Saturday, January 2, 2010

Washington Post Partnership With Peterson-Funded Fiscal Times Draws Fire From Left

Politico reports on protests against a new partnership between the Washington Post and the Fiscal Times, a newsgroup focusing on public finance issued funded by the Peter G. Peterson Foundation.

Critics are calling on The Washington Post to stop printing news articles from The Fiscal Times, a new "independent digital news publication" funded by Peter G. Peterson, a former Wall Street financier and longtime advocate of changes to Social Security.

The Post and the new publication announced an agreement last month to jointly produce content "focusing on budget and fiscal issues," and the first article from The Fiscal Times appeared in The Post on Thursday. Headlined "Support grows for tackling nation's debt," it described growing momentum for "a special commission to make the tough decisions that will be required to dig the nation out of debt."

In a letter to The Post's ombudsman, 14 academic and public-policy experts on Social Security said the newspaper should "rescind the partnership, "reserve opinion pieces for the op-ed page, and not allow itself to be a propaganda arm for ideologues who use fiscal distress as a stalking horse to destroy social insurance."

On one hand, the letter of protest is overblown: a letter from Dean Baker, Nancy Altman, Roger Hickey and others from the left complaining of ideologues is a bit much, particularly since Fiscal Times advisory board includes former CBO director and current Urban Institute president Robert D. Reischauer. If the Urban Institute is a hotbed of ideologues looking to destroy social insurance then I think we'd better just hang it all up.

That said, the writers do have a point: Peterson and those who are funded by him don't take strong views on how to fix Social Security and Medicare, but they are forceful in arguing that entitlements are a big problem – a view on which I agree – rather than a small one. The "big versus small problem" disagreement is a pretty defining one between right and left and I'm not sure how comfortable I'd feel if the shoe were on the other foot.

The first Post article from the Fiscal Times doesn't seem to show any bias, but then again, people on the left don't notice any bias in the New York Times so I'm not sure my judgment is exactly balanced.


Brock said...

The "big versus small problem" disagreement is a pretty defining one between right and left? Really, it isn't about ideology anymore? What about what you said back in 1999 about wanting "a new political culture that rejects government intervention in favor of individual and market freedom. In that way, Social Security reform featuring Personal Retirement Accounts doesn't send just one liberal sacred cow to the slaughterhouse. It sends the whole herd"? That seems pretty ideological.

Your life mission is to exagerrate the costs of social insurance programs so we can return to some imagined yesteryear of libertarian freedom. But without pushback from the massses, governments work only for the powerful. The powerful are using your intellect and libertarian ideals to push the cause of limiting the role of government in providing for the masses. But if you think that the politically-connected powerful are going to let go of the reigns of government when it comes to their own perks to fulfill your libertarian ideals or help society at large, you’re delusional. The revolving door between government and private industry will never end. We’re going increasingly towards giveaway socialism for the politically-connected and harsh laissez-faire capitalism for everyone else. You’re a tool of the latter, and you are never going to touch the former. At best, you’ll help strip the lower and middle classes of their basic income protections and free up more resources for special tax breaks to hedge fund managers.

Andrew G. Biggs said...


You're right that philosophical differences are important, and my personal philosophy is one of more personal control and less government control. (Not NO government control or NO Social Security, but one that accomplishes the main goals of Social Security with as little intrusion on personal freedom as possible.) But those philosophical differences are basically irreconcilable: I believe one thing about the role of government, you may believe another, and it's not a matter of evidence of which view is correct.

But the 'big problem vs little problem' is at least amenable to evidence: we can say that Social Security is bigger than problem X but smaller than problem Y, at least in dollar terms. Has there been a tendency on the right to exagerate the size of the Social Security shortfall? Sure. But has the left understated it? I'd say yes. (The fact that they call it a small problem but never put plans to fix it on the table tells me something.)

The rest of your post about 'the powerful' and laissez-faire capitalism is college freshman stuff. Many or most of 'the powerful' favor more government rather than less since it allows them to get free money without paying for it. That's the case for public sector pensions, trade restrictions, farm subsidies, corporate payoffs and the rest. I'm against all that kind of stuff, but it's hardly done by only one party.

Bruce Webb said...

"(The fact that they call it a small problem but never put plans to fix it on the table tells me something.)"

Andrew never is a little strong. In fact it is a lie. The 'left' has proposed two fixes. One was promoted by Professor Barkley Rosser and me back in the 2005-2006 time frame. It is called "Nothing" and I addressed your point directly in:
The Fierce Urgency of Nothing

Which quoted from my comment to your post:

Social Security 'crisis' over the Infinite Future Horizon, so confidently cited by you and yours is in fact predicated on a particular economic and demographic model. As was CSSS Model 2 and all other privatization schemes. Whether those models were actually compatible was the subject of Baker's 'No Economist Left Behind' challenge, one that in my mind wasn't met.

