Victory in Iraq Day: November 22, 2008

ZombieTime.com is declaring Saturday “Victory in Iraq Day” and lots of bloggers are joining in.  I’ve been a supporter of our efforts in Iraq since the beginning, and it’s amazing to think that it’s now possible to think of declaring victory.

That doesn’t mean we can’t see what they expected, by virtue of watching their reactions to the President-elect’s activities.

The biggest news today: Senate Democrats, at the prompting of the President-elect, have retained Sen. Joe Lieberman (I-CT) as the Chairman of the Homeland Security and Governmental Affairs Committee.  Jane Hamsher, writing at Firedoglake, recounted her reaction during a conference call Democratic National Chairman Howard Dean had with her and other bloggers.

JANE HAMSHER: With all due respect, Governor Dean, we were all just told to go screw ourselves.  That our concern for Barack Obama and that our concern about the war and everything else that we fought so hard for within the Democratic Party is meaningless.

And that Joe being happy, and giving into his threats — and he did threaten the Democrats in his press conference — is more important than we are.  And so I don’t think it was a matter of “reconciliation,” I think it was…we were told to go Cheney ourselves.  And I think that that really is the sentiment online.

More liberal disappointments as they develop.

Part of the problem is that I have lots of other stuff I feel like I should be doing.  Aside from just work, today we had a board meeting for our Homeowners Association (I’m on the board, so I have to go), plus I ran to the store for Amy, we had dinner, I did dishes afterward, and… okay, yes, I played some Grand Theft Auto IV on my Xbox 360. (Obviously, this is what I should skip in order to get some blogging done.)

• The Southeast Missourian: Teachers in Missouri pay into the Missouri Public School Retirement System instead of paying into Social Security.  However, some school employees who are not teachers, such as bus drivers, counselors, speech therapists, and others, may have been incorrectly exempted from paying into Social Security.  In the comments, a teacher complains, “15% of our salary is unbelievable.”  (Allen: I guess the idea of paying for their own retirement is too much for teachers to understand.)
• Dubuque Telegraph Herald: Seniors who rely on Social Security benefits alone have a tough time getting by.  (Allen: Don’t neglect to save for your own retirement.  The fact that an AARP spokesman says “young people can and should count on (Social Security)” isn’t very reassuring.)

Historic election, first African-American President, Change.gov, blah blah blah.  I was mightily tired of the election campaign, and now I’m mightily tired of Obamamania. 

Went out with to dinner with my client tonight, then spent too much time web surfing to write much.

• I’m not reading enough P.J. O’Rourke.   Neither are you.
• I don’t care what the Wikipedia says, Roger B. Taney was a lousy Chief Justice.  And while Dred Scott was a terrible, terrible decision, I think Charles River Bridge was just as bad.
• The Nation’s Capital is very cool.  This seems like a cool way to see it.
• I always listen to this album as I go to sleep when I travel.
• I’m adding InstaPundit to my blogroll.  I don’t read everything there, but sometimes I wish I did.  How does Glenn find so much time to blog and still maintain his law professor gig?

G’night.

I wrote:

In my opinion, the most significant domestic policy issue in the long term is the looming insolvency of Social Security and Medicare. Obama opposes almost all of the measures that could prevent this disaster — he won’t lower benefits, he won’t raise the retirement age, and he won’t move toward privatization. The only solution he presents (in his “Blueprint for Change”) is to lift the cap on earnings which are subject to the payroll tax, currently at $97,500. According to his website, Obama “will ask those making over $250,000 to contribute a bit more to Social Security to keep it sound… would ask those making over $250,000 to pay in the range of 2 to 4 percent more in total…”

Really? The programs are $50+ trillion in debt, and you’re going to make up for that with an extra 2-4% from those making over $250K?

And someone named “Beeeej” replied:

It’s extremely difficult to take an argument seriously from someone who claims that Social Security and Medicare are “$50+ trillion in debt.” That is a horrifically inaccurate number, too large by a couple of degrees of magnitude. When a rag like USA Today explains the shortfall by claiming it’s “$53 trillion,” they’re not saying those programs are currently in debt by $53 trillion. They’re talking about the amount you’d have to put away in principal as an endowment (never to be touched itself), earning interest, in order to use the INTEREST to repay old debts AND pay future obligations of EVERY government social program (including government pensions).

It’s the equivalent of saying, “You personally owe $50,000 on old debts, and you will also owe $10,000 on your mortgage every year in the future - so you need to put $800,000 in the bank in order to accrue $40,000 interest every year, add $20,000 back to principal to increase it as a hedge against inflation, use $10,000 to pay down your old debt in stages, and $10,000 to pay your mortgage for the year.” That doesn’t make you “$800,000 in debt.”

So I fired back:

I’ll make you a deal — I admit where I got my numbers wrong, if you’ll admit where you got your analogy wrong.

According to the Wikipedia, the $53 trillion — actually, $52.7 trillion, 2007 — consists of:

• a $10.8 trillion chunk, most of which is the result of “official” budget deficits over lo these many years, plus military and civilian pensions and retiree health
• a $1.1 trillion chunk, which is stuff like the Pension Benefit Guaranty Corporation, and undelivered orders (I think this is military equipment, etc.)
• $6.8 trillion in commitments to Social Security over and above the amounts expected to be received in payroll taxes, and
• a whopping $34 trillion in commitments to Medicare programs, over and above the amounts expected to be received in payroll taxes.

The $52.7 trillion figure is a current dollar value figure, and it’s what you’d have to put aside in 2008 to pay all these commitments by spending both the interest and the principal. Here’s where your analogy fails. You assert that the $53 trillion is what you’d have to put aside to pay these obligations without touching the principal — in fact, your $800K example assumes that you put money aside “as a hedge against inflation,” which I take to mean to maintain the principal’s purchasing power after inflation. In this, you are incorrect. You’d have to spend all $52.7 trillion, plus any interest accrued over the next 75 years, in order to meet the obligation.

Now, 75 years sounds like a long time. But this is adding something like $702.7 billion — more than the official deficit has ever been in any single year — each and every year until 2082!

If you have data from some other source (the Wikipedia’s source traces back to the Government Accounting Office’s GAO Financial Condition and Fiscal Future Briefing, January 2008, I’d be very happy to take a look.

On the other hand, I’ll probably have some time to spend blogging, so…  more on Social Security tomorrow, I guess.

• Reduce the number of people receiving benefits
• Reduce the benefits each individual receives.

One way to reduce the number of recipients is to increase the retirement age.  Congress has already used this approach.  The retirement age used to be 65.  It is currently slowly increasing so that the retirement age will be 67 in the year 2027.  This can be accelerated. Raising the retirement age actually does two things to improve Social Security’s financial picture: it pulls some people out of the recipient pool, which reduces payouts; it also leaves people in the contributing pool, which increases revenues.

The same result could be accomplished by eliminating the early retirement option.  Retirees currently have the option of taking reduced benefits as early as age 62.  The amount of the reduction depends how early the worker retires compared to their normal retirement age.  For example, a worker who retires 36 months early (by retiring at age 62 instead of age 65) will receive only 80% of the full retirement benefit. (This reduction is permanent — you’ll still receive 80% benefits even after reaching age 65.  You’re trading off the amount you receive each month for receiving benefits over a longer period of time.)

Tomorrow: More on reducing expenditures.