But Bush's taxcuts are without question the guiltiest party.

If by that you mean the largest contributor to the deficit, you are incorrect.

As to SS, administrations from the 50's through the 90's, have used a pay as you go system. Meaning, what you and I pay in right now is transferred to retirees now. There is no trust and there never has been. You're right that in the first term, Bush should have addressed this issue, but the inherited bubble and deficit made those issues a priority at the time.

It is past time to debate whether there should be reform, as even you now admit by suggesting we could have set up a trust, rather we should debate how to reform it. Should we repeal the tax cuts and put those money toward younger retirees SS trust? Should we allow a small percentage of contributions to be privatized?

If we do nothing, the pay as you go, by it's ancient design, will make it impossible to keep our promises as the number of folks paying in will be smaller than the number of folks taking out. --s

As to SS, administrations from the 50's through the 90's, have used a pay as you go system. Meaning, what you and I pay in right now is transferred to retirees now. There is no trust and there never has been.

Except when there's a surplus -- as there has been -- which is then paid into a trust. Here's where you get into questions of whether that trust counts as part of the genral fund or not, etc etc... Yglesias has been handling it pretty well.

I find it tough to get too incensed over it. There's nothing inherently wrong with the maligned "pay-go" approach, provided that you can assume growth (if we can't we've got bigger problems) and you provide an adequate buffer for periods when the numbers don't match. "Pay-go" lets the issue be framed in a way that lends itself to anecdotal comparison to many sorts of ill-advised individual investments or schemes, but at the massive, society-wide level that SS actually operates, such an abstraction works perfectly well.

Anyway, I doubt Kriston meant to imply that the tax cuts are the most significant cause of the crisis; they're just the least excusable.

J. Scott--Still waiting on that evidence that Social Security is in crisis . . .

again, referencing kevin drum, wouldn't a very modest reduction of benefits and a teeny tax increase on the biggest earners make SS solvent pretty much forever? and that's assuming weak economic growth, right?

that reform seems much more reasonable than borrowing huge amounts of money to finance a system than increases risk and slashes guaranteed benefits.

Not only that but Kevin has some neato graphs taken from the Congressional Budget Office's analysis of the President's own hand-picked privatization commission's plan to privatize. I'm sure most everyone on this board will be shocked to learn that even with bullish equity growth over the next 40 years, the amount of benefits paid out by the privatization plan are less than that of unreformed social security. That's right folks--the plan the President is rumored to support is worse than doing nothing. Remind you of any other imminent actions the President has recommended?

Wow. You used the word "multivariate." That's remarkable.

Gore was dumb to call it a "lockbox", a phrase tailor-made for SNL to joke about.

Rob W.-According to even the "no crisis!" folks

Currently, Social Security takes in more in payroll taxes than it needs to pay out. By 2018, it will start to receive less in payroll taxes and will need to tap its surplus, held in U.S. Treasurys, to meet its obligations. By 2042 (or 2052), that surplus will be tapped out, and payroll taxes will only be able to cover a portion of Social Security's obligations.(http://money.cnn.com/2004/12/15/retirement/what_crisis/)

yeah, that's our point, though. by the time 2042 rolls around, we'll only be paying 70% of benefits, which would require only minor actions to bring up to 100% if enacted now. instead, bush has proposed a major overhaul that doesn't even guarantee that it will increase payouts over the current, slightly flawed system. the whole thing just seems silly.

J. Scott,

But does this rise to the level of "crisis"? Even in the worst case scenario, the events you discuss don't happen until 2042. That's 38 years in the future. If you took the time to read the federal government reports I cited to in the last round of Social Security posts here on Grammar Police, you'd see that in the best case scenario, Social Security never goes bankrupt. Quoting a single CNN article isn't analysis, its lazyness.

Do potential problems exist with Social Security? Yes. Is it an immediate crisis? No. Does it require a total overhaul of Social Security? No. Should we carefully and slowly look at whatever changes might be needed? Of course.

Don't kid yourself, this represents a phase-out of Social Security, not a plan to "save it."

Why? Because Social Security is the signature Democratic program. It is the single most visible program in the Government, and by destroying it, Bush can begin to roll back every progressive program of the last 70 years.