But no matter, the Rosser-Webb plan was based on economic outcomes that would come in somewhere between Intermediate Cost, which over the 1997 to 2005 period had proved too pessimistic, and Low Cost which was pretty realistic over that period but was wrecked by the Bush policies that led to the productivity crash of Q3 2005 (people who think this recession was only triggered by the housing bubble not paying attention to the fundamentals, Bush tax cuts did not lead to the productivity investments that Supply Side Voodoo assume, instead it just left that much more cash to chase speculative returns on such things as CDO's themselves backed up by unsustainable speculative pressures on housing).

After Bush policy trashed the idea that we could grow our way out of this with 4.5% unemployment and 1.5% real wage (which is all it would have taken) some of us fell back on a modified version of a plan that was being pushed by Dale Coberly based on simply assuming Intermediate Cost projections and fixing Social Security under those assumptions. The result was the Northwest Plan which showed that you could fix Social Security from now to 2026 by increasing payroll tax by 0.3% by 2011 ($1.50 a week for each of the earners and employers of the median wage household) and then if necessary imposing similar increases in the years 2026-2036. The spreadsheet is here: and neither you nor anyone else has pointed out an arithmetic flaw.

After his first election President Bush appointed a Commission to propose fixes to Social Security. And while later rhetoric asserted that "all options were on the table" that was simply not true at all. Instead an examination of the 'Guiding Principles' of CSSS
reveals bullet point three "Social Security payroll taxes must not be increased." meaning that the simplest and fairest and in context most beneficial to worker solution was ruled out of order from the git-go.

(to be continued, hit character limit)

Bruce Webb said...

Given that your claim that the the left "never put plans on the table" is in lieu of a more correct but less polite term misleading. Over the course of its history Social Security faced some funding challenges, and in response the system was periodically adjusted in ways that increased the rate of taxation while never actually overtaking the increase in Real Wage, and given that initial benefits are currently indexed to Real Wage mean each generation of retirees was able to buy a basket of goods better than that of similarly situated retirees in the generation just passed.

In 2001 the Bush Administration could have proposed a tradeoff for workers, he could have taken the minor savings they received from a cut in the bottom income tax rates and instead offset that with a phased in increase in FICA of around 0.2% per year for eight years and fully funded Social Security for decades. And I suspect the left would have gladly accepted the deal in order to insure that people ideologically hostile to Social Security didn't have an opening to 'fix' it in a way beneficial to the interests of capital and adverse to the interests of wage workers.

The left would have been and probably still would be open to a Social Security fix based on a phased in payroll tax fix. You (and I mean you Mr. CSSS staffer and later Deputy Commissioner Biggs) were complicit in ruling that fix out of bounds and now are the left for not having a plan.

The left has plans. My preferred plan "Nothing" is not faring well, but then CSS Model 2 would not have done well either given the equity markets from 2001 to 2008.. On the other hand the Coberly Plan as since modified into the NW Plan would have worked well and with tiny tweaks would still work well, as would the similar plan advanced by Virginia Reno of NASI. It is just that the artificial ground rules established by CSSS make discussion of that impossible. Though oddly enough roughly equivalent tax increases are accepted as parts of privatization based plans like LMS.

Is Social Security a problem? Maybe. Can it be fixed within its current structure? Of course. Can it be so fixed given the shackles put on it by CSSS? Well no, and forgive me for thinking that was by malice aforethought.

Your framing of this as the left being in simple denial indeed "tells me something", but not something very flattering to you.

Andrew G. Biggs said...


Without shortchanging you or Rosser, neither of you are elected officials who have to respond to the public. I was (implicitly) referring to Congressional plans, of which there have been many Republic reform plans proposed and scored but almost no Democratic plans (I see two Democratic congressmen on the list among many Republicans. And one of the plans, Wexler's, was what prompted Speaker Pelosi's reponse that she would "Never" put forward a reform plan.)

Bush put forward a number of compromises -- price indexing would only fully hit high earners and not hit low earners at all; he was open to raising the tax max; and accounts would be voluntary. I don't remember hearing any compromises proposed from the left.

Brock said...

"Many or most of 'the powerful' favor more government rather than less since it allows them to get free money without paying for it. That's the case for public sector pensions, trade restrictions, farm subsidies, corporate payoffs and the rest. I'm against all that kind of stuff, but it's hardly done by only one party."

