Deinonychus antirrhopus

I'm telling you, those posts are pure moonbat bait. No intent to inform, no intent to draw out discussion, just an intent to attract the dregs of the LLL.

Maybe WM is looking to be a fund raiser like Kos...

He seems to do none of what you claim, Steve.

This last post doesn't have any assumption of economic growth from KD, just whatever the S&P guys presumed, and they may have not presumed any especial economic growth rate(s) or ranges for that index, either. It appears they've simply reported on economists' responses as to whether the economy could grow at ~2%, and the return on (private) er, PERSONAL (of course) accounts, be what Bush has suggested, explicitly or implicitly. Addressing THAT question doesn't presume any estimate at all for economic growth.

Nor is it even a valid criticism if KD hasn't considered the performance of the (private, sorry) PERSONAL accounts in the case of the optimistic Trustees' estimate, since should that scenario transpire (as it has to date, being far closer to historical performance over the years than the other estimates), the very predicate for the PERSONAL accounts would have disappeared.

Well that was rather incoherent.

This is an extremely dishonest method of presenting an issue. At the very least try to be consistent between the numbers that you are using, or present the results for both sets of numbers.

That's exactly the point Drum is making. The Bush administration, the Heritage Foundation, etc. do precisely this. If this bother you, then criticize them, not Kevin Drum.

The overall point is that, if there's genuinely a problem with Social Security, it will be because of an overall problem with the economy: low productivity, etc. Investing Social Security money in stocks isn't going to change anything. Likewise, if the economy does better, then there won't be any Social Security problem in the first place.

Yes Jon, and Steve's point is that Drum seems happy to argue that 1) the market probably won't perform well enough for the personal accounts to get good returns, and 2) the market will probably perform well enough for SS to stay viable. Both of these propositions cannot be true at the same time, but that doesn't much seem to bother Kevin.

That's exactly the point Drum is making. The Bush administration, the Heritage Foundation, etc. do precisely this. If this bother you, then criticize them, not Kevin Drum.

No, Kevin does it too. Actually it is worse. I don't know of the Bush Administration explicitly taking growth to be bad on one hand and then good on the other. Maybe they have, at least I haven't seen it. Kevin on the other hand has been explicit in saying growth is going to be high, and has used the bad growth scenario in his arguments for why private accounts will be bad.

The overall point is that, if there's genuinely a problem with Social Security, it will be because of an overall problem with the economy: low productivity, etc. Investing Social Security money in stocks isn't going to change anything. Likewise, if the economy does better, then there won't be any Social Security problem in the first place.

This is also simplistic and misleading. The problem are the huge unfunded mandates that are going to come due. Social Security and Medicare are likely going to necessitate massive increases in taxes to keep them afloat. These in turn could very well result in the crappy growth that Kevin says isn't going to happen. Reducing those obligations is one way of addressing the problem. Saying there is no crisis is dishonest.

It is quite rational to say that the stock market and the economy will do well under privatization and poorly under the current Socialist Insecurity system. Privatization will increase the savings rate, and thus economic growth. The current Socialist Insecurity system will require massive tax increases to support it in its current form, which will cause growth and the market to tank.

I don't think privatization, at least given Bush's plans, will increase savings at least not in the productive sense. If the transition costs are financed via debt then the new savings will be offset increased government borrowing to finance transfer payements not investment. If it is financed via a tax increase then it will reduce the incentive to save unless there is some sort of special exemption for interest income. And given that the Left/Liberals find such exemptions particularly odious I don't expect that to happen anytime soon.

Steve, what about long term? The borrowing is to cover short term costs due to privatization. But 10 years out, that borrowing starts to result in huge savings to the system. At that point, savings undoubtedly increases.

Also, you are swapping t-bills for stocks. What does that do to the rate of innovation and growth? Privatization is brilliant in that the borrowing soaks up excessive global savings (and a lot of Asian central banker money used to manipulate currencies) and invests it in the most productive economy on earth, namely ours.

The transistion costs are going to take alot longer than ten years. We are talking trillions of dollars here.

Drum thinks the Trustees' chosen economic assumptions are unreasonably pessimistic. Those who argue the system faces huge shortfalls accept something close to the Trustees' projections.

But that isn't the question in this post. It is the more narrow question of whether such projected miserly economic growth numbers are consistent with projection of a 6.5% return from a conservative stock portfolio.

That the answer appears to be no means the Bush proposal is incoherent, or lyingly presented, not that Drum is playing both sides of the projections as accurate when it suits his argument. At least here, he is doing no such thing.

Your trackbacks aren't working? My comment.

But that isn't the question in this post. It is the more narrow question of whether such projected miserly economic growth numbers are consistent with projection of a 6.5% return from a conservative stock portfolio.

That the answer appears to be no means the Bush proposal is incoherent, or lyingly presented, not that Drum is playing both sides of the projections as accurate when it suits his argument. At least here, he is doing no such thing.

No Sofla, you missed the point entirely.

Victor,

Yeah I know I've looked into the probelm a bit, but haven't figured it out yet. I don't know what the problem is.

By the way Victor, I saw Kevin's silliness about the correlation coefficient, but just couldn't muster the effort to respond. Funny how Deb defends Kevin as statistically literate and calls me statistically illiterate. Speaks volumes of Debs statistical literacy.

Deb can read?

No, Steve, it speaks volumes as to her mental agility in adapting her integrity to the needs of her ideology.

Steve, you dishonestly distorted KD's position. Drum has been arguing that if you want to conduct a fair analysis comparing the privatization proposal versus the existing defined benefit SS program, then you must use the same growth numbers. Right now, Dubya and the posse insist on using a higher number for GDP growth for their privatization proposal than the SS trustees use for the median forecast, which is the SS forecast usually reported. Drum's arguing that the higher number used for the privatization proposal should be used for the median forecast. That scenario shows that no crisis exists, which is exactly Drum's argument. Any contention that Drum's suggestion is bogus is dishonest. Make a choice. Do you use the higher number or the lower number - for both Dubya's privatized version and the current existing vision of SS? Don't be surprised if the electorate laughs you and Dubya off the stage and out of office when they see what "benefits" privatization offers.

Drum has been arguing that if you want to conduct a fair analysis comparing the privatization proposal versus the existing defined benefit SS program, then you must use the same growth numbers.

Wrong. He has consistently switched back and forth between high growth and low growth to suit his needs. If he wants to blast the privatization scenario he should either pick a growth scenario and stick with it, or use each growth scenario fairly and apply it to both privatization and SS. He does not do this.

Any contention that Drum's suggestion is bogus is dishonest. Make a choice. Do you use the higher number or the lower number - for both Dubya's privatized version and the current existing vision of SS? Don't be surprised if the electorate laughs you and Dubya off the stage and out of office when they see what "benefits" privatization offers.

And back in the real world....Hint: Dubya can't be laughed out of office. He is a lame duck President. Sheesh.

Further, that is my gripe about Kevin. The article he points to as evidence supporting the do nothing position assumes low growth and looks at private accounts. Kevin has previously written that the thinks the low growth scenario is bogus. He can't have it both ways, and your inability to read his blog consistently is not my problem.

This is the most comprehenaive article on the subject that I have found recently.

http://www.businessweek.com/investor/content/mar2005/pi20050331_8478_pi076.htm

The second page contains good info on the influence of privatization on the savings rate.