Kinsley: The Meathead Proposition (on Social Security)

[kskiska]

Another Irrefutable Argument Against Privatizing Social Security

By Michael Kinsley

Try to forgive my obsession, but here is another proof that President Bush's designs for Social Security cannot work. This one's not mine. I first heard it from the actor and liberal activist Rob Reiner. Like the argument I have been hawking (see www.latimes.com/proof), this one doesn't merely suggest that Bush is making bad policy. It demonstrates with near-mathematical certainty that the idea he endorses can't work. Period.

Bush might as well be proposing legislation that two plus two is five. And if that happened, there would be no shortage of Republicans prepared to endorse this view, experts on arithmetic to declare that it is a very difficult question, research to indicate that the answer may lie anywhere between 2.3 and 7.09, moderate Washington sages to urge caution, media to report both sides of the question, and media critics to accuse the media of a subtle bias in favor of two plus two is four.

The Meathead Proposition (in honor of Reiner's most famous role) is this. The case that there is a Social Security crisis and the proposal to address it through "personal retirement accounts" both depend on assumptions about the course of the economy over the next few decades. These assumptions are highly speculative, but that's okay. What's not okay is to assume one thing when you claim there is a problem and something different when you claim that you've got the solution.

(snip)

But if free markets work the way they are supposed to -- and I would like to hear the Heritage Foundation say that they do not -- the effect of the government's announcing that government bonds are a bad investment and officially pushing people to put their money elsewhere will be to make it more expensive for the government to borrow money. So even if private stocks and bonds are a better long-term investment than government bonds (after factoring in risk and so on), they won't stay that way for long. Meanwhile, in their latest report, the Social Security trustees assume that growth in the nation's gross domestic product will slow from 4.4 percent to 1.8 percent in 2015 and will stay there for the next six decades. They predict productivity growth of 1.6 percent and average unemployment of 5.5 percent. From this and other data, the trustees predict that the trust fund will earn 3 percent a year (5.8 percent interest minus 2.8 percent inflation). This is their "intermediate" assumption, from which Bush concludes that the shortfall will hit the fan in 2042.

more…
http://www.washingtonpost.com/wp-dyn/articles/A17605-2005Feb11.html

[BrklynLiberal]

1. Kinsley was a riot on Al Franken this past week.

Rob Reiner was on the show with him. Guess they had an interesting conversation after the show.

[papau]

2. Excellent article

:-)

[Demit]

3. Michael Kinsley is great, in print and speaking extemporaneously.

[CTyankee]

4. Always loved Kinsley

Does anyone know how he is? He has Parkinson's and I heard him speak a few months ago and could visibly see the effects of the disease. I was hoping he was getting good treatment, but of course there isn't any cure yet.