A Gut Punch to the Middle

[Nbadan]

By now, every journalist should know that you have to carefully check out any scheme coming from the White House. You can't just accept the administration's version of what it's doing. Remember, these are the people who named a big giveaway to logging interests "Healthy Forests."

Sure enough, a close look at President Bush's proposal for "progressive price indexing" of Social Security puts the lie to claims that it's a plan to increase benefits for the poor and cut them for the wealthy. In fact, it's a plan to slash middle-class benefits; the wealthy would barely feel a thing.

Under current law, low-wage workers receive Social Security benefits equal to 49 percent of their wages before retirement. Under the Bush scheme, that wouldn't change. So benefits for the poor would be maintained, not increased.

The administration and its apologists emphasize the fact that under the Bush plan, workers earning higher wages would face cuts, and they talk as if that makes it a plan that takes from the rich and gives to the poor. But the rich wouldn't feel any pain, because people with high incomes don't depend on Social Security benefits.

Cut an average worker's benefits, and you're imposing real hardship. Cut or even eliminate Dick Cheney's benefits, and only his accountants will notice.

I asked Jason Furman of the Center on Budget and Policy Priorities to calculate the benefit cuts under the Bush scheme as a percentage of pre-retirement income. That's a way to see who would really bear the burden of the proposed cuts. It turns out that the middle class would face severe cuts, but the wealthy would not.

The average worker - average pay now is $37,000 - retiring in 2075 would face a cut equal to 10 percent of pre-retirement income. Workers earning 60 percent more than average, the equivalent of $58,000 today, would see benefit cuts equal to almost 13 percent of their income before retirement.

But above that level, the cuts would become less and less significant. Workers earning three times the average wage would face cuts equal to only 9 percent of their income before retirement. Someone earning the equivalent of $1 million today would see benefit cuts equal to only 1 percent of pre-retirement income.

In short, this would be a gut punch to the middle class, but a fleabite for the truly wealthy.

Beyond that, it's a good bet that benefits for the poor would eventually be cut, too.

It's an adage that programs for the poor always turn into poor programs. That is, once a program is defined as welfare, it becomes a target for budget cuts.

You can see this happening right now to Medicaid, the nation's most important means-tested program. Last week Congress agreed on a budget that cuts funds for Medicaid (and food stamps), even while extending tax cuts on dividends and capital gains. States are cutting back, denying health insurance to hundreds of thousands of people with low incomes. Missouri is poised to eliminate Medicaid completely by 2008.

If the Bush scheme goes through, the same thing will eventually happen to Social Security. As Mr. Furman points out, the Bush plan wouldn't just cut benefits. Workers would be encouraged to divert a large fraction of their payroll taxes into private accounts - but this would in effect amount to borrowing against their future benefits, which would be reduced accordingly.

As a result, Social Security as we know it would be phased out for the middle class.

"For millions of workers," Mr. Furman writes, "the amount of the monthly Social Security check would be at or near zero."

So only the poor would receive Social Security checks - and regardless of what today's politicians say, future politicians would be tempted to reduce the size of those checks.

The important thing to understand is that the attempt to turn Social Security into nothing but a program for the poor isn't driven by concerns about the future budget burden of benefit payments. After all, if Mr. Bush was worried about the budget, he would be reconsidering his tax cuts.

No, this is about ideology: Mr. Bush comes to bury Social Security, not to save it. His goal is to turn F.D.R.'s most durable achievement into an unpopular welfare program, so some future president will be able to attack it with tall tales about Social Security queens driving Cadillacs.


E-mail: [email protected]

[smackdaddy11]

http://www.techcentralstation.com/061804D.html


Intellectual honesty compels one to acknowledge two things: first, weaknesses in one's position; and second, controversial assumptions on which one's position rests. Paul Krugman, the economist-cum-columnist, is routinely dishonest in both ways.



For example, the other day (see here), Krugman wrote a New York Times column in which he called the Bush administration's economic policy "Robin Hood in reverse." Robin Hood, as we all know, stole from the rich and gave to the poor. The Bush administration, according to Krugman, steals from the poor (or at least the nonrich) and gives to the rich.



