Looking around the blogosphere, I see many fine and solid whacks at the Bush administration’s plan to gut social security. On all the standard left leaning sites -- Angry Bear, or Max Sawicky, or Brad DeLong, or Matt Yglesias – arguments are being forged that will surely be at the heart of the Democratic counter-attack. They all conclusively demonstrate that the Bush administration’s figures are outrageously cooked to make social security seem like it is in crisis. They demonstrate that the figures are also internally inconsistent, cranking out returns on private investment that depend on robust growth in the GDP and at the same time cranking out anemic and dire growth in the Social security fund, based on bad or no growth in the GDP over the same period.
Yet, LI has a sinking feeling that this strategy won’t work. Why? Because it hasn’t worked before. Combating a Bush program by saying it isn’t so seems to have had zero success in the past.
Meanwhile, in another world – the real one – there is a real pension crisis. Elaine Chow (Bush’s labor secretary – how’s that for a Trivial Pursuits answer?) unveiled a startlingly sensible plan to deal with the 23 billion dollar deficit in the Pension Benefit Guaranty Corporation. Here’s the beginning of the Time’s story from yesterday:
“Overhaul Plan For Pensions Is Outlined. (Business/Financial Desk) Mary Williams Walsh.
The Bush administration outlined an ambitious plan on Monday to shore up America's pension funds and the federal agency that insures them, calling for a sharp increase in premiums for pension insurance and new controls on how companies with poor credit ratings should handle their plans.
Under the plan, the premiums that companies must pay to insure their defined-benefit pension plans would rise for the first time since 1991, to $30 a year for each active worker and retiree in the plan from the current $19. In the future, the premium rate would also be indexed, to rise with wages.
That would make a dent in the record $23.3 billion deficit of the insurance program, the Pension Benefit Guaranty Corporation. But the administration also intends to charge even higher premiums to companies with credit ratings below investment grade. Such a move would further increase the agency's revenue and give companies an incentive to keep their pension plans in line with what they can afford to pay.
Companies with below-investment-grade credit ratings would also have to meet a higher standard for funding pension plans.”
In LI’s humble opinion, a successful strategy to fight for social security would begin with an attack, not a defense. The attack would outline the crisis in pensions at all the Fortune 500 companies, mentioning the bigger ones by name. It would rack up the deficits accrued by these companies with the zest of a carny shilling a shooting gallery. It would point out that those deficits were accrued by companies that hired the brightest investment experts. It would point out that, due to unexpected shifts in the investment landscape, the government, i.e. the taxpayer, is ending up paying out for the mistakes of the best and brightest, while millions are getting 10 cents to the dollar on their supposedly secure pensions. And it would then accuse the Bushies of turning Social security over to the same daytraders.
You’ll pay for it three times over, this campaign would intone. Once in the budget deficits the plan entails, putting the country a trillion dollars more in the red. Once in the losses compounded by daytrading your FICA. And once in covering those losses through your taxes. Three strikes and this plan is out.
That, of course, is the most malicious way to look at Bush’s proposal. And the catchiest.
This suggestion will not, we predict, be used by the Democrats. Why? Because it would involve naming, however delicately, real corporations as mismanagers of their workers’ money. It is one thing to fight vaguely named “corporate interests”. Corps smile upon that, and will still shell out for campaign donations. But the rule in contemporary America, with two parties representing primarily the Fortune 500, and only distantly the unwashed, is that you never ever ever name a corporation. You never out it. You never shame it. Unless it is already bankrupt, like Enron, and thus unable to hire your relatives, your friends, your spouse, and, potentially, after your ‘retirement from public service”, yourself, you treat it like the apple of your eye and the best thing that ever came into your community to garner tax benefits, bust your unions, and pay you minimum wages.
Oh well. LI will throw out the idea, anyway.