Doesn't it trouble you at all that the same crisis rhetoric which lead to the total debacle that is Operation Iraqi Freedom is again being unveiled? That rhetoric was, pure and simple, lies carefully constructed from the worst of the worse case scenarios possible. This new invented "Social Security Crisis" is the same thing.

Try harder next time with more analysis and actual facts, not a single quote from one CNN article.

we bought junior-hockey tickets. already had the DVD player.

Guess you drank the cool-aid. The tax cuts made very little difference in the deficit. Order of contributors: 1) less revenue due to economic slowdown - and even as recovery came about fairly quickly, tax revenues do not because of loss carry forwards and other accounting stuff. Also last two years of boom and huge tax receipts were partly fueled by estate transactions, and as real estate fell, in some places by double digits % much loss of revenus; 2) 9/11 - very significant to financial businesse and stock market from which a lot of tax revenue comes, and there is a carry forward effect as assets are sold in the future; 3) the war - obviously lots of spending here, some that needed spending anyway, but was cut during eight years of Clinton, some just because of war; and 4) tax cuts - in the short run they reduce revenues, but always result in higher revenues 2-4 years out. See JFK and Reagan cuts and resulting increase in revenues that follow, a consequence of accelerated economic activity.

Anselm, please provide support for your statements re: Effects of recession, supposed revenue positive effects of tax cuts. Cite.

Two payers for every one recipient. Tell me, when that happens, how you can claim solvency in the near future with a straight face. You folks are delusional. And regressive.

SS WILL bust or require draconian choices if nothing is done to reform it..

...even though there are crazy people here in denial about this...

...let assume that they are correct for a moment and SS will continue as good as ever forever...

even if that were true (and it isn't), then, at the least, SS is a shitty deal! It has pretty much a zero to 1% rate of return on average over one's lifetime and leaves those who solely depend on it pretty much at poverty level for their retirement.

In contrast, folks in the municipal retirement system in Galveston Texas were allowed to opt out of SS in the early 80s. They pay into their municipal retirement the exact same thing that they would have paid into SS (both employer and employee contributions). Instead of collecting their crappy little 1,500 checks each month... they collect 6K+ checks each month. Many of them retire and have a take-home pay this is MORE than when they were working! Also, they don't lose this when they die. They can contribute whatever they want of this to charity or leave it to their children.

...but ya'll just keep your head in the sand and keep believing in this SS ponzi scheme which would put Corporate Execs in prison if they tried to offer it to customers.

Rob W asked Anselm:
Anselm, please provide support for your statements re: Effects of recession, supposed revenue positive effects of tax cuts. Cite.

Rob W: I'm very frustrated when trying to answer this question only because several months ago, I engaged in a very long and in-depth debate on this over at Yglesias's site and the comments section where this debate took place has since disappeared. If I had know that, I would have copied it for long-term keeping because it had some real gems.

Nevertheless, without going into as much detail or research...

the best, most "laboratory" real life example is probably Reagan's tax cuts because:

(1) Reagan's tax cuts phased in quickly... not little-by-little as Bush's tax cuts do. If phased in little-by-little, it is too easy to attribute changes on other factors since (more time) = (more potential for other factors to play into the results)

(2) Reagan's tax cuts were historically very aggressive as far as tax cuts go. Bush's tax cuts were rather modest compared to Reagan’s.

Interestingly, most people under 30-35 cannot remember just how bad the economy was in the late 70s and very early 80s... double digit unemployment, double digit interest rates, double digit inflation, hour long waits in gas lines... etc.

When Reagan took office, he inherited these things from Carter. However, keep in mind that a president's first budget doesn't begin until they are in office for about a year and the effects of their changes also have further delayed reactions... Therefore, it is interesting to note that the economy continued to be awful for Reagan's 1st 1 1/2 to 2 years... as any supply-side economist would have predicted.