Let's think about this. Krugman says that unless taxes are raised, social programs will have to be cut. These programs help poor and middle-class families, not the families of the well-to-do; so cutting them hurts poor and middle-class families (but not the families of the well-to-do). The Bush administration, however, is adamant about not raising taxes. So, in effect, the Bush administration makes things better for the well-to-do and worse for everyone else.



What Krugman conveniently ignores -- perhaps because it undermines his position -- is the question of entitlement. He writes as if nobody is entitled to anything. Suppose that were the case. A policy that hurt many and helped only a few would indeed be unjust (not to mention irrational). But when you factor in entitlement, the situation changes completely from the moral point of view. Lowering taxes isn't giving the well-to-do something to which they're not entitled. It's not a boon to them, or a windfall. It's letting them keep that to which they're entitled!



In Krugman's twisted mind (I say that endearingly), not taking your money against your will is giving you money. Read that sentence again, slowly and carefully.



It all goes back to liberal first principles. Nobody, to the liberal, has a valid claim on anything, even his or her talents. Those who produce or acquire wealth do so not because of effort, initiative, creativity, or sacrifice. They're just lucky. They were born healthy and into loving families. Others are unlucky. They were born unhealthy or into indifferent families. Since none of us is entitled to what we have at birth, none of us is entitled to anything we produce thereafter. We might call this, to borrow a term from the criminal law, the fruit-of-the-poisonous-tree doctrine. Wealth, to the liberal, belongs to all of us in common, not to any of us in particular. There are possessions, but not property.



Stating this view is, or ought to be, enough to refute it. Accidents of birth don't determine our fates; they simply tell us where we start. Where we end up, and how we fare along the way, are up to us. Krugman and other egalitarians must eliminate desert, entitlement, merit, and responsibility from our thinking in order to engineer society to their liking. Conservatives must oppose them. The first step in opposing them is understanding what they are doing. Liberals know this, of course, so they try to hide what they are doing. This is the intellectual dishonesty of which I speak, and which Krugman, in his New York Times columns, exemplifies.



By the way, I'm not begging the question against Krugman and other liberals by assuming that the wealthy are entitled to their wealth. I make no assumption either way about that. It's a question that needs to be discussed -- and that political philosophers, to their credit, are discussing. It may turn out that the wealthy are entitled to some of their wealth but not all of it, in which case, for policy purposes, we must develop a practical means of separating the two types. To do this, we must confront the question of entitlement head on. We must not sidestep it, as liberals such as Krugman are wont to do.



If anyone is begging the question, it's Krugman. He assumes, without argument, that nobody is entitled to anything -- or at least that the wealthy are not entitled to their wealth. Entitlement plays no discernible role in his thinking. One wonders whether he believes that he is entitled to any of his wealth, which, given his prestigious academic position and best-selling books, is probably substantial. If he's not entitled to it, why has he not disposed of it? Maybe only liberals are entitled to their wealth.

[scott]

Double post.

[scott]

Paul Krugman is one of the most well respected economists today. He's is brutally sharp in his criticism where it is deserved, which has the effect of rallying supporters of those criticized, regardless of whether or not Krugman happens to be right.

But what about this article from techcentralstation.com, known worldwide as the hub of modern economic thought.


Intellectual honesty compels one to acknowledge two things: first, weaknesses in one's position; and second, controversial assumptions on which one's position rests. Paul Krugman, the economist-cum-columnist, is routinely dishonest in both ways.

Is this out of the High School Debate Team Handbook? Intellectual honesty requires neither of these posited requisites.

Perhaps it is something foreign to the author of this article, but inherent in the analysis and defense of a position is the elimination of weakness in said position. It is the duty of any analytical professional to reconcile any weaknesses in one's positions with facts, and accordingly adjust the position based on those findings. I guess the author is used to writing down whatever pops in his head without any regard to facts, publish such ideas, and then admit the weaknesses in his ideas. Seems like a fairly ineffecient way of getting one's message across.

