my own sugar.

[Jennifer]

A. Zarkov

What your example shows is that having a good retirement plan is important, and having Social Security to rely on as a base is equally important. The example in no way lessens my support for Social Security.

[Jennifer]

PGL

Recognize what clear and simple writing is. New York Times writers and editors are technically superb. So, when we wish to argue with a Times careful thought is needed as Brad DeLong shows. Also do be polite, for I am always polite.

[anne]

http://www.nytimes.com/2005/04/28/opinion/l28tierney.html?ex=1115697600&en=1b0be47688ee8b39&ei=5070

What's Good for Chile's Retirees...?

To the Editor:

Re "The Proof's in the Pension" (column, April 26):

I read with interest John Tierney's discussion of the social security system in Chile, my native country.

As his sample of one suggests, most upper-middle-class Chileans do well under the private accounts system. But many low-income Chileans find to their dismay that the retirement income available to them through private accounts is not enough to live on.

This is likely to happen here if we adopt the plan that President Bush has proposed.

The Social Security system in the United States is more than a retirement plan; it is also a social contract that enables low-income retirees and those who become disabled to have a pension that enables them to live with a modicum of dignity.

We need a system that works for all Americans, including low-income and middle-income Americans.

Daniel Pilowsky

Hastings-on-Hudson, N.Y.

April 26, 2005

To the Editor:

John Tierney paints a rosy picture of the private pension plans instituted by Chile in 1981. But his anecdotal account, based on the experience of one highly paid Chilean professional, runs exactly counter to the message of a front-page article you published on Jan. 27.

In that article, "Chile's Retirees Find Shortfall in Private Plan," we learn that many Chileans, including middle-class workers who made regular contributions to private accounts, are finding that they would have been better off if they had remained in the old system.

One Chilean official observed, "If people really had freedom of choice, 90 percent of them would opt to go back to the old system."

Philip Terrie

Bowling Green, Ohio, April 26, 2005....

To the Editor:

John Tierney calls his comparison of Chile's pension plan with Social Security on the basis of two people an "experiment." It is not an experiment but an anecdote.

It is possible to find another Chilean whose privatized pension has yielded insufficient funds and no doubt to find another United States citizen who used his Social Security check to buy a lottery ticket, which has made him wealthy.

The real question is whether we want to continue to have Social Security as an insurance program that guarantees a certain level of pension benefits to all, or to change to an investment program that will benefit some while leaving others penniless.

Hector Javkin

San Jose, Calif., April 26, 2005....

[liberal]

A. Zarkov wrote, "Would professor DeLong like to give up his UCRS pension plan for a pay-as-you-go type system?"

OK, so how do you propose to transition from the current system (mostly, but not 100%, pay-as-you-go) to a fully prefunded system?

[liberal]

Tim H. wrote, "Again, if SS bonds are worthless it would be nice if they would immediately stop buying them with my payroll taxes. One might assume that George Bush is condoning criminal acts."

Agreed.

[ChasHeath]

Someone did an econometric study "proving" that "congress" cuts other tax revenue and increases spending by more than a dollar for every dollar of Social Security surplus.

Much easier to explain this phenomenon simply by looking at specific President's records. The data is there to back up an econometric "proof", but you can attribute 90% of the correlation to specific Presidents.

[A. Zarkov]

Bruce Webb:

“Zarkov. Bullshit. I was working for UC Berkeley in 1989 and I paid FICA.”

You have not read me carefully. You paid FICA if you elected the coordination option in 1976 or if you started to work there after either 1977 or 1983 (I can’t remember the exact date when FICA became mandatory). The $8,000 example I choose was arbitrary, in no way was I implying that $8,000 a month was typical salary for UC employees. Although it would not surprise me if the average UC full professor made that much. All the numbers scale linearly, so if the monthly salary were $4,500, then the example retiree I presented would still get 75% or $3,000 per month as an uncoordinated monthly pension benefit. If he coordinated or started after coordination became mandatory, he would suffer an offset of $50 per month on his UC pension benefit. I provided all these details because someone asked for them.

The larger point here is that UC employees are better off without SS and they know that. That’s why so few opted for coordination in 1976 and why the few that did strongly regret it. I’m not saying that in absence of a pension alternative people would opt out of SS. But I’ll bet if you offered people the choice of SS or getting 15% more salary, they would take the latter.

Liberal:

I agree. We can’t. We are stuck with the present pay-as-you-go system. I don’t support the Bush plan either because the expense ratios would eat up too much money. What I do support is the following. The SS Trust Fund stop buying special-issue Treasury Bonds and start managing a portfolio of assets like the UC with the surplus FICA taxes. This has two benefits. First the taxpayers don’t get stuck with the cost of redeeming the special-issue bonds. Second, it would pressure the government to be more fiscally prudent because it would take away that extra source of funds. So the real deficit would be more apparent.

[Anthony Greco]

As I pointed out in a letter to the Times after seeing Tierney's column, if "they're just IOUs" was a genuine concern re. the SS trust fund, there would be a simple solution: just change the law to allow the trust fund to acquire "real" assets, say, AAA corporate bonds. Why hasn't anybody proposed this obvious solution? It doesn't occur to the privatizers, either because they themselves know the "problem" is bogus or because they really aren't interested in solutions to SS's alleged problems, but in replacing SS altogether. Another reason, of course, is that while AAA corporates are pretty safe, they're not quite as safe as US Treasuries.

[James S. W.]

Dr. DeLong,

Could you provide a footnote or reference for these graphs, please? I believe them, but I've been trying to convince some "true believer" GOPers that THEIR party has been driving the country to bankruptacy, not the other.