Samuelson on Social Security: An Artifact From A Strange Year

Historians of the future will look back on this year as a turning point in the drive to dismantle a popular, self-funded program by convincing people that it's a "big government" initiative that "costs too much." Ours will be remembered as a time when superstition ruled the land, just as it did in ancient Europe - except that today we make sacrifices on the altar of tax magic, not black magic.

Whenever that day arrives, Robert J. Samuelson's latest Washington Post editorial [1]will be a useful artifact for students of this demon-haunted time.

Words Matter

Samuelson's been on a thirty-year quest to destroy Social Security - a program which he clearly despises on a visceral as well as an ideological level - and 2011 may be the year his dream comes true. But like any true believer, he's never satisfied.

How much does Samuelson dislike Social Security? It's "old-age welfare," he sneers, despite the fact that everyone who receives retirement benefits paid for the privilege. Its existence means that "government" ... "subsidize(s) Americans for the last 20 to 30 years of their lives." (Social Security is not "subsidized" by government. Working people and their employers make payments into a separate Trust Fund which pays retirement benefits.)

In a particularly Orwellian turn of phrase, Samuelson even suggests that one of the many valuable reasons for "overhauling" (ie, slashing) Social Security is "to extend people's working lives," as if forcing a 69-year-old janitor or waitress to keep working were some sort of productivity enhancement tool.

Then there's the word "boomers," which Samuelson uses with great resentment. He says he's a first-line Baby Boomer, which is open for question (he was born in 1945, while the "boom' is typically thought to have begun in 1946). Do I sense resentment against younger people who may have enjoyed life a little more?

But the word "boomer" serves more than merely personal goals. The Post editorial, entitled "On Medicare and Social Security, Be Unfair to the Boomers," seeks to inflame generational conflict nearly as much as it misinforms its readers about economic reality. The "Boomers" are the generation everybody loves to hate - including themselves at times - but they're not the ones who will suffer the most if Samuelson's argument wins out. If we're unfair to the "Boomers," that will just be a prelude to the greater injustices visited on their children and grandchildren.

Rituals of Bravery

Samuelson says his 65th birthday "makes me part of one of America's biggest problems. By this, I mean the burden that the massive baby-boom generation will impose on its children and the nation's future."

"There has been much brave talk recently," he writes, "from Republicans and Democrats alike, about reducing budget deficits and controlling government spending." It is a commonplace in this puzzling time for people like Samuelson to characterize their own advocacy for the sacrifice of others as "brave," rather than selfish. There's no end to their ritual chest-thumping and declamations about the "courage" it takes to deprive other people of benefits they've paid for all their lives.

The nub of Samuelson's complaint about other "brave" proposals is that they don't begin the ritual sacrifice of the elderly soon enough. After years of conservative hostility to these programs, backed by the billions of ideologue Pete Peterson (whose "news" agency feeds stories to the Post) [2] and abetted by the President's seeming indifference, Samuelson's prize is within sight. But it's taking too long!

Of course, Samuelson isn't proposing a cut just for "boomers." He wants a permanent cut. But his central theme - let's be "unfair" to "boomers" - reflects another cultural norm for today's anti-benefits, anti-government crowd. The idea is to convince us that only the author is gutsy and honest enough to face the need for "unfairness," even though (as Samuelson puts it) "as a society, we've recoiled from a candid discussion."

It's all nonsense, of course. Samuelson's a well-to-do guy (all the "brave" ones are) who has nothing to fear from cuts to Social Security or Medicare. And a little tax fairness will eliminate the need for any benefits "unfairness."

Sleight of Hand

It's worth recapping the observations made by the EPI, Rep. Jan Schakowsky, and our own Citizens' Commission on Jobs, Deficits, and America's Economic Future [3]: Social Security can be made stable for the rest of the century (at least) with some easy-to-absorb taxes on higher-income earners. Medicare, on the other hand, will require some serious discussion of cost containment. That must include an expanded public option to drive overall costs down, and may require abandoning our system of private health insurance. By conflating these two programs, which are linked only by the age of their beneficiaries, Samuelson's performing a little three-card monte to draw his readers' attention away from the real problems they face.

Having completed this little sleight of hand, Samuelson tells us that without drastic cuts in both programs (see what he did there?) we're condemned to decades of "inferior policies." "We can raise taxes sharply over the next 15 or 20 years, roughly 50 percent from recent levels, to cover expanding old-age subsidies and existing government programs," says Samuelson. "Or we can accept permanently huge budget deficits. Even if that doesn't trigger a financial crisis, it would probably stunt economic growth and living standards."

Samuelson, who is not an economist [1], is grossly misstating the realities. Social Security will never trigger budget deficits, unless Obama and the Republicans fundamentally change its structure. It is required by law to be entirely self-funded. As for Medicare, he's not willing to declare that we must do what other countries have done successfully to control costs: create a rational, national system.

