Sunday, November 26, 2006


Permanent Recession Or Permanent Boom: The Meathead Proposition Redux

Apparently the Republicans and the Sabbath Gasbag enablers have been pushing once again to destroy Social Security, if this post from Atrios is any indication. This is as good a time as any to post this little ditty, which is a reworked reply I made to someone way back in February of 2005 to someone who'd obviously been chugging too much right-wing-radio Kool-Aid when he made a comment in one of my threads on the subject: One of my favorite right-wing lies about the Bush/Cato/GOP privatization plan is "No money is being borrowed to set up a private account." Oh, really? Then why does Bush want all those extra trillions, bucko? That sure sounds like "borrowing" to me. And it would to any other sane human being. As for Social Security containing only IOUs -- oh, you mean Treasury Bonds? Because guess where George W. Bush has his money stashed? Yupper -- those "worthless IOUs" known as Treasury Bonds! (By the way: Even the Republicans admit that under Bush's plans, benefits would drop like a stone.) Meanwhile, privatizers, how do you explain that Bush and his Cato/Heritage/Club for Growth buddies use two wildly different economic forecasts, depending on what they're trying to argue?

Bush and his Cato/Heritage/Club for Growth privatizing buddies use two wildly different economic forecasts, depending on what they're trying to argue. When they want to diss Social Security, they use the extremely pessimistic (and usually extremely wrong) projections of the SS Trustees, who assume that the US economy will grow at 1.9 percent per year for the next 75 years. By the way: The average growth per year over the last 75 years -- years that include the Great Depression -- was 3.6 percent, almost twice what the trustees project for the next 75 years. In other words, in order for the 2042 "doomsday" number to hold, we'd have to be in a depression for the better part of the next century. Do you really think that will happen? (Well, under Bush, it could.)*

But wait! When the privatizers want to talk up private/personal accounts, they claim huge rates of return of 7 percent or more per year. (They've been claiming this for nearly a decade.) Those are rates seen only during the height of boom times, such as when the budget-balancing, not-afraid-to-tax-rich-people Bill Clinton was in office -- and they're predicting them for the next seventy-five years.

And they're predicting the Big Boom at the same time they predict the Big Depression.

So which is it, Permanent Boom or Permanent Depression? You can't have both. (Really, you can't have either, but let's humor the privatizers a bit and pretend it's possible.)

If it's a Permanent Boom, the economy grows so much that Social Security is solvent forever. (Actually, so long as we average 2.7% growth per year over the next 75 years, which is below-average growth, Social Security is solvent. In other words, there is no crisis. Period.)

If it's Permanent Depression, then who the hell wants their money in the stock market?

Oh, and this doesn't even take into account that Social Security's overhead costs are less than 1%, whereas any privatized plan, such as those of the UK and Chile, will be nearly twenty times that (the UK's and Chile's plans average around 14% for overhead costs). Even Bush officials admitted that their privatization plan, even with big cuts in benefits, will have overhead costs ten times that of Social Security as it now stands. This is why the UK has been looking longingly at adopting a plan similar to our very own Social Security!

One final note: Social Security is not the same as Medicare, though its enemies never tire of conflating the two.

* 01/06/08 update: In the comments in a recent DKos diary of mine, Roger Fox points out that the not-so-trusty Trustees don't count as part of the SS Trust fund the current interest earned by the trust fund money! See how hard they have to fudge the numbers to get the Doomsday projections they want?

Michael Kinsley gets the credit for calling this "The Meathead Proposition", by the way. He must be ticked off that this zombie idea hasn't been killed off by reality by now.

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