Thursday, April 07, 2011

Validating Ignorance on Social Security

-- Posted by Neil H. Buchanan

The buzz this week in Washington has been all about the new Tea Party/Republican proposal to effectively phase out Medicare and Medicaid. Following the standard practice, the press has been quick to label this plan "bold," while noting its political risks. I will have more to say about that proposal sometime soon, so I will limit myself here to pointing out (again) that anyone can propose a big, bold plan to reduce the deficit. It takes no expertise to throw around a few big numbers and then declare that politicians must take up the challenge to save the republic by imposing pain on the people.

What is surprising is that this week's proposal is not focused on gutting Social Security. The current proposal was supposedly written by the blatantly overrated Wisconsin Congressman Paul Ryan, who has previously proposed ending Social Security (in all but name) as well. For now, however, it is Democrats and nominal liberals who continue to do the advance work in guaranteeing Social Security's demise. Once they have given enough ground, their opponents will surely bully and coax them into taking the few remaining steps to the promised land.

The most recent example of misguided commentary on Social Security was an op-ed in The New York Times by Alicia H. Munnell, an economist at Boston College and former economic advisor to President Clinton. Munnell's message is hardly subtle, with her essay carrying the title, "To Cut the Deficit, Look to Social Security." It is still somewhat surprising to see someone like Munnell be so blatant about it, but maybe that is just my lingering idealism. What is genuinely surprising, however, is the argument that Munnell offers to justify cutting Social Security.

Starting with the "entitlements" ruse, Munnell decides to treat Social Security as just a big spending program. Yes, she admits, its dedicated tax stream has caused the program to be a net positive for the government's finances, but now it is about to turn negative; so we should stop treating it as a separate program (which justified the higher-than-necessary taxes for three decades) and just treat it like any other spending program. This kind of double-think is common among longtime Social Security foes like Alan Simpson. The basic move is to treat Social Security as a self-financing mechanism to justify its surpluses, but then ignore those surpluses when the long-planned period of annual deficits begins.

All of that is standard stuff, even if the source is a surprise. What was especially notable, however, was the lone argument that Munnell offered in support of the idea that Social Security should be cut: People think it is going to be cut anyway, so we need to cut it now to restore their confidence. No kidding. I wish I were exaggerating, but here is her argument: "Restoring balance to Social Security would also make Americans feel more secure about their retirement." Munnell uses that claim to suggest that people are taking early retirement in response to concerns about Social Security's finances, which harms those early retirees by locking them into lower benefits than they might otherwise receive.

In short, we should validate people's ignorant fears as a way to allay those fears. Last summer, I noted a similar argument from a think-tank-based deficit hawk. Munnell, however, is a trained economist, and a former member of a nominally-Democratic administration. We thus have a prominent economist leaping into the realm of social psychology, claiming that people will calm down if you only tell them that there really was a problem. Maybe that is true. Maybe people really will believe that the (imaginary) problem has been fixed, and they will then stop worrying about Social Security.

If we are going to speculate about the wisdom of crowds, however, it seems much more likely that people will view cuts to Social Security -- cuts, by the way, that (like Rep. Ryan's attack on Medicare and Medicaid) will overwhelmingly or entirely be borne by post-Baby Boomers -- as proof that it was never a sound program, and thus is not worth supporting. In any case, we can be sure that Social Security's opponents will never admit that the program has been fixed, using the changes to the system as proof that we must abandon the system once and for all. Changing some details of the program, in other words, cannot change a fundamentally dishonest debate.

Again, I remain an idealist, despite everything. Maybe the best response to ignorance really is to give up and inflict unnecessary harm on people. Given that no leading Democrat has even tried to defend Social Security, however, it seems a bit premature to give up on the truth.


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