Tuesday :: Jan 4, 2005

Post Demonstrates Shortsighted Reporting Today On Social Security


by Steve

Well, after my hope yesterday that the main newspapers would at least do some critical analysis of the Bush Administration’s claims and case for privatizing Social Security, the Washington Post runs a story today by Mike Allen and Jonathan Weisman which is nothing more than a press release from 1600 Pennsylvania Avenue. In the story, the Post reveals that the Administration will propose adjustments to the benefit indexing model used by Social Security that will result in significant reductions in benefits for retirees decades from now. And under this plan, how will retirees make up for the reduced benefits? They won’t, unless they are really good at picking stocks.

Nowhere in the piece do Allen and Weisman ask why this is the only option being considered by Bush to save money, nor do they explore other options for saving money. They simply put it out there that this one change in the indexing formula would close the gap itself, without also reporting that there are other choices to do this, and that the gap and alleged problem itself are subject to debate.

Under the proposal, the first-year benefits for retirees would be calculated using inflation rates rather than the rise in wages over a worker's lifetime. Because wages tend to rise considerably faster than inflation, the new formula would stunt the growth of benefits, slowly at first but more quickly by the middle of the century. The White House hopes that some, if not all, of those benefit cuts would be made up by gains in newly created personal investment accounts that would harness returns on stocks and bonds.

But by embracing "price indexing," the president would for the first time detail the painful costs involved in closing the gap between the Social Security benefits promised to future retirees and the taxes available to fund them.

Note that the White House “hopes that some, if not all” of those benefit cuts would be made up by the personal accounts. There’s a ringing endorsement of their own plan. But also note that, as Muckdog noted in the comments thread of my post from yesterday afternoon, indexing anything to inflation rates instead of wages in the coming years given globalization is not wise.

Paul Krugman once again today tells us that the “imminent crisis” argument used by Bush to sell this “cut benefits and privatize or else” only will occur if the US government chooses to default on its own obligations as a result of Bush’s fiscal policies, something that isn’t going to happen. But despite Krugman’s level headedness, this won’t stop the Administration and its corporate allies, who see a chance to not only make money with the personal accounts, but to also reduce their employer contributions into the system, from dumping hundreds of millions of dollars into a campaign to sell America on this phony crisis and false choice of privatization.

In other words, it sounds like Iraq’s WMDs all over again, this time with the deceptions being bankrolled by Wall Street and Corporate America. Maybe now would be a good time for Democrats to remind voters of how much the Wall Street investment houses gave Bush in 2004, and how much Corporate America stands to save by cutting their contributions to Social Security.

Also, Weisman and Allen quote the Center on Budget and Policy Priorities’ Robert Greenstein to offer a dissenting view on the indexing proposal, without also quoting from CBPP’s own paper done more than two weeks ago that makes it clear that the Bush indexing proposal is a significant cut in future benefits that will affect all system beneficiaries, not just those that chose to self-direct a portion of their contributions. Even those receiving disability and survivors’ assistance would have their benefits cut significantly under the Bush proposal. CBPP also makes the point that the indexing proposal, by itself, allegedly eliminates the funding shortfall all by itself, making the privatization feature irrelevant and unnecessary except to provide a vehicle for those who suffer the benefit cuts to hope to recover a portion of the losses they suffer from Bush’s indexing proposal. Again, like his fiscal policies, Bush creates a catastrophe and then offers nothing but bad choices for how to deal with his own disaster.

This same analysis by CBPP, again published over two weeks ago, offered alternatives to close the funding gap developed by experts in the field. Yet Allen and Weisman didn’t bother to quote from those choices in their press release from the White House yesterday.

You can write Mike Allen about his lack of good reporting at allenm@washingtonpost.com.

Steve :: 12:00 PM :: Comments (6) :: Digg It!