Monday, December 31, 2007

The Social Security "Crisis"

We've heard for years about a "crisis" in Social Security, as benefits are predicted to exceed FICA tax revenues at some time in the future, most recently in 2005 as President Bush tried to undermine the Social Security system by allowing workers to opt out of the system and create private accounts (which even the White House eventually agreed would not solve the financial problems of the system). But the assumptions made by the Social Security Administration are conservative and new projections often push the predicted shortfall further into the future. (The latest estimates, in the 2007 reports of the Social Security Administration, say that projected tax income will begin to fall short of outlays in 2017, and the trust fund will be exhausted in 2041.) Now, there are new reasons to believe that the predicted shortfall might never occur.

According to the book "Microtrends" by Mark Penn, a growing number of people are working past the traditional retirement age of 65, either by necessity or choice. For example, the number of workers 65 and older has almost doubled in the last 25 years, and a 2005 survey by Merrill Lynch found that three fourths of baby boomers were not planning a traditional retirement.

Of course, if people work longer, they continue to contribute taxes while delaying receipts of benefits. According to an economist at the Urban Institute, Eugene Steuerle, if everyone worked just one year longer than the SSA has been assuming, and so received one year less in benefits and contributed one more year of FICA taxes, the projected shortfall would disappear.

There is also recent news that the fertility rate for American women has reversed a long-term downward trend, and is now something like 2.1 children per woman, which exceeds the "replacement rate" and is one of the highest of any industrialized nation. That means that in 20 years we may have more workers than previously expected, and more tax revenue than previously predicted.

All of which means that the so-called "crisis" in Social Security might no longer exist (assuming it ever really did exist).

But funding Medicaid and Medicare is going to be a problem.

Saturday, December 29, 2007

The Bandwagon Effect

It is often said that everyone loves a winner, and people like to root for a winner. The crowds at sporting events are larger when the home team is a winning team because people would rather be fans of a winning team and not a losing team.

Unfortunately, we have taken the same attitude to politics. Many people are so desirous of voting for a winner that they vote for the candidate they think will win, rather than the candidate they want to win. And so some voters will describe their own votes as "wasted" merely because their candidate failed to win.

Pundits sometimes describe this as "momentum," because popularity can be a self-fulfilling prophesy. Candidates that are perceived as successful, popular, and potential winners, become more popular and more successful simply as people hop onto what they think is a winning bandwagon.

In fact, it is arguable that Hillary Clinton's entire campaign to date has been based on this phenomenon. With an early lead in public opinion polls (which was due mainly to name recognition), her campaign has sought to present her success as inevitable, so that any vote for any other candidate is futile (and wasted).

This phenomenon also explains the importance of the early primaries in Iowa and New Hampshire. Candidates that do well in those two small states may be able to coast to national victories simply because they are perceived as winners, which causes more people to vote for them in later primaries.

Unfortunately, the mainstream media (and most pundits) actually encourage this kind of thinking by covering political campaigns as though they were sporting events. They rely on polls (and often just guesswork) to talk about who's behind and who's ahead, what are their tactics and strategies, and what are their chances, while hardly mentioning at all the real policy differences among the candidates. So most voters will go to the polls with all sorts of ideas about who's likely to win, but very little idea about which candidate stands for policies that are favored by the voter.

The bandwagon effect is also fueled (or perhaps magnified) by our "winner take all" political system, in which only the candidates with the largest plurality of votes (a majority is not needed in most elections) is elected. This discourages votes for third-party candidates, and also denies any political representation to voters representing sizable minorities of the population. (More about this another day.)

Wednesday, December 05, 2007

The Iranian Nuclear "Threat"

In the most recent National Intelligence Estimate on Iran, the Bush administration reluctantly (and embarrassingly) admitted that the Iranian nuclear weapons program, which has been the focus of its policy towards Iraq, doesn't actually exist.

In the past, when asked about the possibility of military action against Iran, Bush has repeatedly said that "all options are on the table," and that the United States would use force against Iran if diplomacy failed.

And yet yesterday (12/4), facing questions about his own administration's assessment that Iran actually halted its nuclear weapons program in 2005, Bush repeated and confirmed his policy that "all options are on the table."

That's right, the President of the United States still holds out the possibility that we might bomb or invade a country that, according to our own intelligence agencies, (a) has no nuclear weapons, (b) is not building any nuclear weapons, and (c) has (as far as we can tell) no present intention of building any nuclear weapons, simply because that country might change its mind and start to build nuclear weapons in the future.

Is that crazy? Yes, but it is also consistent with a President who does not know how to govern or negotiate except through fear. Bush does not know how to negotiate with Iran except with threats, and Bush does not know how to lead this country without first trying to scare its citizens.