"Third Way" Go Away
Rather than join the diverse chorus critiquing the latest report on the middle class from the newish think tank calling itself the Third Way – see Jeff Madrick’s take on an earlier version for what I think is the strongest substantive rebuttal – my meta beef is that we should once and for all retire the outmoded and now counterproductive concept of “the third way” itself. The country today is much worse off now on virtually every front than it was when Clinton left office because the government has been in the hands of conservative ideologues. The solution to those problems is getting the conservatives who have supported one failed policy after another out of office. The right is the problem – not Bob Kuttner or any other real or conjured counterpart on the left.
It is revealing that the New York Times columnist the group originally leaked its report to was not Paul Krugman – who actually knows more than a little about the subject – but David Brooks. The idea that Brooks is supposed to represent the sweet spot of centrism that Democrats should be appealing to these days only underscores why any attempts to equate “the third way” with “progressivism” amount to a mindless sell-out to the right.
Even if you think the “Third Way’s” tepid and incoherent policy agenda is a politically safer package than more ambitious proposals, what they and everyone else across the spectrum on the left should be emphasizing is how any Democratic platform would be vastly superior to what the country has been subjected to over the past six years because we all actually believe that government is part of the solution. Continuing to set up the kinds of right-left dichotomies that may have been politically useful in 1992 isn’t doing our side any good. We can debate policy particulars while making it clear that anyone on our team would be far better than everyone on theirs.













You might like to know that we have been discussing this on the Warren Reports section. Here is an entry from Elizabeth Warren on the subject. She shows how this organization cooked the numbers to make it look like the middle class is doing better than they are.
Satellite Sky Blog
Find the Truth. Do Justice.
February 20, 2007 10:09 AM | Reply | Permalink
I checked out the web site and its list of advisers (misspelled -- that should be a clue) and then the list of board members, and then the list of supporters from the House and Senate. I conclude that "Third Way" is a watered-down version of DLC; interesting to wonder why DLC wasn't enough for them.
February 20, 2007 10:39 AM | Reply | Permalink
But two of the board members are brothers and another two are married to each other. That's a power board!
February 20, 2007 11:01 AM | Reply | Permalink
I don't think this is true. A report I saw a while ago (may no longer be true) had the mean wages increasing while the median wages were decreasing. For those not versed in the distinction, it means that more people saw a reduction in wages than saw an increase in wages, but those who saw an increase saw (on average) a larger increase than those who saw a decrease in wages. I.e., the income disparity grew but in such a way that the poor didn't get poorer quite as fast as the rich got richer.
However, a significant number of people's wages did, in fact, increase. Perhaps you were just speaking in hyperbole, but certainly a certain class of people are better off (e.g., stockholders in certain companies) under the Bush administration than under future Democratic administrations. (I'm also under no delusion that a Democratic president in '08 is guaranteed. Heck, depending on the choices, I might not vote for a Democratic president, but I've yet to see the choice that would cause that to happen.)
I also don't think that the group of people who are better off financially under Bush is limited to the top 10%. It's possibly as big as 30-40%. My point is that these are people you can't just write off. There are other reasons why they shouldn't vote for a Bush-like candidate (whether that candidate is Democratic or Republican), and those reasons go beyond just whether or not they personally will be "better off".
February 20, 2007 11:01 AM | Reply | Permalink
Ben, I just meant that the country as a whole would be better off under the leadership of any Dem regardless of how centrist or lefty they might be versus anyone who calls themselves conservative. --Greg
February 20, 2007 11:06 AM | Reply | Permalink
I completely misread what you wrote (and I quoted). I've read it again and realized that I (mentally) added a word "off" where there was none. It's amazing how one word can completely change the meaning. Mea culpa.
February 20, 2007 11:13 AM | Reply | Permalink
Greg
Bush has been a miserable President and having a Republican Congress has allowed some of the worse impluses to be enacted into law. However, what might be the core of a Democratic set of policies is not unimportant when and if the Democrats regain the White House.
Thus any of the prospective Democrats would be a better President than Bush and any of the Republican alternatives. However, is the Democratic Party forever the party of the Depression? Is it going to try to tell people that they are worse off than they are just as Republicans try to convince people they are better off than they are?
