With Friends Like These...By James Hamilton

Blogger Donald Luskin takes conservative thinker Peter Ferrara to task in a recent blog.  As usual, Ferrara can't focus his attention on those that oppose strengthening Social Security on philosophical grounds.  Rather, he turns his venom on those who support doing the hard work necessary to achieve lasting changes.  Luskin rightly notes that Ferrara's "lies" only help provide a wedge that opponents can use against us.

Luskin again: "By promoting fantasies [of his own] at the same time as he accuses the White House of selling out, Ferrara makes realistic solutions difficult to achieve."

Come on, Peter.  Play nice.

Comments

[Feverishb]

James, you are absolutely right. Priority #1 in this project is getting both sides to the negotiating table. Until now, only one party has shown up.

In order to get both parties to the table, we need to stick with FOG's premise that "all options must be on the table."

This doesn't mean selling out. If personal accounts are the most attractive option, they can survive a negotiation with everything on the table. But you've got to get there first.

[Feverishb]

Unfortunately it doesn't seem as though the nice playing is about to begin.

There's another piece up on IPI today attacking Don Luskin for putting tax increases "on the table," and extolling the Ferrara proposal as the only way that should be considered to fix Social Security.

"IPI developed a plan that was far superior to anything else that had been suggested, and the Chief Actuary of the SSA modelled it and said it worked beautifully. . . The real point here is that not only has Ferrara offered the only plan that completely fixes Social Security without either tax increases or benefit cuts. . . "

At this stage of the debate, it's extremely important that all participants be willing to come forward with their ideas and to consider alternative ideas, without being attacked for it.

Part and parcel of this, however, is being straightforward about what the various ideas would and would not accomplish. Many of us support personal accounts for a number of reasons. But the representation in the IPI piece that they are a magic bullet that obviates the need to consider such measures as revenue increases or restraints in outlay growth, simply isn't right.

In particular, it's wrong to state the the Actuary Memo on the Ferrara proposal provides such an endorsement. In fact, it says quite the opposite. The memo is posted at http://www.ssa.gov/OACT/solvency/index.html. Go to the Ferrara proposal, listed at its posting date of 12/1/2003, and read Tables 1c and 1d.

The memo says that the plan requires an additional $7.6 Trillion in revenues over the next 75 years in order to avoid changes in the benefit structure. The same table says that the current system can provide for all promised benefits if an extra $4.9 Trillion are provided.

In other words, the Actuary memo doesn't at all say that the personal accounts eliminate the imbalance. In this particular plan, it's an extra $7.6 trillion in revenues that does it. Specifically, the plan relies on trillions in additional corporate tax revenue.

The fact of the matter is that the wage-indexed benefit formula that Social Security now uses will impose much higher cost rates on our children and grandchildren if it is not changed. This is true with or without personal accounts, as the OACT memo clearly shows. That need for additional revenue will only be obviated if the benefit formula is reformed.

It's ironic that backers of a proposal to increase the program's revenue needs by trillions would accuse others of being the tax-raisers. It's perfectly legitimate to back an approach that calls for making the cost of supporting Social Security even more expensive over the next 75 years, but everyone should be straightforward about what is proposed and debate the merits accordingly.