Monday, January 31, 2005

Uh-oh...SS stuff again...

Man, I don't need another day off from work. It gives me too much time to get into trouble at the keyboard...

Josh Marshall has posted a link to a 103-page PDF document prepared for those who want to advance the administration's position on changes in the Social Security system. What a study in organizational excellence. I have to hand it to these guys, they got their you-know-what together. Not only are there extensive articles and quotes, there are also a couple of prepared speeches, one generic and another for audiences over 50, ready to go...

Good day. My name is _______________. I am here to talk with you about your future, and the future of your children and grandchildren. I have studied the challenges facing our Social Security system. I am going to share with you today what I have learned, and tell you about the solution that I recommend.

Complete with Power Point slides and supporting material, whoever does his homework with this pile of stuff will have no equal when he marches into the next civic club or coffee klatch for a presentation. I'm impressed.

Unfortunately, I happen to be on the wrong side of the debate, essentially unarmed in the face of what is clearly an armory of artillery aimed in my direction. The only thing I have in my favor is that I work in a retirement community, I'm getting older, my kids and grandchildren have been on my mind a lot over the last few years, so I have been able to give the matter a good deal of layman's attention long before the issue took center stage in Washington. I have to give the president credit. I heard him say on the radio just the other day how everyone was afraid to touch it...the "third rail" of politics for fear of being killed. He's doing more than "touching" it.

At a glance (remember there is over 100 pages to look at) here is a couple of things I noticed...

Language is very important to the discussion...

"Personalization" not "privatization": Personalization suggests increased personal ownership and control. Privatization connotes the total corporate takeover of Social Security; this is inaccurate and thoroughly turns off listeners, who are very concerned about corporate wrongdoing.
Talk in simple language: Your audience doesn’t understand financial jargon. Phrases such as “cash flow deficits” and “actuarial imbalance” don’t normally crop up in conversation; avoid using them.
Keep the numbers small: Your audience doesn’t know how trillions and billions differ. They know these numbers are large, but not how large nor how many billions make a trillion. Boil numbers down to “your family’s share.” Also avoid percentages; your audience will try to calculate them in their head—no easy task while listening to a speech—and many will do it incorrectly.
Acknowledge risks: Many of your listeners will not have a lot of financial education or investment experience, but they know that markets have risk—and nothing is guaranteed. They believe investments can grow over time, but they also know they can lose their investments. They don’t trust someone who tells them differently.
Say it the way they can hear it: Your audience will reject some turns of phrase because of the connotations and associations. The responses are not universal, but they are much less personal than you might imagine.

I'm not going to the trouble to fisk this stuff. The condescending tone speaks for itself. We're down to "bread and circuses" here.

Credit where credit is due. There is one brief mention of an opposition proposal.

The leading liberal plan on Social Security is that of economists Peter Diamond and Peter Orszag. Its backers, such as Jonathan Cohn of The New Republic, prefer to describe it as "a series of tweaks" that "involves both raising taxes and cutting benefits." Likewise, the Washington Post describes Diamond and Orszag as "'balancers,' who would use benefit cuts and tax increases in equal measure." In truth, 85 percent of the improvement in solvency their plan accomplishes would come from higher taxes. (They even propose adding some benefits.) They want to raise the payroll-tax rate. They want to raise the amount of wages to which the tax applies. Then they want to add a "surtax" to high earners.

Yes, I added the emphasis to those thirteen words, because it is the only reference I found in the entire document to the cap on earnings taxed for Social Security. Notice the absence of the word and in that string of they-want's. All three refer to the same thing, the item highlighted in bold-face. That is one cat that no one wants out of the bag, including many, if not most of those who call themselves part of the opposition. It would mean that anyone earning over (this year) $87,000 would have to continue chipping in, maybe even for the remainder of the year, until resuming next January. Imagine that...somebody earning six or seven times the minimum wage having to pay the same percentage as everybody else! How unfair! Those folks would otherwise be salting away that money to create jobs and build factories, don't you know...

Settle down, Hoots. There's more to talk about.

This jumped out at me...

The average life expectancy has increased from 63 in 1935 to 77 today.

I don't think this is a deliberate attempt to mislead anybody because it is so widely believed to be important. It is, in a way, because those are "life expectancy at birth" numbers, which are not the same as "life expectancy at 50" or "life expectancy at 80". The differences are more dramatic when you look at statistics from birth. The difference is fourteen years. But the numbers for life expectancy at age 65 are not as dramatic. In 1930 a 65-year-old man could expect to live 11.7 years. By 1997 a 65-year-old man could look forward to 15.9 more years. That is an improvement of a little more than four years, not fourteen. Trivial point in the overall debate, but one worth noting.

