Dear Kevin:
I have not written to you before, but I do know your work from the health reform debate. Since your comments about my recent CJR post have made it to the thousands who devour words on The Huffington Post, it’s fitting I respond to your piece. In the post in question, I criticized both the gloom and doom headlines and the mediocre stories that followed the release of the Social Security Trustees report last week.
For those new to this topic, the trustees projected that, largely because of changed economic conditions, Social Security would be able to pay full benefits only for 21 years, and 75 percent of the benefits after that assuming no changes were made. It’s very unlikely we will reach that point. Always in the past Congress has made the necessary fixes. In speaking to the press, Social Security Commissioner Michael Astrue cautioned reporters that the Social Security program was far from broke and even though it was not acceptable to pay out only 75 percent of benefits, “it’s still a fact that there will still be sufficient assets there.” Most media outlets, however, did not heed his warning, and chose drama over caution. That’s standard operating procedure for some of the press, as we both know.
Headlines like the one from Bloomberg.com—“Social Security Fund to Run Out in 2035”— reinforce what the media have been telling the public, particularly those who are younger: that Social Security won’t be there for them. That message, as I reported two weeks ago, has a way of weakening support for what is a system of social insurance that has had up until recently enjoyed widespread support among all age groups. And that inaccurate drumbeat has ramifications. A story appearing this week in the trade publication Investment News reported that “many financial advisers are taking steps to de-emphasize the program’s place in clients’ retirement income plans.” In other words, financial gurus are, as the story says, “acclimating investors to the prospect of receiving small benefits, no cost-of-living adjustments, and, in some cases, no Social Security benefits at all.” So misleading headlines do matter.
We agree the media must do a better job discussing possible solutions to Social Security’s dilemma. Press stories have mentioned, pretty much in passing and without much explanation, the ones that seem to be the agreed-upon fixes that would inject more revenue into the system. Those are: means testing benefits that would turn Social Security into a welfare program; raising the age for collecting full benefits, to 69 or 70; and changing the Cost of Living Adjustment formula, which would pinch seniors financially if they live a long time. Occasionally stories do mention the idea of raising the cap on payroll tax contributions—the amount of wages subject to the tax, but that’s not really on the table since it’s unpopular with the anti-tax crowd.
Your discussion of how easy it would be to come up with a package of fixes, if only Republicans would compromise, falls into the trap of the approved narrative for Social Security. It’s an expedient political frame that has so far excluded a discussion of how any of these changes will affect ordinary people now and in the future. What the media have not done, as I have pointed, is discuss how the various proposals affect real people—you know, like the older woman who moved in and out of the work force and doesn’t have a very big benefit, or the laborer whose back injury requires that he retire at 62, or the thirty-something worker who will have no employer-provided pension and very little in a 401(k) plan.
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The press coverage of the Social Security Trustees report has been pathetic; mostly slanted toward the dramatic, with very little scrutiny and critical analysis. The facts are simple. Social Security is an enormously popular program; it has been wildly successful; and with minor changes, hardly noticable to most people, can remain so for generations to come.
#1 Posted by Rick Sullivan, CJR on Thu 3 May 2012 at 09:44 PM
I'm mystified why Trudy is taking Kevin Drum to task for making the following eminently sensible point that few reporters have the guts to state:
"Your discussion of how easy it would be to come up with a package of fixes, if only Republicans would compromise, falls into the trap of the approved narrative for Social Security. It’s an expedient political frame that has so far excluded a discussion of how any of these changes will affect ordinary people now and in the future. "
#2 Posted by Harris Meyer, CJR on Thu 3 May 2012 at 11:16 PM
Sorry to nit pick, but these were bothering me.
I assume for "innacurate" you meant inaccurate?
Also, it is Champaign-Urbana, not "Champagne-Urbana"
#3 Posted by misko, CJR on Thu 3 May 2012 at 11:33 PM
Misko, thank you. Fixed
#4 Posted by Mike Hoyt, CJR on Fri 4 May 2012 at 10:24 AM
"I'm mystified why Trudy is taking Kevin Drum to task for making the following eminently sensible point that few reporters have the guts to state: "Your discussion of how easy it would be to come up with a package of fixes, if only Republicans would compromise"
The reason is because nobody is debating that. Everybody has known for a long time that Obama and the "third way" "DLC" democrats are willing to talk. Bill Clinton himself was caught on camera holding his thumb to his ear mouthing "Call Me" to Paul "I republican insistence on avoiding it.
Christ, they've wrestled the AARP into supporting it.
The question here isn't who supports compromise and who doesn't, the question is what are they compromising and who's going to get hurt by it.
They are playing with social security just before America has to swallow the pig in the system's snake (the baby boomers) and just after a financial crisis caused by government negligence of private sector criminality has wiped out retiree alternatives to social security.
The mainstream, DLC, liberal policy proposals are to do something hideous to one of the few programs which is stabilizing the economy and is the only hope for unemployed older workers who are just trying to make their finances work until they hit
656775130? Perhaps 130 will take the program off the table?And the only thing saving the program is that other party doesn't think the democrats go far enough in the hideous direction.