Agreed. But if smaller government and lower costs are really your primary concern, spending your life highlighting the cost of a modest (by OECD standards)social security program for the disabled, survivors and elderly, while all sorts of truly egregious and far more expensive abuses of government funds and power are perpetrated by "the powerful," seems, at best, like picking on the weak. I'd like to know how you'd sleep at night if everyone bought your version of the social security "big problem" story, cut future social security benefits in response, and some disabled, young survivors and elderly people ended up suffering real hardship as a result. Yet, at the same time, it continued as "government as usual," with 'the powerful' acting like the public coffer is their personal checking account. You didn't really address that. Don't you ever feel used? Although you say you're against those abuses, you've not been given a career to highlight those abuses. How long do you think you'd last in the policy limelight if you started addressing the costs of the powerful abusing government as your life's work?

Andrew G. Biggs said...

You're presenting a caricature of Social Security reform, at least as I envision it. Most reform plans leave benefits for low earners alone and focus on reducing them for high earners. Most plans reduce benefits somewhat for low earners, as well as trying to fill some of the cracks in the current system. The question is are we going to raise taxes on high earners to provide more Social Security benefits for high earners? I'd say no, but those on the left seem to say yes.

I don't specialize in the areas you mention, although I've done some work on public pensions and have written publicly about cutting corporate welfare, farm subsidies and the like. I haven't been fired yet for it. Others I know -- for instance, people who argued for decades that Fannie Mae and Freddie Mac were disasters waiting to happen -- did suffer the consequences, but it was mostly from those on the left who refused to recognize those dangers. One thing about small government is that there's a limit on how much pork it can give out and how much it can distort markets to let people get something for nothing.

JG said...

spending your life highlighting the cost of a modest (by OECD standards) social security program for the disabled, survivors and elderly ... seems like picking on the weak.

So may I presume you wouldn't object to reducing SS benefits to the able non-weak, indeed strong, who survive quite wealthily?

I mean, if you are so upset about the rich exploiting the poorer, you don't want to make a special mental exception saying its OK for them to do it through Social Security.

If SS looking out for "the weak" is what's important to you, then Warren Buffett collecting a real time cash transfer from his Dairy Queen workers must be quite upsetting, yowza!

Means test the guy out! And the millions of boomers who use SS to pay for their yachts, literally as well as figuratively, too.

Save payroll taxes collected from the working classes for the working classes and needy. Save a few trillion dollars present value too.

It's the progressive thing to do. As well as the fiscally responsible. Win-win, left & right holding hands together.

(And all those "progressives" who don't object to all these one-way entitlement transfers from the poor to the rich ... how do they sleep at night?)

Brock said...

You know as well as I do that many retirement experts and researchers are projecting major shortfalls among the middle class and even among today’s “high earners” in the retirement income available to cover basic expenses throughout retirement. And, if Social Security is as big a problem as you say, its shortfall could not be resolved in any significant measure by reducing future benefits for the minority of beneficiaries who are “high-earners.”
You are framing this as an issue over taxes and benefits for high earners for the same reason you said you liked personal accounts – because reducing guaranteed Social Security benefits for “middle” and “high” earners would help “sever the ties of middle-class and wealthy Americans to government assistance programs and diminish political support for social welfare programs." As you know, the fact that Social Security benefits are based in part on covered earnings is what gives the program its broad support: most everyone has a stake in the program. As you also know, even the highest income quintile of the elderly today (those “rich” folks with more than $50-some K per year) get about a fifth of their income from Social Security. If you make the program’s benefits smaller for them, their personal stake in the program is all the smaller, and so their political support erodes. Since the upper quartiles of earners are the group who tend to be most politically active and persuasive, their support has always been key to the program’s existence and hence its ability to help the most vulnerable. Undercut their stake in the program, and slowly but surely, you undercut long-term support for the nation’s #1 antipoverty program, a program that keeps millions of retirees, disabled workers, dependent spouses, widows, and children of deceased, disabled and retired workers out of poverty. We all know how well-funded programs are that only or primarily benefit the poor and how great welfare is at encouraging work and savings.
Since everyone says what a nice guy you are, I assume you have some long-term libertarian vision of what will replace Social Security for average Americans, some outcome where we will all be better off. But while you’re hammering away at the US’s modest base of social insurance, non-welfare, income protection for workers and their families, big government will continue giving out big, expensive favors and freebies to those who have the money to pay for them and the connections to make them happen. And, correct me if I’m wrong, I don’t see these same crooks ushering in a new era where the politicians and the economy create an environment where the American masses can regain the basic income protections they lost from Social Security.
Of course, discussing what your long-term vision is for an America without Social Security – and whether that is realistic -- would require you admit you’re fundamentally opposed to the program on ideological grounds and, as you admitted so many years ago, trying to send it to the “slaughterhouse” (your word, not mine, and I don’t anyone is going to seriously think “slaughterhouse” was code speak for simply “paring down” or “reducing”). You’re committed to denying that nowadays, which is understandable. So be it. I’m not interested in debating the smoke and mirrors you employ in your job. It probably would have been a whole lot more interesting to talk to the Andrew Biggs of the 1990s.