We’ve seen the apology by Alan Simpson over his intemperate remarks, and that the White House accepted the apology (really, were they involved?) and announced that Simpson would continue to serve on the cat food commission. This has not comforted either groups like NOW or others, who maintained their call for Simpson’s resignation.
But I want to go beyond the 300 million tits and focus on the substance of his arguments. Because Simpson keeps bringing something up in these emails, whether to OWL’s Ashley Carson or CEPR’s Dean Baker. He keeps mentioning Stephen Goss’ report to the cat food commission from May 12 of this year. I’ve obtained the slides from that speech, and I have to say, I don’t think Simpson knows enough about Social Security to even collect it, let alone head a commission devoted to its future.
The presentation basically explains the Social Security system and how it works. It’s a primer, if you will. Slide 5 shows, in my view, that a commission focused on the budget deficit has no business involving itself in a separately funded program. It says that “Trust Funds enforce long-term budget neutrality” and if the Trust Funds get exhausted by 2037, which is the current schedule, “Spending is limited—-NO annual budget deficit.” In other words, Social Security cannot run a deficit and will adjust to the available funds. Regardless of whether you think that’s a good idea, the fact is that the program has basically no impact on the budget deficit whatsoever, unless you contort yourself into the lie that paying back the US Treasury bonds in the Trust Fund represents a “raid” on the budget. That’s what Matt Bai did in his preposterous story today, claiming that the $2.5 trillion in the Trust Fund, backed by the full faith and credit of the US government, “is sort of like saying that you’re rich because your friend has promised to give you 10 million bucks just as soon as he wins the lottery.” No, it’s like saying you’re rich because your friend owes you 10 million bucks by force of law.
Slide 6, which Simpson specifically pointed out, is merely the recitation of what the trustee’s report showed this year: all scheduled benefits can pay out until 2037. That’s 27 years of solvency, which I’d gather is better than practically every program in the federal government. What’s more, it makes Bai (and Simpson, who has made the same argument on occasion) look like an idiot for his stupid Trust Fund metaphor, because the 27 years of solvency assumes full repayment of the Trust Fund. That would be the point of Slide 7, “Solvent as Long as the Trust Fund Has Assets.” Slide 10 also shows this. It may look “scary, scary, scary,” but it’s showing the completely normal data from the trustee’s report. Simpson must think we never saw that before. I think he hasn’t.
As for the best solution in the future, I hardly think the answer for the potential cuts in 27 years is to make cuts today. As Goss says on Slide 11, the current program structure is sustainable with adjustments. It’s far more sustainable than Medicare, Ag subsidies, or just about 100 other things in the budget. Goss continues, “Sustainable is what Americans want and are willing to pay for.”
Hardly anyone knows that the payroll tax which pays for Social Security is capped at $106,000. Even if we carved out up to, say, $300,000 and then continued the tax on up, to capture the amount of compensation – 90% – expected by the program at the outset, we would have filled the gap almost entirely. As for the rest, believing so strongly in a 27-year projection is kind of nuts. We didn’t budget for any other program in 1983 based on what would happen in 2010: only Social Security.
As Goss concludes on Slide 19: “No Need to “Bend” the Cost
Curve (% of GDP) for Social Security.” Medicare is clearly the bigger problem, and the changes in the Affordable Care Act only covered part of the job. If Simpson were in any way credible, he’d get to work, not only on a better overall health care system, which would lower Medicare costs concurrently, but the inefficiencies in the overall budget, like runaway defense spending, Ag subsidies, contracting and a host of other problems. Social Security, despite being a lower-order issue, seems like all this commission is going to deal with. And Simpson’s comments show a bias against the program as well as a lack of understanding about it. That’s why he should be fired, not for obscenity or anything else.





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Thank you, David. Excellent article and, as usual, so clearly presented, too.
I really wish they’d get rid of Alan Simpson and any other boisterous politician who should have retired (fully retired) long ago. it’s like we heard them a quarter century ago, in the ’80′s, and now they’re back. They can’t shut up. They can’t go away. They can’t get out of the limelight.
I’d rather have a commission of 40-somethings handle any potential problems that we as a nation face in the 21st century.
Simpson’s attempt to be dismissive, calling his detractor’s questions, “vapors” and his attempted assassination of her character by attacking her image as a hard worker by saying, “Write when you get honest work.” both failed. And David D. is right to point out that Simpson hung the validity of his allegations of insolvency on the authority of a report which proves that Social Security is self-funding, separate from the federal deficit, and is as solvent as required to meet immediate needs and then some.
Let these facts stand. Obama and his inappropriate acceptance of this incompetent and disrespectful appointee’s behaviors condemn themselves. Add elderly women, near retirees, those who advocate for a just and fair society to the long list of groups whose voices have been demeaned and disregarded, and who have been openly and brazenly victimized by this administration and its appointees. Yet another “We don’t care about you (people).” moment for the ‘compassionate’/snark tag here! Democrats.
