Political Animal

Blog

September 13, 2011 2:15 PM Competing audiences on Social Security

By Steve Benen

As expected, the debate over Social Security played a fairly important role in the debate for Republican presidential candidates last night. Indeed, almost immediately after the event began, the field’s top two candidates, Rick Perry and Mitt Romney, went toe to toe over the issue.

For the Romney camp, this probably seemed like good news. The more the light shines on Perry’s outside-the-mainstream views, the easier it is for the former Massachusetts governor to argue that the Texas governor is unelectable.

It’s why Perry has moderated his tone a bit, assuring today’s seniors last night that the “program is going to be there in place” for them. But Romney, not surprisingly, sees value in exploiting a perceived weakness.

“[T]he term ‘Ponzi scheme’ I think is over the top and unnecessary and frightful to many people. But the real issue is in writing his book, Governor Perry pointed out that in his view that Social Security is unconstitutional, that this is not something the federal government ought to be involved in, that instead it should be given back to the states.

“And I think that view, and the view that somehow Social Security has been forced on us over the past 70 years that by any measure, again quoting his book, by any measure Social Security has been ‘a failure,’ this is after 70 years of tens of millions of people relying on Social Security, that’s a very different matter.”

The back and forth continued a bit, with Romney pressing Perry on whether he thinks the program is unconstitutional, and Perry responding, “If what you’re trying to say is that back in the ’30s and the ’40s that the federal government made all the right decision, I disagree with you. And it’s time for us to get back to the Constitution.”

Romney added that Perry is “scaring seniors,” and rhetoric that suggests “Social Security should no longer be a federal program and returned to the states and unconstitutional is likewise frightening.”

Obviously, for much of the mainstream, Romney was on the smarter side of this dispute, and his exchange made Perry look like something of an extremist.

But the point I keep coming back to is the strength of extremists in Republican politics, and how far the entire party is from the American mainstream. Consider this item from yesterday, run before the debate:

During his Monday show, Limbaugh warned the 2012 Republican field not to use Perry’s remarks against him. He specifically named Minnesota Rep. Michele Bachmann and former Massachusetts Gov. Mitt Romney.

“I’ve not endorsed anybody and this is not an endorsement” Limbaugh said. “But be very careful if you start attacking Rick Perry on Social Security and the ‘Ponzi scheme.’ There are too many of you out there who have already said that yourselves — Mitt Romney. Mitt, you have already called it a Ponzi scheme. And worse.”

“I’ve got a whole list of people here — media and outside — in politics who have referred to Social Security as a Ponzi scheme,” Limbaugh went on. “And … I would like to warn everybody: Be careful here because you’re pandering to the media.”

As a factual matter, as best as I can tell, Romney hasn’t called Social Security a “Ponzi scheme.” But the larger point is, Romney’s argument is likely to resonate with sane people everywhere, while Perry’s argument is likely to resonate with the kind of folks who participate in Republican primaries and caucuses.

Romney is left telling GOP voters how much he loves a program Republicans have labeled “socialism” since its inception. He wants to make an electability argument, but he’s doing so by voicing his support for the pearl of the New Deal. We’ll have to see how that turns out for Romney, but assuming rank-and-file GOP voters will repel is likely a mistake.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

Comments

Post a comment
  • just bill on September 13, 2011 2:27 PM:

    hey, these people are free to decline their social security benefits when they retire.

    what? they won't?

    hypocrites!

  • c u n d gulag on September 13, 2011 2:30 PM:

    Limbaugh the Hut has spoken!

    I have a question for Rush:

    Can a Coach Umpire, and should an Umpire Coach?

  • The truth hurts on September 13, 2011 2:36 PM:

    Social Security, forces people to invest in it through a mandatory payroll tax. A small portion of that money is used to buy special-issue Treasury bonds that the government will eventually have to repay, but the vast majority of the money you pay in Social Security taxes is not invested in anything. Instead, the money you pay into the system is used to pay benefits to those "early investors" who are retired today. When you retire, you will have to rely on the next generation of workers behind you to pay the taxes that will finance your benefits.