Mullets and Medicare

"Boomers" aren't the problem. They're just a convenient piñata. And these much-maligned folks are the largest group of people to see their personal wealth evaporate in the housing collapse and subsequent recession. Things were bad for this generation even before those trillions were lost, since the private pension system that supported preceding generations has been decimated. And they're not exactly freeloaders, either. They've contributed more to Social Security throughout their working careers, too, in equal proportion to their large numbers. That's one reason why the Social Security Trust Fund has record surpluses - surpluses which the Peterson/Samuelson crowd now wants to steal.

Social Security is financially stable, and its long term imbalance is easily fixed. Medicare's a different story. The cost curve there will be devastating in the decades to come. The cost problem gets quite serious around 2030, as the "boomers" reach advanced age. But it explodes around 2075, after the last of the boomers have presumably gone to their final reward (where, if Paradise exists, they may dance through all eternity to all their favorite disco hits as light from the glitter ball reflects in their restored and mulleted hair).

Here are some very wise words: "The central health-care problem is not improving coverage. It's controlling costs." Who wrote them? Robert J. Samuelson [4]. Unfortunately, Samuelson's apparent hostility to government hinders him even here: He can't bring himself to acknowledge that countries with national health systems pay far less (for much more health delivery) than we do. His resentment-fueled solution appears to consist mainly of shifting the costs back to older people, rather than actually controlling them.

Boomers aren't the ones who would suffer most from that approach. It's their children and grandchildren - the ones who'll be retiring in 2075 and beyond - who would pay the greatest price for the ideological biases and self-interest of Samuelson and his Beltway peers.

Tax Voodoo

By pretending Medicare and Social Security are one and the same, Samuelson's able to claim that "dramatically higher taxes" are needed, and that they would "probably stunt economic growth and living standards." This bait-and-switch routine may have been designed to distract readers from the obvious solution for Social Security, supported by people across the political spectrum from left to right: Raise taxes on higher-income people. (Eight out of ten people polled rejected Social Security cuts [5] to balance the budget; two-thirds favor lifting the cap on the payroll tax for employers, and 61% favor lifting the cap for employees too.)

And does Samuelson really believe that higher taxes "stunt growth and lower our standard of living"? If so, then that old tax magic has him in its spell. No serious economist believes that nowadays. Our greatest periods of growth and prosperity came when the nation - and especially the wealthy - paid far more in taxes than they do today.

America vs. the Beltway, 2010-style

This one's for the psycho-historians of the future:

"They (politicians) dread an assault from AARP, the main senior lobby, and the rage of millions of retirees and near-retirees. Public opinion is hostile."

Consider the language: Elderly people on fixed incomes are characterized as mounting an "assault," and are characterized as a horde of enraged millions. Samuelson makes the Social Security debate sound like a cross between Driving Miss Daisy and Night of the Living Dead.

And public opinion - which should be respected and considered in any democracy, even if leaders must sometimes challenge it - is described as "hostile." These warlike words are used to describe either those who have spent a lifetime of work paying into Social Security, or else to represent the people at large. It reinforces an impression of Samuelson and those with whom he presumably socializes: That the inside-the-Beltway crowd is a garrison state within a state, cordoned off by privilege and relentlessly hostile to both the elderly and the public at large.

The truth is that nobody wants what Samuelson (and Peterson, and Simpson, etc.) are selling. These proposals are incredibly unpopular, and not just with the eight-track-and-Nehru-collar crowd. They're rejected by those who are already retired, baby boomers, and the young people Samuelson tries to inflame with generational hatred. And yet screeds like his keep appearing, reflecting the conventional (and often Peterson-financed) "wisdom" of the Washington elite. The widespread views of the public (including most Republicans andTea Partiers) are marginalized by press and politicians alike as "leftist" and "naive," while the inaccurate and inflammatory prose of Robert J. Samuelson is praised as moderate and centrist.

That may be what astounds our future historians most of all: That the public's strongly-held opinions - reinforced by near-consensus among the experts - remain ignored and unrepresented in both politics and the media. And yet our nation continues to call itself a "democracy." That may explain one more set of poll numbers [6]: The journalistic profession, whose esteem soared during Watergate days, is now rated highly for ethics and honesty by only 22% of the population. State politicians are held in even lower regard, and the only national politicians in the poll (members of Congress) were rated highly by less than one person in ten.

Nurses top the ethics list every year, with 81% of the population rating their honesty and ethics highly. This year, older Americans know that a nurse will be available when they need them. Let's hope that's still true when our historians of the future look back at our curious and confused era.

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[1] The Internet's filled with references to Samuelson as an "economist." He's not. They're confusing him with Paul Samuelson, who (among other accomplishments) wrote the most widely-used introductory economics text. When I was working behind the Iron Curtain I was told that people made illegal copies of the Samuelson textbook and circulated it as samizdat literature.

Paul Samuelson won a Nobel Prize. This isn't that Samuelson.

This post was produced as part of the Strengthen Social Security [7]campaign.