Good piece. I think the SS projection showing that the system will no longer be able to pay full benefits in 2037 is highly suspect simply because economic projections are entirely unreliable so far out. What I don’t understand is why blogs here at FDL don’t take this issue on, not only from the viewpoint of SS, but also across the Board.
As far as I know, I’m the only one here who’s been writing about the unreliability of such projections in post such as these here, here, and here. This is regrettable, because all the deficit hawk talk we’ve been hearing and the very existence of the CF Commission itself is justified by these projections. By letting them stand without objection we’re allowing this foolish wave of panic to take defeat every piece of potential progressive legislation that might require deficit spending. The projections and our unwillingness to critique them are paralyzing political action we need to solve our problems.
To see how ridiculous the projections may be all we have to is go back to late 1999 when people were talking about having surpluses as far as the eye can see, or for that matter projections in 2006, which, of course, give no hint of the crash of 2008 and its effect on the deficit.
Again, we should target long-term projections by economists of the Federal fiscal situation for criticism because they are almost certainly wrong, and also because there are almost certainly alternative projections that paint an entirely different picture of what the future will be like, as I’ve illustrated in the third piece (63690) I link to above. I think the bottom line here is that most long-term projections are much more dependent on the policies we will implement than they are on where we’ve been. And I also think we should be spending much more time talking about those policies and their impact on the well-being of Americans than on a deficit fantasy having very little basis in reality.
Will read the post after I’m finished laffing/marveling at the brilliance of this latest graphic – might take a while :)
Remarkable, maybe if Simpson were black he would’ve been kicked to the curb by the time the 6 o’clock hour rolled around. Once again, this White House dismisses the lefts criticisms of someone the right agrees with, but jumps like the cowards they are when Fox news screams.
We have the facts but Simpson will have everyone in the Media repeating his lies.
First, he’s not black, so Obama doesn’t have to run from the race issue. Second, he’s from the right, so since Fox news won’t begin yelling and screeching about him, well he’s ok to keep. Typical cowards!
The Boomer’s are retiring politically this fight is very stupid.
Alan Simpson is Social Security’s best friend. Keep him right where he is. In fact, fire Erskine Bowles and make Simpson the sole chair of the commission. And as a provision of his new position, mic him 24/7.
Congrats David,
spot on comments – great article/post
Funny we could save money by ending 2 wars but nobody talks about that.
He’s only retired? Looking at pictures of him, he looks like he died and was mummified years ago.
He’s 79 and way past sell-by date. I don’t understand why Obama keeps using all these old people (not in age but being around DC for too long) when he could get young, smart people who have new ideas and new ways of looking at things. Just retreads over and over and it’s tiring.
Long term projections are indeed less reliable – Social Security has always done better than the “optimistic” 3rd projection, and much better than the “likely” 2nd project.
When Bush came into office he wanted privatization so he created a crisis – the Trust funds run out earlier than expected – and this was reported by the media. What was not reported was the fact the crisis was a con-job caused Bush ordering the GDP growth assumption to drop to 1.6% from the prior 1.7%.
You no doubt notice that both those numbers are well below historical growth.
Using historical growth in the project we would come to the conclusion that there is never a problem in the Social Security system.
Indeed the only number that is a problem is the current lack of growth because Obama wants to please the GOP and avoid spending on infrastructure jobs. So we get crap like save the Bush tax cuts (said by those that push this Keynesian reasoning despite saying they are not being Keynesian – as they ignore the piss poor multiplier that the last eight years Bush tax cuts have achieved – about a million new jobs over 8 years compared to Clinton’s 22 million).
Just trying to help the old bastard accomplish his life’s goal before hell will accept him?
Of course, his fellow commissioners have sat there and listened to his ignorant rants while he chaired their meetings, with none of them blowing the whistle on him. Which makes the entire Commission suspect: no one was willing to point out what’s very clear to anyone who listens to anything Simpson says about Social Security: he’s an ignorant opponent of the program who will spout any lies he thinks he can get away with.
Shut down this monster — and by that I mean the Commission, not just Simpson.
D’oh!
The Executive Order creating the cat food commission specifically targets entitlements:
That is of course exactly what Obama thinks. It’s why he created the cat food commission in the first place.
This is what the summary of the SS trustees report has to say about how the trust fund is held.
It is important to note that these are not the same as Treasuries but have no constraints on their redemption.
Agreed. Yet another thing discussed in BHO’s lying campaign that was dumped the second the liar got elected. BHO waxed lyrical about utilizing the “best minds” and finding people from “different walks of life” or words to those effect. Maybe not exactly a “promise,” but BHO vowed to make improvements and get away from the Beltway syndrome.
And yet, whadda we have here? Washington Insiders on steriods: way old, dodgy, whining, Republican insiders, to boot. Same old, same OLD. BAH! Ptoui!
I think the Commission is a shell game, but the people who are being gamed here are not who we think they are — i.e., prospective SS pensioners — but the deficit hawks. You put a clearly addled Simpson in as co-chair, he makes asaholic statements, and the whole enterprise is disgraced (as well it should be). I think this whole business is a bit like the Royal Commissions in Canada, where a hot topic is essentially put on the back burner by relegating it to a Commission that simply stalls out the issue until it loses traction. The other thing is that it provides the Real Democrats with a foil to run against.