As a second requisite, the author (Keith Burgess-Jackson, a philosophy professor) suggests one must acknowledge the controversial assumptions his position rests. If Jackson feels this is a controversial subject, I'd hate to hear his thoughts on PG-13 movies.


What Krugman conveniently ignores -- perhaps because it undermines his position -- is the question of entitlement. He writes as if nobody is entitled to anything. Suppose that were the case. A policy that hurt many and helped only a few would indeed be unjust (not to mention irrational). But when you factor in entitlement, the situation changes completely from the moral point of view. Lowering taxes isn't giving the well-to-do something to which they're not entitled. It's not a boon to them, or a windfall. It's letting them keep that to which they're entitled!

This is not a case of Krugman ignoring anything - whether or not people are "entitled" to their tax dollars is irrelevant to Krugman's point... which is that either taxes will need to be raised, or programs will need to be cut. This is a factual pair of outcomes.

Krugman's arguement is not that the rich don't deserve their money, but rather that the marginal benefits of shifting funds (that is what fiscal policies do, afterall) from the rich to the poor are greater than letting the rich keep their money (up to a point).

There is a lot of empirical evidence supporting this - there exists a optimal level of social benefits (welfare, if you will) that maximizes output and utility.


In Krugman's twisted mind (I say that endearingly), not taking your money against your will is giving you money. Read that sentence again, slowly and carefully.


The only thing "twisted" appears to be Jackson's misinterpretation of Krugman's position.

Jackson goes on to engage in the typical liberal blame-game, and makes several assumptions regarding Krugman that a little bit of research can debunk.

Jackson's article is a great example of the common misinterpretation of theoretical and empirical evidence supporting a number of positions that pollute both sides of the political isle. Too many people like Jackson are more concerned with defending the party line than objectively evaluating position's like Krugman's. With that said, it should be noted that Krugman has historically been guilty of "baiting" people like Jackson with his inflammatory language, even though it typically isn't too far off the mark.

[Clandestino]

I seemed to have missed the point where Krugman offers a solution...

also, this is bullshit: [quote]The administration and its apologists emphasize the fact that under the Bush plan, workers earning higher wages would face cuts, and they talk as if that makes it a plan that takes from the rich and gives to the poor. But the rich wouldn't feel any pain, because people with high incomes don't depend on Social Security benefits. [quote]

no one was ever supposed to solely depend on social security. that is the problem with people today. they don't save for retirement aside from social security.

[Nbadan]

no one was ever supposed to solely depend on social security. that is the problem with people today. they don't save for retirement aside from social security.

It still amazes me how some Republicans have trouble looking past their own egos.

[Clandestino]

It still amazes me how some Republicans have trouble looking past their own egos.

i am not republican or democrat. i vote based on the candidate and issues. i voted for clinton and i voted for bush.

[Nbadan]

Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes that you can do these things. Among them are a few Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid."

--President Dwight D. Eisenhower, 1952

[Clandestino]

same as starting a draft now...

[Nbadan]

same as starting a draft now...

There already is a draft. After they have completed their active duty requirements, troops can be left in Iraq for up to two years, or until the military finds a adaquate replacement. Many National Guard and Reservists meant to be part-time soldiers have been on active duty for two years.

The Army is now accepting foreign nationalists, Mexicans, Guatemalens, you name it, in exchange for a promise of citizenship if they survive.

[Clandestino]

There already is a draft. After they have completed their active duty requirements, troops can be left in Iraq for up to two years, or until the military finds a adaquate replacement. Many National Guard and Reservists meant to be part-time soldiers have been on active duty for two years.

The Army is now accepting foreign nationalists, Mexicans, Guatemalens, you name it, in exchange for a promise of citizenship if they survive.

The Army has always accepted foreign nationalists in exchange for citizenship you idiot. This is far from new. They only thing that has changed is they are trying to speed up the process. It took years before.

and the "draft" you speak of is not a draft. It has always been there too. soldier know they when they sign the dotted line they are at the mercy of the u.s. government. 8 years is the minimum service to your country.

you have no clue how the military works.