The problem isn't who's holding up policy, it's that the proposed policy options are bad - and there are better options which these people refuse to consider.
Unfortunately it's really hard for the residents of Mount Washington to relate to the concerns of mortals down on earth.
That's the press's job!
#5 Posted by Thimbles, CJR on Fri 4 May 2012 at 12:00 PM
"Bill Clinton himself was caught on camera holding his thumb to his ear mouthing "Call Me" to Paul "I <3 Atlas Shrugged" Ryan. The only thing saving Social Security from compromise republican insistence on avoiding it."
Grr. Html escape chars.
PS. About the site redesign, how's someone from the front page supposed to follow discussions without a "recent comments" column? And is the recent comments column going to be eliminated from articles when they receive the new look?
We already have a hard enough time looking at discussions on mobile devices.
#6 Posted by Thimbles, CJR on Fri 4 May 2012 at 12:10 PM
A free and independent press will devote much coverage to serious solution steps, no matter their likelihood of happening or their perceived partisan roots. Here are the more obvious ones:
-- Stop spending trillions on wars, police state, etc.
-- Stop spending trillions on bailouts, R&D, etc.
-- Stop writing — in fact, abolish — countless laws every year that monopolize industry, chase capital out of the country, etc.
-- Stop decimating real wages and SS recipients' purchasing power: abolish the State's monopoly on money creation, interest rates, etc.
A pertinent journalist who does not seriously entertain at least one of those steps is a lemming, hack, coward, charlatan, liar, or combination thereof.
#7 Posted by Dan A., CJR on Fri 4 May 2012 at 12:33 PM
"-- Stop spending trillions on wars, police state, etc."
Agreed. According to Kevin Drum, it's not like we're doing so good a job on that anyways (why? look at the incentives.)
"-- Stop spending trillions on bailouts, R&D, etc."
Again, when the economy is in free fall, you can't let the nation fall onto the concrete and expect your democracy to stand up intact. In a crisis, when the middle stands on the corner whistling, the extremists take the streets.
What needs to be done is crisis prevention, not crisis neglect after the fact. Good law, good regulators, a justice department that puts criminals of any collar in jail for the damage they do, that is what America desperately needs.
"-- Stop writing — in fact, abolish — countless laws every year that monopolize industry, chase capital out of the country, etc."
Screw capital. If they don't want to be part of the country's solution (go swiss, a-holes), then let them and their market access go be someone else's problem.
"-- Stop decimating real wages and SS recipients' purchasing power: abolish the State's monopoly on money creation, interest rates, etc."
Hurr? Should Pete Peterson and Warren Buffet compete on currency issuance? Should an Alabama dollar be different from a New York one? Have you thought this through?
#8 Posted by Thimbles, CJR on Fri 4 May 2012 at 01:27 PM
"A pertinent journalist who does not seriously entertain at least one of those steps is a lemming, hack, coward, charlatan, liar, or combination thereof."
You'll find the real problems and a solution discussed here
http://www.cjr.org/campaign_desk/report_card_on_social_security.php#comment-60267
We're talking about a 24 billion a year shortfall in a 14 trillion dollar a year economy.
http://www.cjr.org/campaign_desk/social_security_in_perspective.php#comment-30594
Again the discussion is not about an immediate social security crisis, it's about social security's recent inability to produce an offset for income and corporate tax cuts.
That is the problem political elites think needs fixing. Old people with dead pensions who've had their house values hollowed out and are trying to survive on their one dependable social security benefit? That's not Mount Washington's problem.
#9 Posted by Thimbles, CJR on Fri 4 May 2012 at 01:47 PM
Different blogs, different angles, same problem:
http://digbysblog.blogspot.ca/2012/05/cold-truth-about-obama-and-fdr-by.html
"Plainly speaking, FDR didn't need the bankers' money. Campaigning wasn't nearly as expensive in those days. Lack of effective mass communications made it harder to purchase persuasion. And the Powell Memo that led to the coordination of big business spending on elections was over 30 years away. Wall Street had money, but it wasn't as coordinated and it didn't go as far.
But that's not all. FDR also had the votes of the racist South. He couldn't afford to lose them. FDR had the opportunity to pass an anti-lynching bill, but he couldn't afford to do it and still get the New Deal passed...
The cold truth is that Democrats' decision to support working families and organized labor from 1930-1970 led to an intense and furious backlash by moneyed interests, without which the Movement Conservative revolution would not have been possible. Republicans outraised Democrats in presidential elections during the late 1970s and throughout the 1980s by a factor of 7-1 and higher. That in turn led to the creation of the DLC and the rise of the neoliberal elite to raise enough funds to be remotely competitive."
http://www.nytimes.com/2012/05/04/opinion/krugman-plutocracy-paralysis-perplexity.html
"Which brings us to the question of what it will take to end this depression we’re in.
