Friday, February 18, 2005

Greenspan Whispers, the world speculates

As to my last post, re: Greenspan's words on the Social Security situation, it looks like there are as many interpretations as there are people listening.

Here are three from the same newspaper:

Slice 1:

It was inevitable that Alan Greenspan would make news when he testified before the Senate Banking Committee on Wednesday that he supported private accounts in Social Security. "So if you're going to move to private accounts, which I approve of," he said, "I think you have to do it in a cautious, gradual way."

...As the nation's top banker, Mr. Greenspan was on surer ground when discussing the borrowing needed to establish private accounts - an estimated $2 trillion over 10 years, and $4.5 trillion over two decades. He said it would be a risky thing to do.

Slide 2:

The math in the Social Security debate is fuzzy, but the politics are crystal clear. Everybody is going to point to the problems, and nobody is going to embrace a solution.

After refusing to face the truth about his Social Security plan for the entire election campaign, President Bush has finally acknowledged that diverting part of workers' Social Security taxes into private investment accounts will do absolutely nothing to fix the projected imbalance in the system when the baby-boom generation retires. This week, he made a very tiny gesture toward a partial solution to that problem: he declined to reject the idea of raising the current $90,000 cap on wages subject to Social Security payroll taxes.

...Sure enough, Mr. Bush's mini-concession caused an uproar. Republican House leaders instantly vetoed the idea. And Democrats declined to say anything positive for fear that Mr. Bush would stage a quick retreat, leaving them holding the bag.

Even something as modest as a bump in that $90,000 cap is impossible as long as Republicans and Democrats are both determined to make the other guy go first. The only solution, as far as we can see, would be for every elected official in the Capitol to get together in one room and yell, "Raise the cap!" - on the count of three.

Slice 3:

On Wednesday Mr. Greenspan endorsed Social Security privatization. But there's a difference between 2001 and 2005. In 2001, Mr. Greenspan offered a convoluted, implausible justification for supporting everything the Bush administration wanted. This time, he offered no justification at all.

...This week, Mr. Greenspan offered no excuse for supporting privatization. In fact, he agreed with two of the main critiques of the administration's plan: that it would do nothing to improve the Social Security system's finances, and that it would lead to a dangerous increase in debt. Yet he still came out in favor of the idea.

Let me make a detour here. The way privatizers link the long-run financing of Social Security with the case for private accounts parallels the three-card-monte technique the Bush administration used to link terrorism to the Iraq war. Speeches about Iraq invariably included references to 9/11, leading much of the public to believe that invading Iraq somehow meant taking the war to the terrorists. When pressed, war supporters would admit they lacked evidence of any significant links between Iraq and Al Qaeda, let alone any Iraqi role in 9/11 - yet in their next sentence it would be 9/11 and Saddam, together again.

Similarly, calls for privatization invariably begin with ominous warnings about Social Security's financial future. When pressed, administration officials admit that private accounts would do nothing to improve that financial future. Yet in the next sentence, they once again link privatization to the problem posed by an aging population.

End slices:

No matter how you cut it, one should be highly skeptical of a proposal that at best has a null affect on the situation. At very least, there should be some kind of positive movement in the direction of solving the problem, otherwise the solution is not, and any movement in a particular direction seems to me like a complete waste of taxpayer dollars (as in all the cash we are spending having our politicians and representatives talking about it).

Did anyone hear the report on NPR the other day that explored some other countries that have a privitized system and how they are failing?

Perhaps reinventing a broken wheel is what this administration is all about.

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