    As with Ponzi's scheme, this turns out to be a very good deal for those who got in early. The very first Social Security recipient, Ida Mae Fuller of Vermont, paid just $44 in Social Security taxes, but the long-lived Mrs. Fuller collected $20,993 in benefits. Such high returns were possible because there were many workers paying into the system and only a few retirees taking benefits out of it. In 1950, for instance, there were 16 workers supporting every retiree. Today, there are just over three. By around 2030, we will be down to just two.

  • SteveT on September 13, 2011 2:43 PM:

    . . . Perry has moderated his tone a bit, assuring today's seniors last night that the "program is going to be there in place" for them.

    The Republicans tried this approach already, after Paul Ryan unveiled his plan to dismantle Medicare. Republicans were shocked that seniors didn't share their "I got mine so f*ck the rest of you" attitude and want Medicare to be their for their children and grandchildren.

    Maybe the "I got mine so f*ck the rest of you" mindset plays better in Texas.

  • Redshift on September 13, 2011 2:51 PM:

    To play on Adlai Stevenson's quip, they may get the votes of all sane Republican primary voters, but unfortunately, they need a majority!

  • Anonymous on September 13, 2011 2:57 PM:

    Romney wants to privatize SS he,s no friend of the program. Didn't he call it criminal?
    Romney is just an opportunist. Check his record.

  • ShadeTail on September 13, 2011 2:59 PM:

    I'm not convinced that Perry's extremism will play well when it comes to Social Security. Sure, the GOP leaders and their corporate overlords have always wanted to privatize SS out of existence and transfer the money up to the wealthy. But to most Americans, SS is like Medicare: a program they *love* because they know first hand how well it works. That is true for the vast majority of Republicans also.

    I think Perry's stated positions on SS is one of Romney's stronger wedge issues against him.

  • Zorro on September 13, 2011 3:01 PM:

    But the larger point is, Romney’s argument is likely to resonate with sane people everywhere,

    Such people are such a small slice of the American electorate that you're better off ignoring them.

    -Z

  • Josef K on September 13, 2011 3:10 PM:

    We’ll have to see how that turns out for Romney, but assuming rank-and-file GOP voters will repel is likely a mistake.

    One can but hope.

    And to The truth hurts, I'm afraid you've undercut the argument by noting Social Security has invested in Treasury Bonds. These constitute the reserves necessary to continue paying full benefits, despite the decline in workers-to-beneficiaries. At least so I understand.

    Also, if I recall the most recent report on the program's finances, it is projected to be fully funded through 2037. After that, it drops a bit and will require some of the Bonds it hold get cashed in.

    Anyone feel free to correct me on the details here.

  • Redshift on September 13, 2011 3:12 PM:

    Selective "truth":
    Such high returns were possible because there were many workers paying into the system and only a few retirees taking benefits out of it. In 1950, for instance, there were 16 workers supporting every retiree. Today, there are just over three. By around 2030, we will be down to just two.

    Gee, sparky, so by your calculation, Social Security today can only afford to pay 1/5 of the benefits it could in 1950, right? Yet mysteriously, that's not the case. Have you considered that there may be something you haven't accounted for in your simplistic arithmetic here?

    For those of us who can handle math and economics beyond the fifth grade level, the answer is productivity. Look it up. It's the reason we have a higher standard of living in general than people did in 1950, and it's the reason why three workers are sufficient to support Social Security now where 16 were required then.

    Equally ignorant or dishonest is your use of an edge case (the initial cohort to be covered by Social Security) to pretend that it's equivalent to a Ponzi scheme. Tell me, how many Ponzi schemes pay out their promised benefits for every "investor" for 70 years?

    The only difficulties now are that we are going to have a particularly large cohort of retirees, and that 30 years of conservative anti-worker and union-busting policies have broken the long-running link between productivity and income.

