Wednesday, February 02, 2005


I'm sure that Social Security will be a big part of tonight's State of the Union, and so this may be completely moot by the time you read it.

I can't find any good citations on the Web right now, but it seems that the Bush administration is playing three card monte with economic predictions when it comes to Social Security. They seem to be assuming good economic growth when it comes to privatized SS accounts, but poor economic growth when direly predicting the fall and collapse of the SS program in general. You don't get to have it both ways.

This is what steams my potatoes. Look, I'm a scientist, and a fairly rational guy. (Or so I like to think.) I am, as they said when I interviewed at Intel (but didn't get the job), very data-driven. If privatizing Social Security will help it financially, I'd be all for it. Numbers don't lie. Unfortunately, you can lie with numbers.

Yes the governments budget office is making some fairly low numbers when they do their economic forecasts. There's nothing wrong with that. In fact, it's a good idea to make a conservative estimate when you're forecasting something, so if things do a little bit better than that, you have extra to work with. But when they pull a rosy forecast out of their ass when talking about growth of these private accounts?

That's cheating.

The fact that they are making these distortions suggests something else entirely. This isn't about trying to save Social Security. It's about marketing a decision that's already been made. Note how everything used to be about "privatizing" SS, then moved to "private accounts?" Those terms didn't focus test well, and so now it's about "personal accounts." The administration even critisizes those in the press that use the verboten terms, even though they were using them themselves a few weeks ago.

And quibbling about rates of return in SS is a red herring. Social Security isn't a retirement plan. It's insurance against retirement planning. It's a compact between this generation and their parents that they won't be forced into poverty when they retire. It's not supposed to replace sensible retirement savings, it's supposed to protect you if it catastrophically fails. (Just ask Enron employees about how bad stocks can do.) No one thinks of fire insurance as a great investment. It's not there to be collected on eventually;, it's there to stop you from being homeless if your house burns down.

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