Google showed a private site that was a treasure trove of numbers and statistics. It is a duke's mixture of stuff about insurance, annuities and the like, but it is a great jumping off point for anyone who wants to get informed about numbers. From what I have learned about gerontology, a lot of the material is pretty good. How about these...

Immigrants who come to the United States live an average of three years longer than people born here. (NIH)... A growing body of evidence indicates the life span difference reflects both immigrants' innate vitality and their reluctance to embrace Americans' drive-thru, drive-everywhere mentality. They also smoke less....The life expectancy deficit is true for all races but is most dramatic among blacks. Immigrant black men live nine years longer than black men born in the United States....The records showed the average American-born black man could expect to reach 64, while a black man born overseas would likely live beyond 73 if he immigrated. In the case of an African-born man remaining in his homeland, he might well have died before his 50th birthday.... Obesity, too, is far more prevalent among American-born residents. Data from the mid-1990s showed that 22 percent of adult immigrants were obese, compared to 28 percent of U.S.-born adults. (Recent numbers suggest about 30 percent of all U.S. residents are obese.) ...The smoking numbers were even more dramatic: 18 percent of immigrants smoked, compared to 26 percent of U.S.-born adults.

Does anyone need to be reminded about demographic trends regarding immigration?
Could these trends have any connection with the shape of the debate about Social Security reform?
I mentioned immigrants in my previous post about Korea. Because they are employed largely at the lower end of the economy they are contributing a growing share of the revenue upon which the Social Security System is supposed to be relying.
Is anyone bringing them up?

What about this (from USA Today)?

With better medical care and a drop in smoking rates, death rates for heart disease have been cut in more than half, and they have declined even more dramatically for stroke and other cerebrovascular disease. ...Death rates from injuries, particularly motor vehicle crashes, have also fallen since about 1970, with safer cars on the road and more people wearing seat belts. ...The average baby born in 1900 could expect to live 47.3 years and that gauge has been climbing ever since. By 1950, life expectancy had risen to 68.2, and it reached 76.9 in 2000. ...Infant mortality: The portion of babies dying before their first birthday was at a record low in 2000, 6.9 per 1,000 live births. That rate has fallen 75% since 1950. ...there are currently some 76,000 Americans over the age of 100. The Census Bureau estimates that the number of centenarians will increase to 324,000 by the year 2030, and swell to the astounding figure of 834,000 by the year 2050.

As Twain or Disraeli or somebody famously said There are lies, damn lies and statistics. That part about more than three quarters of a million centenarians looks to me like a stretch, but you get the idea. I don't wish to be an alarmist, but from what I can tell, the future, barring unforseen circumstances, is going to be cluttered up with a lot of old people. I'm old enough that by then I won't be part of the problem, but my kids will have to come to terms with it in all it's glory.

So to conclude this post, I want to go back to one of the canned speeches fouond in the PDF document.

For every six dollars the government takes from today’s workers for Social Security taxes, five dollars is given to retirees. That remaining dollar goes into the “trust fund” that you’ve heard about, but it’s not being saved there; it is being spent. And what it’s being used for is the day-to-day functioning of the rest of the government, which itself is running giant deficits.

I’m all for fiscal discipline. Forcing the government to balance its checkbook, cut its wasteful over-spending, and quit borrowing from the Social Security trust fund surpluses is one of the most important things we could do to strengthen Social Security. In fact, I’d love to see the government pay back to the trust fund the billions and billions of dollars it has alreadyborrowed over the years. But I’m not optimistic this will ever happen. No matter who’s in charge, there’s just no discipline in our nation’s capital.

There it is in black and white.
I could not have said it any better.
These are the words of a Republican talking points document and last time I checked, they were the ones in a majority.
My message to them, to the majority, to the man who wants to spend some of the "political capital" that he earned in the presidential election, is this: Pay attention to the paragraph above and do something to get some discipline in our nation's capital. Do what you have to do about the future without stealing any more money from those of us who continue to be taxed, not for the general revenue, but for Social Security.

I thought there was a problem in our history with "taxation without representation." I have been suffering under the illusion that income tax, designated for the general fund, was subject to some kind of deduction.

There is no deduction against the Social Security tax. It is REgressive, not PROgressive.
From the first earned dollar it affects everyone in the population.
Those who pass that cap, whose income levels are most able to absorb an increase, are not affected, year after year, while those who never come close to that level of income pay into the system all of their working lives.

What is going on?

1 comment:

Deborah said...

Josh Marshall's competency and astuteness on reporting this issue astounds me. And the Bush team's thoroughness in planning and preparing is astounding...If only they have used that energy and creativity in Iraq, rather than attacking us Americans.