    Even so, the transition from three to two workers per retiree is much less than the transition from sixteen to three, and a policy to build up a surplus that would handle most of the problem was instituted back in the Reagan Administration. Now that Boomers are starting to retire, the surplus is declining, because that's it's entire purpose. An additional relatively small one-time fix is needed, and then we'll be done, and the program can handle your doomsday two-worker scenario for the forseeable future. But if you call depleting the trust fund surplus "going bankrupt" and use it as an excuse to dismantle the program, what you're actually doing is taking the extra taxes that have been collected to create the trust fund surplus and stealing them to pay for the massive budget deficits from recent Republican administrations.

    No, thanks.

  • flyonthewall on September 13, 2011 3:20 PM:

    Very nicely put redshift. Ponzi's scheme promised high returns, such as 100% in 90 days. Ponzi's scheme lasted less than 200 days. Ponzi schemes are fraud. Yup, sure sounds like SS to me....not. The truth hurts is playing the victim card, nothing more, since SS was designed to be pay as you go and was fixed and needs a small tweak.

  • AMS on September 13, 2011 3:31 PM:

    I may have achieved an over-the-top level of cynicism, but I suspect that the results of doing away with Social Security and Medicare---more seniors in poverty and without health care, and therefore dying much earlier than they otherwise would---would not entirely displease the Randian wing of the Republican Party. I don't expect any of them to be reckless enough to acknowledge that publicly, but it follows logically from two of their cherished precepts:

    1. The productive should not subsidize the unproductive. In Paul Ryan's formulation, the retired elderly are "takers', not "makers." Only the "makers" are worthy of government support. The "takers" unfairly steal wealth from the "makers" who earned it. Maybe the elderly were once "makers" but not after they've retired---what have they done for us lately?

    2. Everyone gets what he or she deserves. The virtuous elderly made "good choices" and saved enough to fund their own retirement and buy their own health insurance. If you can't support yourself in retirement, you obviously made "bad choices" (like, maybe, sending your child to college instead!). Why should the hard-working, productive taxpayer subsidize your profligate, spendthrift ways?

    A government without Social Security and Medicare would fulfill many of the right wing's wildest fantasies. Just think---not only would much less tax revenue be needed, but the agencies that administer these programs would disappear. Voila! Dramatically smaller government. As for those who cannot survive without those programs, Ebenezer Scrooge said it best: "Let them die and decrease the surplus population."

    Please tell me I'm being too cynical here!

  • ShadeTail on September 13, 2011 3:46 PM:

    AMS: I think the mistake you make is in figuring the GOP base for people who are 1) politically engaged, and 2) philosophically consistent.

    1) The vast majority of republicans are like the vast majority of Americans in general: not overly engaged because they're more concerned with getting through their day-to-day lives. They're very unlikely to be particularly Randian if only because they never bothered to really follow up on the idea.

    2) Also, even those who at least pretend to like Ayn Rand can easily indulge in a bit of cognitive dissonance to exempt SS from their "gov is bad" idea. Remember all those idiot right-wingers a few summers ago screaming, "Keep your government hands off my Medicare!"

  • ShadeTail on September 13, 2011 3:48 PM:

    ...Which is to say, not that the Rand-wing doesn't exist, but, rather, that you seem to over-estimate their size and influence.

  • Anonymous on September 13, 2011 3:53 PM:

    Red,
    In fact, Social Security taxes have been raised some 40 times since the program began. The initial Social Security tax was 2 percent (split between the employer and employee), capped at $3,000 of earnings. That made for a maximum tax of $60. Today, the tax is 12.4 percent, capped at $106,800, for a maximum tax of $13,234. Even adjusting for inflation, that represents more than an 800 percent increase.

    In addition, at least until the final collapse of his scheme, Ponzi was more or less obligated to pay his early investors what he promised them. With Social Security, on the other hand, Congress is always able to change or cut those benefits in order to keep the scheme going.