Many pundits assert that the U.S. economy has big structural problems that will prevent any quick recovery. All the evidence, however, points to a simple lack of demand, which could and should be cured very quickly through a combination of fiscal and monetary stimulus.
No, the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority. And the key to economic recovery lies in finding a way to get past that minority’s malign influence."
The malign influence of an affluent minority is truly bipartisan. We should not be looking for someone to blame for the obstruction of feckless party by radical party - both under malign influence - , we should be asking, "how do we fight the malign influence?"
#10 Posted by Thimbles, CJR on Fri 4 May 2012 at 02:45 PM
Do annuities converted from 401ks come with Cost of Living Adjustments? This detail about adjusting for the cost of living is mostly lost on younger people. So if the cash balance of the 401k is all that there is, a lot people don't get that---they see the cash balance as the most amount of money they've ever had at one time and feel pretty good about it. Slicing and dicing it and spreading it out over the unknown quantity of the future is the farthest consideration from the minds of most people blithely sailing into a cash-strapped sunset.
#11 Posted by MB, CJR on Fri 4 May 2012 at 03:31 PM
"Do annuities converted from 401ks come with Cost of Living Adjustments? This detail about adjusting for the cost of living is mostly lost on younger people."
Came across this by James Kwak
http://baselinescenario.com/2012/05/07/social-security-matters/
"Another way to look at Social Security is to compare it to the things that, in some people’s eyes, were supposed to make it unnecessary: 401(k) plans. In the projection, for early baby boomers (people retiring now), about half were expected to have defined benefit pensions and the other half were expected to have individual retirement accounts like 410(k)s and IRAs. The latter group are getting about $4,000 from those retirement accounts. That could go up; maybe people are withdrawing less while they are still working. It could also go down; maybe people are withdrawing money at an unsustainable rate. But in any case it isn’t much, and it’s not even close to what Social Security contributes. (Remember, the Social Security figure of $13,000 also doesn’t include people who have chosen to delay taking benefits until after age 67.)"
"Both of these analyses focus on people in their 60s. As people get older, it seems that they rely on Social Security even more—not only because they stop working, but probably because they exhaust their other assets, or because their other pensions are not indexed for inflation (unlike Social Security). According to Sylvia Allegretto, if you look at retirees in the middle of the income distribution in California, a full 70 percent of their income comes from Social Security, with only 16 percent coming from retirement funds."
#12 Posted by Thimbles, CJR on Thu 10 May 2012 at 11:54 PM
Dean Baker walks down Trudy's beat:
http://www.cepr.net/index.php/blogs/cepr-blog/playing-inflation-games-with-grandma-the-washington-consensus-and-the-chained-cpi
"At the most simple level, the switch to a chained CPI is a way to reduce the annual COLA in Social Security by roughly 0.3 percentage points. That may sound trivial, but it is important to remember that this sum adds up over time. After ten years, this lower annual cost-of-living adjustment would imply a reduction in benefits of roughly 3 percent, after 20 years the reduction would be 6 percent, and after 30 years close to 9 percent. So this is real money.
This plan to lower the COLA raises two obvious questions. First would the new measure actually be more accurate, and second is a cut in Social Security benefits good policy?
There are some complex philosophical issues raised by a cost-of-living index but at the most basic level, the question is to what extent Social Security beneficiaries substitute between items to offset price increases. The proponents of switching to a chained index for the COLA are arguing based on research that examines the consumption patterns of the population as a whole.
The Bureau of Labor Statistics (BLS) has done research indicating that the Social Security population has qualitatively different consumption patterns than the rest of the population. This research suggests that a consumer pirce index based on the consumption patterns of the elderly would show a higher rate of inflation.
The BLS research would imply that someone who is concerned about the accuracy of the Social Security COLA might want a higher annual cost-of-living adjustment, not a lower one...
This is a simple way to distinguish between people who want an accurate COLA and people who just want to cut benefits. Those who want an accurate COLA advocate having BLS construct a full elderly CPI. People who just want to switch the indexation to a chained CPI simply want to cut benefits...
This brings up the second question as to whether a cut in Social Security benefits is a good idea. The Washington insiders like to treat this proposed cut in benefits as a small matter -- it's just 0.3 percent a year. But this adds up. If a typical beneficiary receives benefits for 20 years then the average cut in benefits is roughly 3 percent.
Is that a big deal? For almost 40 percent of beneficiaries Social Security benefits are more than 90 percent of their income. For these people, a 3 percent cut in benefits is roughly the same as a 3 percent cut in income...
It is important to remember in this story that most seniors are approaching retirement with very little other than their Social Security. This is the fault of the Washington insiders who were not able to see the $8 trillion housing bubble, the collapse of which wrecked the economy. It also destroyed most of the savings of most older workers, which was the equity that they had in their homes."
Beats what Kevein Drum had to say.
#13 Posted by Thimbles, CJR on Fri 25 May 2012 at 12:36 PM