Tuesday, December 10, 2013

Social Security, Compromise, and the Great Boondoggle

Lee H. Hamilton, Director

The Center on Congress
Indiana University
1315 E. Tenth Street, Suite 320
Bloomington, IN 47405

Dear Mr. Hamilton,

Our local paper, the Deming Headlight, frequently runs your editorials and so we benefit from your perspective, as someone who served in Congress for more than three decades and won the respect of both of our dominant political parties; as vice chairman of the 9/11 Commission; and as a member of the Homeland Security Advisory Council.

Today’s editorial concerns the budgeting process and, in particular, the irresponsibility of sequestration as a substitute for a rational budget. It is bad enough to see the routinization of continuing resolutions, for all the reasons you describe, instead of a deliberative and productive budgeting process. It seems to me that we have depressingly low standards, if any, for the performance of our representatives in Congress. You, of course, have the perspective of one who has been there.

 I am moved to respond to two points, both occurring in the ninth paragraph of your editorial calling for a budget agreement. These are nitpicks, I admit, but given the dearth of quality reporting on economic issues in the American news media – a gap filled all too readily with deliberate misinformation – I believe diligence and clarity are very important.

You wrote, “The country needs gradual deficit reduction that avoids disrupting the economy or harming the vulnerable.” While I have no quibble with that statement on the surface, it requires some context. Most people – certainly here in New Mexico’s second Congressional district – do not realize that the current administration established a record of deficit reduction even before sequestration went into effect this year. Indeed, one of the objections to sequestration was that it would increase deficit reduction to a degree that would endanger recovery from the “Great Recession.” Indeed, most readers do not grasp the difference between short- and long-term deficit analysis, which leads to contradictory theses and much confusion.

In the same paragraph, you write, “It [the country] needs reforms to Social Security and Medicare that put them on a solid footing for decades to come.” This sentence, unfortunately, contributes to a misunderstanding about (1) Social Security’s relationship to the budget and (2) its current fiscal health. As I am sure you are aware, misinformation abounds about Social Security (for the moment, I leave Medicare aside), and one of the popular myths (happily repeated by those who would like to see it privatized) is that it is already bankrupt, or on the cusp. It is also widely believed that Social Security contributes to the deficit, because it is so often mentioned in the context of deficit reduction. It needs to be made clear, and repeated more often than the misstatements, that Social Security does not contribute a single dime to the deficit because it is financed separately and cannot – as per the Social Security Act – spend beyond its own revenue stream. It cannot draw from the federal budget, and is therefore irrelevant.

What is also not clear to most is that Social Security is, if we leave it alone, capable of fulfilling its promised benefits for another two decades; and at that point, projections say, it would be able to pay reduced benefits. There is a long-term problem here, but not an eminent crisis.

While I am grateful to you for promoting increased revenue as a desirable solution – via increased contributions by higher-income citizens – I deeply regret that you also include the C.P.I. boondoggle which dresses up benefit cuts in technical language. Those who esteem compromise must understand that the “chained C.P.I.” solution is an austerity policy offering cuts without revenue. It is no compromise, it is a giveaway – by the poor, to the rich.

It is my privilege to write for this same local paper, and more often than not it is all I can do to debunk the myths about Social Security, which serve to obscure the efforts of those whose political purpose is quite simple: to dismantle Social Security as a public institution and appropriate that revenue for the private sector. Let us not play into their hands and call it compromise, for that is capitulation.

You have indulged me thus far, and I will close wishing you wonderful days in this coming new year.

Warm regards,

No comments: