DailyKos: "A Non-Hysterical Progressive Analysis of so called Social Security Cuts on the Table"

[TheWraith]

I like to read and write about economics and finance but hesitate to do so because (1) it's hard to explain anything without explaining everything, and the draft diaries just get too long until I have to abandon them, (2) a lot of DKers have a lot invested in certain views about economics and finance that are not really open to empirical (ie factual) analysis, but instead are based on political commitments and emotion, and (3) despite how crazy the Republican Party is, once in a while Democrats, Republicans, technocrats and policy wonks actually agree on something, and even if the most credible progressive policy wonk institute says a particular assertion is true, if a Republican also says it's true, and someone on DK finds a link to said Republican saying such rare sane assertion, it becomes automatically discredited.

But today's hysteria over the "cuts" to Social Security on the proverbial political table and the even wilder assertion that the Obama administration is committing political suicide by discussing them, let along enacting them, has persuaded me to provide a dollars and sense (as well as economic theory) explanation of what's going on.

If you don't like economics, public finance or numbers, then let me not bury the lede and explain exactly what's on the table. If enacted, the average social security recipient would get 14 cents less of an increase per month, but only in a month in which the social security benefit actually went up by about $34. So the assertion being made in several diaries is that social security recipients will revolt because their average monthly benefit went up from $1,044 to $1,078.31 instead of $1,078.45. Of course someone would have to point out some highly technical macro economic measuring theory first, and then get them riled about about that monthly dime at a time when they are actually getting a net of more money. So yes, it does look like 11 dimension chess (offering the Republicans nothing of substance).

More at the link. Emphasis mine.

http://www.dailykos.com/story/2011/07/07/992060/-A-Non-Hysterical-Progressive-Analysis-of-so-called-Social-Security-Cuts-on-the-Table

[TheWraith]

1. Naturally, anything NOT hysterical and based on bullshit is being ignored today. nt

[LiberalAndProud]

15. Sorry, I was away reading the article so I could understand your position.

So who's not hysterical?

[dennis4868]

18. Well we are at DU....

IT'S ALL ABOUT HYSTERIA AND HYPERSPECULATION!

[damntexdem]

2. I don't give a fuck about the size of the cut -- it's the fact of a cut.

This is NOT defending Social Security. If Obama really does push this, then it IS TIME TO GET HYSTERICAL.

[pnwmom]

31. 14 cents is time to get hysterical? Maybe if you're a Rethug,

and you don't want to pay more taxes.

I thought Democrats had more sense.

[Inuca]

52. Not exactly rational n/t

[Bluerthanblue]

3. K&R despite the 0.

thanks.

[DJ13]

4. Theres a problem with that analysis

If the cuts offered are that small the Republicans wont accept it as a serious offer.

If thats just a starting point then the cuts will be much larger by the time a deal is finalized.

[Aerows]

9. Bingo!

And once they think they can get away with SS cuts, you can pretty much kiss it goodbye, because they will chip away at it until it's gone.

It's OUR money. We paid into it.

[Richardo]

5. It's like a breath of fresh non-hysterical air

Thanks for posting, and a hearty :rec: and :kick:

:patriot:

[sabrina 1]

6. More condescension towards the people by

a familiar source. Do they really, really think we are too stupid to understand numbers? Typical though. No surprise to see this.

THERE SHOULD BE NO CUTS, not EVEN 14cents from SS. SS benefits should be RAISED. That fund belongs to the people!

Hysterical! A favorite word it seems for apologists for the assault on SS.

[TheWraith]

7. Hysterical is, traditionally, the word used to describe baseless lunacy.

Which is what DU is displaying in spades today. Including the complete inability to realize that there is no "cuts."

[dennis4868]

19. Train has left the DU station...

even if there are NO cuts DUers will say Obama made cuts...facts mean nothing here...

[SidDithers]

51. +1...nt

Sid

[Fumesucker]

21. When the wealthy got a monstrous tax cut, I and a lot of other poor people got a tax increase..

That's basically why I no longer believe a word that comes out of Obama's mouth.

http://www.nytimes.com/2010/12/08/us/politics/08impact.html

Although the $120 billion payroll tax reduction offers nearly twice the tax savings of the credit it replaces, it will nonetheless lead to higher tax bills for individuals with incomes below $20,000 and families that make less than $40,000. That is because their payroll tax savings are less than the $400 or $800 they will lose from the Making Work Pay credit.

“It will come to a few dollars a week,” said Roberton Williams, an analyst at the nonpartisan Tax Policy Center, “but it is an increase.”

When you have to pinch every single penny, a few dollars a week is a huge burden.

Afflicting the afflicted and comforting the comfortable, that's my view of Obama now and it's going to take something really major to change it.

[TheWraith]

28. So because something expired and wasn't replaced, you think Obama is Scrooge?

Is it that he's supposed to always 100% get every single thing we could want?

I know very damn well how much it sucks to be pinching pennies: I've been underemployed since before the Obama administration even BEGAN. But playing blame games because you expect one guy to singlehandedly win the day doesn't make sense.

[Fumesucker]

34. The tax cut for the wealthy was set to expire...

That one got the replacement, poor people got the shaft, a big "fuck you, pay more, assholes".

[TheWraith]

35. What poor people got was $600 billion dollars.

Extensions for unemployment benefits. Lowered payroll taxes. Extension of child tax credits. Extension of college tuition tax credits. Extension of earned income tax credits. All of which were set to expire. $600 billion dollars for people who work for a living, or would like to, wrangled out in exchange for one more year of the Bush tax rates.

But no, you're right, that's the same as telling the poor "fuck you, pay more, assholes". :eyes:

[Fumesucker]

38. Eh, the payroll tax holiday is all about eventually destroying SS..

By paying SS from the general fund rather than the trust fund it just makes it easier for the Republicans to demagogue on SS.

And the 99ers didn't get any extension of unemployment benefits, you know, the ones who needed it the most.

Then, to add insult to injury, we were told that *everyone* got a tax cut when it was blatantly obvious that was not so (at least to those who got a tax increase).

[TheWraith]

41. So, if Obama does something to benefit working people, it's for evil reasons

If he doesn't do something, it's still evil. And helping tens of millions of people feed their families is evil, because he didn't help every single person.

You are clearly emotionally invested in your viewpoint to the extent that facts don't matter.

[Fumesucker]

42. I don't know the reasons, I just know the effects..

And the effect of the payroll tax holiday is that Republicans will have an easier time demagoguing SS..

The *fact* is that I'm paying more in taxes and the wealthy are not, do you dispute that?

[girl gone mad]

37. "Hysterical" is pretending that a sovereign currency government can go broke...

and running around with your hair on fire, offering up cuts to landmark social programs to solve this manufactured deficit crisis.

[orwell]

48. We have a winner...

...nice to see that somebody sees through the smoke and mirrors.

[sabrina 1]

49. I remember similar comments about DUers

when they first expressed fears that there were signs that Obama was going to abandon the PO in the HC debate. They were just being hysterical, he was making sophisticated chess moves which they were too dumb to get and he would do as he said, there would be a PO.

I also remember the 'hysteria' of DUers who were floored, when Obama betrayed yet another campaign promise by ending the ban on Offshore Drillling. Hilariously, 'progressives/liberals' presumably long-time supporters of the ban, especially when Bush was trying to lift it, jumped to the President's defense faster than they could have had time to even think about such a change of heart.

They used his own slam against environmentalists, that they were basically relying on old data regarding the safety of oil rigs today, to defend him. 18 days later he, and his defenders, were proven fatally wrong. 11 human beings died on that rig. So it seems the 'left' was right after all, and President Obama's 'experts' in whom he placed so much faith as he told us, were wrong.

I could go on and list the many times that people who were genuinely concerned about the policies of this administration, were eventually proven to be correct. It's not hard really, when someone doesn't take a firm stand FOR something, it's fairly obvious they don't care much about it.

Being called 'hysterical' is something Democrats are used to, as that was a favorite word for them used by Republicans. This time perhaps there will be enough outrage and HYSTERIA, to stop this president from even thinking about touching SS. It seems there are an awful lot of 'hysterical' people.

Funny too how you would never have found anyone on a Democratic forum, and we did not, who would NOT be hysterical at the mere mention of Social Security in the same paragraph as the Deficit, when Bush was president.

I have the most respect for people who remain firm on their principles regardless of party politics. Those who are willing to set aside their principles for their party, on both sides, have seriously compromised much of what was good about this country.

I am proud to say I am hysterical over the news that there is even a remote chance that SS, Medicare and Medicaid are 'on the table' for discussion re the debt ceiling. I intend to convey that hysteria to everyone in Congress I have time to contact.

If he touches those programs, he will be a one term president. I think that anyone who cares about keeping him in the WH should be hysterical because if he blows it, the question will need to be asked 'does the President WANT Palin in the WH'?

[LynneSin]

11. I'll take a 14 cents cut if we can get the republicans to give up the Bush tax cuts for the Wealthy

nuff said.

[MilesColtrane]

8. K&R

[Ineeda]

10. We're seeing a s*itload of over-the-top hysteria here on DU ...

Nice change of pace with this article. Highly recommended. Do yourselves a favor. Reading an honest analysis could certainly lower the DU community blood pressure.
Edited to respond to posts above. The article says (for those too set in their opinions to actually read it) is that instead of getting approximately $35 in SS increases, recipients would get an INCREASE of $34.86 (Figures not exact because I won't re-read the article to argue against the pig-headed.)

[Poll_Blind]

12. When the President, HIMSELF, said the numbers aren't finalized, how can you say it?

:shrug:

Here, this is from just a few hours ago.

It's less than 3 minutes, you can brave it.

PB

[KittyWampus]

20. It's a shame you didn't bother to read/comment on the OP & the linked diary.

[KittyWampus]

13. That was really interesting.

[denverbill]

14. $.14 x 12 x 32 million recipients is only about $57 million per year.

I find it rather hard to believe they would even bother making cuts that wouldn't even save $1 billion over the next 10 years.

[Fumesucker]

16. Not even a rounding error in SS expenditures..

Good point..

[TheWraith]

24. Basically, a "chained" CPI is thought to more accurately reflect people's behavior.

In other words, that if luxuries increase in price, people spend less on them; if necessities increase in price, people spend more on them. At least, that's the general idea. I'm not an economics expert, so I defer to the author of the article.

[Luminous Animal]

17. TPM has a good analysis of this. Specifically, the cut will be compounded so that

over the years, beneficiaries will lose thousands of dollars of benefits if the formula remains untouched.

I'd say that that is a cut.

http://tpmdc.talkingpointsmemo.com/2011/07/chart-of-the-day-the-stealth-social-security-cut-in-debt-talks.php

I suggest people read the TPM article. If you are loath to read the article, at least scroll down to the chart.

[KittyWampus]

22. It's a shame you didn't bother posting the rebuttals to this. It's not a cut. It's a tiny

reduction in an INCREASE and the numbers who would live that long are small and the reduction in the overall INCREASE will be offset by improvements in preventative care and reductions in drug costs.

[gkhouston]

46. That's a shell game. You can call it something else, but it's still

a reduction of benefits.

[LiberalAndProud]

23. So let's talk.

My immediate reaction was to ask outright how you managed to come up with such very specific figures.

We have been told repeatedly that the deal isn't out there yet. Wait and see what the proposal is before we panic. But you have been able to be very specific in your calculations. So I will ask you, where did you come up with your very specific 14 cents per $100?

And the fact remains, that Social Security, a self-funded program, is being used as leverage to achieve fiscal equilibrium. This violates my sense of justice on a very basic level. I understand what you're saying, this really won't hurt too much. Really. Quiet down now, pipe down.

When people are feeling economically vulnerable, it is not the time to put our only social safety net up for negotiation. It doesn't build confidence. Not at all. Even if your outline is correct, and I will concede that it may be, it is psychologically devastating.

[TheWraith]

26. You seem to have mistaken me for the author of the piece, which I am not.

I'm reposting something from DKos.

As far as a deal, this article addresses one of the very specific things which has been talked about as a potential compromise, and it's been advertised as "horrible cuts" by people who have a vested interest in outraging their readers.

[LiberalAndProud]

30. You are correct. I made that mistake.

I thought you were simply reposting here. I appreciate that you brought it here, but I remain unconvinced.

[tkmorris]

25. Sorry spectral dude

"Since the mid 1990s, economists have worried that the consumer price index generally used by the federal government slightly over estimates inflation. "

I stopped reading right there. The idea that CPI over-estimates inflation is an absurdity, uttered only by the sort of people who believe Reagan was the bestest EVER and that all social safety nets are a crutch for lazy people. It really makes me not want to bother fact checking the rest of the piece as an almost certain waste of time.

[Fumesucker]

27. Good catch...

:toast:

[Cali_Democrat]

29. Yup...CPI doesn't even take into consideration food and energy costs

Overestimate my ass!

[MilesColtrane]

40. Social Security COLAs are tied to CPI-W which has always included...

food and energy prices.

http://www.bls.gov/cpi/cpiqa.htm

...none of the prominent legislated uses of the CPI excludes food and energy. Social security and federal retirement benefits are updated each year for inflation by the All Items CPI for Urban Wage Earners and Clerical Workers (CPI-W).

[Hell Hath No Fury]

32. Author could be a Will Marshall "progressive" -

:puke: The kind of "progressive" that loves war and big business, and hates "special interest groups" like labor and women.

[LiberalAndProud]

33. So the neoliberals are calling themselves progressive now, huh?

That's ironic in a scary kind of way. DLC to the bone.

http://en.wikipedia.org/wiki/Will_Marshall

[Hell Hath No Fury]

44. "So the neoliberals are calling themselves progressive now, huh?"

Yup. Disgusting on so many levels. :puke:

[Buns_of_Fire]

36. But I was promised hysteria, dammit, and I WANT HYSTERIA!

Oh, and a pony, too. I never got my pony.:cry:

If true, I see it as an opening gambit only. It allows republicans to tell their teabaggin' nutjob buddies that they've finally made a dent (albeit, a minuscule one) in entitlements. The Administration can tell its base that it's only a cut in the amount of projected increases.

Both sides, I think, would have a hard sell with their hard-core constituencies -- republicans, because it's not enough of a cut; Democrats because it shouldn't be up for any cuts at all.

I'll still wait and see how it shakes out over the next few days before I totally freak out. But I still want my pony (and my beer and travel money, too).

[lumberjack_jeff]

39. The message is not trivial.

The message is that Social Security cuts are somehow for the purpose of reducing the debt/deficit. They don't. They can't.

[gkhouston]

47. The message is also that Social Security is the debt generator.

Wars? Irresponsible tax cuts?

[mmonk]

43. 14 cents of what increase?

You want to see hysteria? Vote the sob's out of office. All Reagan followers of both parties. Reaganomics is politics, not economics.

[xchrom]

45. From a person who likes to write about economics - their

Qualifications are what?
& the specifics? Where did those come from?

& why are we talking/negotiating SS & Medicare @ all?

Dems control the senate & WH - this reminds me of the PO 'discussions'.

[Shandris]

50. Ummm...

Someone help me here.

1. You're assuming an increase, yet there hasn't been one for two years. That ALONE makes the argument that its 'a lessening of an increase, not a cut', specious. The increase is not guaranteed.
2. The Chained CPI doesn't, to my knowledge, take into account the fact that there IS a point beyond which there is no lower price point to go to. I sure as fuck am not buying 'luxuries' on my SS check unless you want to move into the truly pedantic definitions of 'luxury'. Is 3 new shirts a year a fucking luxury? Well, by some definitions, apparently so.
3. No energy increase. My bill went up THIRTYFIVE PERCENT in the past two years. They're approved for 12 percent more next year. What is my 'non-luxury alternative' for fucking energy? It does snow, and get incredibly hot, here in Indiana.
4. No tie to medical costs. At the rate health care increases, how can this be overlooked?
5. Medicare premiums CONTINUE to rise and likewise are not counted as 'inflation'.

So whoever is bandying about this fourteen cents mantra needs to follow Richard Pryor's advice and Have a Coke and a Smile and STFU.

[pampango]

53. Stop with the non-hysterical analysis. We need more CAPS and EXCLAMATION POINTS!!!!!!!!!!!!!!

Otherwise you don't really care. :)

[muriel_volestrangler]

54. Debunked - it's $4/month, not 14 cents - see the update, and here

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=703173&mesg_id=703427

HamdenRice (late of this parish) had to admit in an update at the end of his diary entry that he'd got it wrong, and taken 'percentage points' to mean a percentage of the increase, when it means a percentage of the index. ie if the 'standard' increase is about 2.0%, the unchained increase is about 1.6%, with a difference of 0.4 percentage points.

So, in that case, $1000/month increases to $1016 with the unchained CPI, rather than $1020.

So over 10 years, that's about $40/month difference, or $480/year. It adds up to something notable.

Moral of the story: always check the working of an amateur on a website.

[ozone_man]

55. Thanks for correction.

Any SS cut is unacceptable. Cut defense spending if we need to cut somewhere.