I should have noted that I appreciated and agree with the information you linked to.
The CBO has a back to the mean mandate but the defining of the period covered by the mean is political – although they do not admit that it is political. The GDP growth has been a disaster under the Bush tax cuts – so why expect that growth to continue once you let the tax cuts expire? When will the GOP – and the media – admit tax cuts for the rich are a drag on the economy relative to other uses for that money.
As to funding deficits outside the bond market, I think I may disagree with you a bit. The cheapened currency may happen quickly enough to make that option undesirable – although it certainly ends any deficit to GDP ratio worries.
It should be obvious to all except those as dim witted as Glenn Beck fans that Obama has made a deal with devil to knee-cap SS. Simpson isn’t stupid. He has bee swinging his ax in the grasslands with a blindfold on for 30 odd years and now he can smell the edge of the forest.
The issue is simple, if the USDOTreas (not Trans) repays the bonds which SS responsibly invested its surplus in, they will not be able to get the Chinese to fund our glutenous MIC budget and endless ‘Wars on Terra’. This is such a complete ruse its astounding the government thinks the average citizen is so stupid to buy this crock. Well, 1 in 5 of us probably are. *sigh*
I have heard this pointed out many times, not necessarily on this blog though. I think a prediction even 1 year out is suspect. Like the global warming gang say, Climate is what you expect, Weather is what you get. We can’t accurately predict the Weather, but we claim to be able to predict the climate. “There are lies, damn lies, and statistics!” (MT)
That’d be nice, but there’s this, lifted from Jane’s earlier post: “If they reach agreement, their proposal will be voted on in December by a lame duck Congress, without the benefit of open hearings …”
sinestar,they do think we are stupid…..and has you pointed out,they may be justified in that belief…remember we don’t get the “real going ons” from the media….and that’s a problem.
Thank you for such a lucid argument. Too bad you’re not on cable. ;~)
Isn’t it lovely? I bow to TWolf!
You have to have a special dispensation to make lucid arguments on US mass media/
Well, if we have to have a Commission and there has to be a Republican co-chair, it seems to me we are fortunate to have Simpson.
If Social Security is cut, and the government refuses to pay back what was borrowed from the trust fund, then the payroll tax can best be described as an UNFAIR TAX SURCHARGE on working Americans. The payroll tax was supposed to be a funding mechanism for retirement. What other retirement program in this country uses 66 or 70 years old as the age to collect benefits?
Consider also the implications of the Treasury DEFAULTING ON ITS BONDS! What macroeconomic effect this may have is unpredictable, but it couldn’t be good. A default is a default. I am pretty sure their are a myriad of other programs that invest in U.S. Bonds as around 60% (last I saw a stat) of the national debt is actually owed to various government agencies.
David –
It’s 310 million tits, not 300 million. You’ve shorted us 10 million tits! As someone who unabashedly loves tits (and usually the women they’re attached to), please don’t do this.
I think everyone here at FDL has made reasonable and impassioned arguments against Alan the Wanker, the Catfood Commissh, and Orahmba as King Hairball man. The intelligence and overall viewpoints of the posts and comments here clearly reflect the situation front and center as ‘Orahmba’s Death Panels’…there simply is no other way to say it!
The more looming and pressing question of the day and the hour as this scenario drags on, is what the hell can we do about it? We must collectively find a potent methodology in which we can stop these asshats and their incessant march to grind us into compost for their political victory gardens!
HOW?
Someone make suggestions please…I am devoid of any ideas that does not involve kicking their butts to the curb….
That’s because there are no ideas that don’t involve kicking their butts to the curb.
Never attribute to malice that which is adequately explained by stupidity.
Right, papau. Take a look at my own alternative projection at that third link. Surpluses as far as the eye can see. It’s nonsense of course, but no more than theirs.
How quickly can it happen? The Gov can buy anything produced here with its dollars and create all the jobs it needs to end the idleness we see now and the loss of productive assets. The end of unemployment will be accompanied by a vast increase in the real wealth of the nation. So, who will downgrade the value of our currency then? If anyone should they’ll be hurting their own exports to consumers who are again capable of buying them.
I’m puzzled by your otherwise excellent article. Why question whether Simpson knows enough to head a commission devoted to the future of Social Security? Why not question why the President saw fit to create a commission to solve a Social Security “problem” that doesn’t exist? Why not question the knowledge, judgment and motives of Obama for creating this unnecessary monster of a commission? Doesn’t Obama understand how Social Security is funded? Or doesn’t he care? Many senior and disabled people depend on Social Security for most of their income, not just a small part. With the continuing recession, more people will lose their savings and retirement money. These people won’t fall into poverty if Social Security is cut, they will lose their homes and land in the street.
Thanks for article and the slides I tried and couldn’t find the presentation.
If the meetings were open the entire country could have had access to the presentation give by an expert in the subject of Social Security!
But maybe they want the country in the dark on how the program really works, it makes it easier to spread their convoluted view of Social Security and how it relates to the deficit.