    Social Security is facing more than $20 trillion in unfunded future liabilities. Raising taxes and cutting benefits enough to keep the program limping along will obviously mean an ever-worsening deal for younger workers. They will be forced to pay more and get less.

    Productivity? I call it tax increases!

  • zandru on September 13, 2011 3:56 PM:

    In the words of El Pigbo: "There are too many of you out there who have already said that yourselves."

    I can agree with that one. It's not much of an exaggeration to say that EVERYONE I've met, outside of self-proclaimed liberals, believes that SS won't be there for them when they retire. Moreover, it shouldn't be; that they ought to save enough for themselves.

    Not surprisingly, most of these folks are some pretty well-paid individuals. For all their education, however, they seem woefully short on imagination, not to mention empathy.

    They lean on questionable factoids, like the truth hurts spews out, such as "only two workers supporting each retiree". This one is particularly egregious. It refers to the brief period when the bulk of the huge "baby boomer" population is retired. BUT! Back in the days of Sainted Ronald Reagan, in whose name we prey, a commission recommended, and Congress enacted, a fix: the boomers would pay for their parents' and grandparents' retirement AND build up a surplus - the "Trust Fund" - to finance their own. So it's NOT "two workers paying for" - it's those two workers and the accumulated surplus.

    Shortly thereafter, all of us boomers will die off, and demographics will look normal again. Everyone can get a big premium increase and/or lowered rates.

    It's typical of the Reactionary Right to latch onto little one-time stats like this and imply that this is how it works all the time. They've also taken the 2008 Federal income tax info - "less than 50% of Americans pay any taxes" - and embraced it like a boa constrictor.

  • Cha on September 13, 2011 4:15 PM:

    So Mitt didn't listen to pig sty. But, he hurt himself if there's a "general" in his future by stating this last night..

    "If Latinos want handouts then they should vote for Democrats". Bet he thought that was a zinger.

  • patrick II on September 13, 2011 4:54 PM:

    Steve,
    Romney wants to "fix" Social Security the same way Ryan wants to "fix" medicare -- privatize it. It is not the sane alternative you assert, nor would it actually be "social security" any more than a privatized medical health insurance plan would be "medicare".

    Romney uses the name "social security" to allay fears, but right now real Social Security is not safe in the hands of any republican, including Romney.

  • karen marie on September 13, 2011 5:49 PM:

    Forget people already retired -- they're getting their Social Security and it's highly unlikely that will change. I'm 54 years old, I have no employer pension, no personal pension and will be entirely reliant on Social Security. I doubt I'm alone.

    If it were up to the GOP candidates, not just Perry, Social Security won't be there in another nine years.

    I think what this is really about is the employer contribution on behalf of employees. How much additional money could be moved into the profit category if employers didn't have to pay in any more? A lot.

  • Texas Aggie on September 13, 2011 8:58 PM:

    " that instead it should be given back to the states."

    Gov. Goodhair is the reason that anything that involves money should never be given to the states without some sort of oversight. The man diverted stimulus money from education to balancing his budget, and there is no reason to believe that if he could get his hands on money that people pay into the state equivalent of SS, he would not also make that disappear. TX has something like 26% of its working population not covered by medical insurance of any kind and the lowest percentage of Medicaid eligible people actually on Medicaid, and Goodhair likes it that way, so why would anyone think that the same wouldn't apply to retired people?

    By the way Bobby in Louisiana already managed to get his hands on the money that was in a state program for health workers, I believe, and is using that money for other uses than paying for medical care for the people who paid it into the kitty. That is the main reason you don't want states to get their hands on your retirement.

  • Michael on September 13, 2011 10:16 PM:

    succinctly put red, I was trying to get that point across, I just don't have the memory.

  • ottercliff on September 14, 2011 9:01 AM:

    "I have in my hand 57 cases of individuals who have called Social Security a Ponzi scheme".....Rush McCarthy

  •  
  •  
  •