Many of Reagan's economists (and Republicans in congress) were actually against the cuts and were NOT supply-side economists... They freaked out when they saw the tax cuts cause immediate reductions in tax revenue (as supply-side economists will acknoledge)... therefore, before the "upside" of the cycle had a chance to start, they "rolled back" 1/3 of the tax cuts... but left in place 2/3 of the tax cuts. This 2/3 still dwarfed the total size of the Bush tax cuts... But... soon afterwards, the upside kicked in and some of these same economic advisers said years later that they themselves underestimated how incredibly well the tax cuts did to improve the economy. (they should have been more patient and not panicked in the early months after the cuts)

So Reagan takes office Jan/01. His budget goes into effect late that 1st year (or early the next, I can recall). The economy still sucks for about 12-18 months later as the tax cuts begin make an difference... then, seemingly miraculously, sometime between mid '82 and late'83/early'84 ...we go from "bad economy" to an economy so good that Reagan used "are you better off now than you were 4 years ago" as his '84 campaign slogan. Basically, in these last 2-3 years of Reagan's 1st term, there has probably not been a single consecutive group of years in our history where the economy when from so awful to so good so dramatically and so quickly.

...and it is no coincidence that Reagan's dramatic tax cuts kicked in just a year or so before this improvement started.

"let assume that they are correct for a moment and SS will continue as good as ever forever"

if you start from a false premise, rob, it doesn't contribute much to the debate.

Don't be so knitpicky. Suppose were were on a trip out in the desert in a car whose engine started making knocking sounds and smoking... but was also low on gas.... but everyone was in denial about the engine and said it just needed to cool down a bit. What I said was the equivant of saying "well, even if the engine is O.K., we are still low on gas".

"Gore advocated that we squirrel it away to bolster Social Security, whereas Bush said that it ought to be disbursed to Americans"

Bush actually ended up agreeing with Gore about the lockbox and even reiterated the lockbox promise in March 2001. But of course he was lying.

Also, Anselm doesn't know what he's parroting about..

Reagan's tax cuts did nothing to spur growth. Growth remained average throughout the Reagan years. Investment, which was also supposed to increase, declined. And deficits, which were supposed to be cancelled by increased revenues, grew instead. Reagan quadrupled the national debt. The good economy in 1984 was the predictable result of looser monetary policy and the fact that the economy was coming out of an extremely severe recession.

Reaganomics, Supply-side Economics, Voodoo Economics - whatever you call it, it failed miserably.

"the Fool":

You don't take into account what the 80s would have been had we continued the taxation policies of the Carter administration.

To say what you said is like a critically injured car wreck victim complaining about the surgeon who saved his life because of subsequent arthritis. He forgets what would have happened if left in the wrecked car another hour. Go back and read about the economy in 1979, for example. It is FAR FAR FAR worse than ANY "bad" economic year we've had in the past 20 years.

Furthermore, Reagan had a majority Liberal Democrat Congress for his last 6 years in office and, I'll admit, some of the progress of Reagan's broad and bold tax cuts passed early on were whittled away. Therefore, it is really not fair to compare the entire 80s.

However, if you want to compare these 4 year periods:

'79-'82

('82 being the last year before Reagan's policies had enough time to really make a full impact)

to '83 - 86

...you will lose this argument hands down every time.

Also, in spite of the large tax cuts, revenue from taxation just about DOUBLED during the 80s... proving that, if you lower taxes, you actually INCREASE government revenues because of increased economic activity and productivity.

In fact, does anyone reading this thread believe that lowering taxes always cuts gov't revenues to the extent that taxes were lowered? If you believe that, you are are dumb ass. If you don't believe it, you might just be a smart supply-side economist. If you are in the dumb ass category... then tell me, how did revenues double in the 10 years following Reagan's tax cuts if cutting taxes supposedly means that there is less money for gov't programs?

Also, the reason that the deficits continued to soar in the 80s, in spite of increased revenues, was because of an out-of-control Liberal Democrat congress which spent like drunken sailors even beyond the growing tax receipts. Reagan had little choice but to sign the out-of-control spending bills, or shut down the gov't.

Basically, if your boss doubles your salary... but you go out and spend 3 times what you spent before... it is your spending which is to blame, not your lack of more salary.

Also, BTW, to clear up another misconception... for every 1 dollar of increased defense spending during the 80s, there were 2 dollars of increased domestic spending. Again... proving that these Liberal Dems are clearly to blame for 80s deficit spending.