Friday, May 11, 2007

Where's Your Brain?

If you ever wondered whether there was a place in the online world where the use of Google was prohibited, I have a candidate for you. How else would we politely explain Matt Stoller's post at MyDD, "Where's Your Core?" in which he refers to Jeff Liebman as a "Cato-infused nut?"

At issue is Jeff's position as one of Barack Obama's top economic advisors and his status as a co-author of the LMS plan to reform Social Security. Stoller quotes a Bloomberg article as follows:

Liebman, an expert on Social Security, isn't easily pigeon- holed either. He has supported partial privatization of the government-run retirement system, an idea that's anathema to many Democrats and bears a similarity to a proposal for personal investment accounts that Bush promoted, then dropped in 2005.

``Liebman has been to open to private accounts and most people in town would say he's a moderate supporter of them,'' said Michael Tanner, a Social Security expert at the Cato Institute in Washington, a research organization in Washington that advocates free markets and often backs Republicans.

In a 2005 policy paper Liebman, along with Andrew Samwick of Dartmouth College in Hanover, New Hampshire, and Maya MacGuineas, a former aide to Senator John McCain, advocated a mix of benefit cuts, tax increases and mandatory personal accounts to shore up the system, which will begin paying more in benefits than it takes in through taxes by 2017 under current actuarial estimates.

Obama has called Social Security's problems ``real but manageable'' and has pledged to preserve what he's called the ``essential character'' of the pension program.
If they allowed the use of Google at MyDD, then Stoller might have typed in "jeffrey liebman" "social security" and hit return. The first link would be to this description of the LMS plan, the first paragraph of which is:
The three of us – former aides to President Clinton, Senator McCain, and President Bush – did an experiment to see if we could develop a reform plan that we could all support. The Liebman-MacGuineas-Samwick (LMS) plan demonstrates the types of compromises that can help policy makers from across the political spectrum agree on a Social Security reform plan. The plan achieves sustainable solvency through progressive changes to taxes and benefits, introduces mandatory personal accounts, and specifies important details that are often left unaddressed in other reform plans. The plan also illustrates that a compromise plan can contain sensible but politically unpopular options (such as raising retirement ages or mandating that account balances be converted to annuities upon retirement) -- options that could realistically emerge from a bipartisan negotiating process, but which are rarely contained in reform proposals put out by Democrats or Republicans alone because of the political risk they present.
It's hard to see what's so inflammatory about that. If I had to guess, it's either "bipartisan negotiating," "compromise plan," or "personal accounts." Let's give Mr. Stoller the benefit of the doubt and assume he understands that the first two are essential to getting any substantive public policy implemented. So it must be those "personal accounts."

Where oh where could Mr. Stoller find the answer to his conundrum of how a top advisor to Senator Obama could support such things? This is where that Google thing helps again. Mr. Stoller could click on the second link in the search, in which he would find the following excerpt from an interview with Jeff:

Q: Why are personal retirement accounts such an important element to the Social Security system as we move forward?

Liebman: The benefit of having personal retirement accounts in the plan is that if we’re going to spread the burden across generations and start putting some extra revenue into the system now, we need to have a way to save that money so that it doesn’t get diverted to other purposes, as the current Social Security surplus often does. If you bring in new revenue but put all of the net new revenue into personal retirement accounts, then you have a way to spread the burden across even current workers in terms of making extra contributions today, but to do so in a way that you can really be sure is going to be contributing to people’s retirement incomes in the future.

Yes, that's a very sinister explanation--you cannot reliably prefund without personal accounts. If Mr. Stoller would like to take the opposite position--that, for example, President Bush's budget policies have not spent the Social Security surpluses during his time in office--he's welcome to do so.

I don't know how Senator Obama would fare as President, but it seems pretty clear that he's better off with Liebman as an advisor than Stoller as a supporter. As I wrote regarding some earlier criticism of the LMS plan, "If you fancy yourself a liberal, and if your coalition doesn't extend far enough to the right to include Jeff Liebman, then you have relegated yourself to political irrelevance."

Normally, this is the part of the post where I would suggest that we raise some money to help Mr. Stoller afford a decent search engine. But search engines are free and improving the quality of the posts at MyDD may be impossible. Making progress against Cystic Fibrosis is neither. The pledge drive is still on. You can support our team at Great Strides or make donations directly to the Cystic Fibrosis Foundation in honor of Mother's Day.


Patrick R. Sullivan said...

We might ask ourselves, if the Greenspan Commission had resulted in Congress creating personal accounts back in the early 80s, and all those SS surplus funds of the last quarter century gone into them, rather than been 'loaned' to the government to spend, would we need to have this conversation now?

alphie said...

Let's funnel a bunch of taxpayer money to my cronies on Wall Street and pretend we care about what happens next.


Patrick R. Sullivan said...

alphie, the most fundamental question in economics is, 'compared to what?'

The reason we're talking about what to do about SS (and Medicare and Medicaid) is because we funneled the taxpayers' money to a bunch of political cronies. And they spent it.

Would we be talking about the problem is we had, instead, funneled the money into the S&P 500?

alphie said...

What's the total market value of American publically traded companies, patrick?

Maybe $15 trillion, tops.

And all their shares are already owned.

Pumping so much money into such a little pool will leave everyone holding over-valued crap when it comes time for them to retire.

And lots of wealthy brokers and financial advisors, of course.

Which is the whole point really, isn't it?

Patrick R. Sullivan said...

alphie, the point is to have people's retirement be based on productive assets, not politicians' promises. But, it's obvious you don't have an answer.

alphie said...

Well, patrick,

Congress could pass a law that allows the SS bonds to be sold on the open market. That would "solve" the SS "crisis" until about 2042.

As far as stopping the current generation of Americans from passing all their problems onto future generations...I don't think you can legislate morality.

Anonymous said...

We need to concentrate solely on the "problem" of solvency after 2040 and hold off on inter-generational accounting or justice whatever that may mean. Fact is the social security system will be in surplus until 2015 which is more than we can say about the overburdened Federal fiscal deficit as long as the Republicans continue to insist on preserving massive tax cuts for the rich and a hemorrhaging national security budget. Why complain about a system that is in surplus and ignore a system that is in massive red ink?