Why isn't a politics based on honesty and accuracy an improvement rather than one based on an economic disaster that isn't the smart politics regardless of what it is called?
Daniel A. Greenbaum
February 20, 2007 11:24 AM | Reply | Permalink
This is really confusing to me on several levels. Start here:
Getting person X or party X out of office doesn't *solve* any problems. It may prevent some from emerging, but it doesn't actually address whatever problems are present.So much of the rhetoric among activists on either side is aimed at how awful the other side is, but Americans are much more likely to respond to actual proposals or ideas for how to fix things than to a litany of complaints about the opposite side.
In other words, leadership involves *doing something*, not demonstrating that what the other side does is awful.
This is the really confusing part. Because your first paragraph suggests that "the third way" should be "once and for all" retired. Here you envison them (at least the Democrats among them) as joining the left in broad opposition to the right, while still arguing policy particulars.Which is it? Are you "retiring" them from your party or having them fall in line behind the liberal base? You realize what they say on sites like The Third Way are their preferred ideas about policy, right? They can't go away and simultaneously argue their views with you about policy.
I see this same attitude occasionally from Markos on DailyKos. He periodically calls for the Democratic Leadership Council to be *eliminated* -- not battled in the marketplace of ideas, but somehow made to disappear.
This whole broad rhetoric is gaining ground in parts of the left. That the organized center doesn't really belong, that they're just Republicans anyway, that you don't need them, etc. To the extent that you take it that far, that you seem to challenge their right to exist and to attempt to organize, I suspect you alienate some people who might otherwise be sympathetic.
I'm an independent who has never belonged to either party, but I voted for the Democrat in all of the last 4 general elections. I'm probably as anti-Bush as any of you, and I'm very uncomfortable and critical of certain figures in my own movement, such as Lieberman and McCain, who I see as inconsistent and fundamentally off-track on the Iraq issue.
Nevertheless, the real center of my views is in organizations like The Third Way or the DLC or the RMSP. I do wonder, when I read these things, if you're showing me the exit door in terms of supporting your party.
Invite The Third Way to go away, and some of us will.
February 20, 2007 11:32 AM | Reply | Permalink
Well, we've had the leftist extreme's third way in 2000 and 2004, and now there's this right wing-libertarian third way.. in all honesty, right wing, left wing, all the same damn thing anyway.
If you want to make change, then support good democratic candidates, and stop assisting leftist extremists to attempt to marginalize democrats and the democratic party. Also, take a stand against a joke like Howard Dean, as DNC chair. Isn't he overdue for criticism for his being a total waste of time and resources???
Tim Roemer, who ran as opposition to Dean was an advocate for achieving a real grassroots movement in the democratic party, while Dean was all hot air and hasn't even bothered to fake walking the walk. How about getting some spine on taking on the fact that for all the radical left's big talk on their knowing what's good for the party, all they've done is prove that they are even more disconnected than we suspected.
February 20, 2007 11:33 AM | Reply | Permalink
William, I think where you may be misunderstanding me is that I don't want to make the people who support the group "The Third Way" disappear by any means. I'm not wild about their ideas but think they would be far better than what we have had. What I am arguing is that they should stop trying to equate people they disagree with on the left with conservative ideologues. That strategy -- call it triangulation if you want, which used to serve Clinton well -- no longer makes sense because government by conservative ideologues has proven to be so much worse than anything anyone on our side is arguing for. I'm criticizing their strategy of pitting what "some on the left" would do as somehow equally dangerous to what movement conservatism is actually doing. The group "The Third Way" (perhaps renamed) should keep putting out ideas, but using "the third way" as a strategy for calling attention to those ideas should go. Does that clarify things? -- Greg
February 20, 2007 11:46 AM | Reply | Permalink
Everyone should be skeptical of electoral strategies based on Bill Clinton's example, unless the plans include resurrecting H. Ross Perot.
February 20, 2007 11:57 AM | Reply | Permalink
When there is a threat of real civil unrest in any society (and we are far from that in the US at present) there always arise those who would forestall change by throwing a few crumbs to the masses.
So the danger is that the "centrist" Dems who favor big business and militarism as much as centrist Repubs do will head off efforts by the real left to make fundamental changes to society. Instead of examining the real issues of consumerism in a world running out of raw materials and suffering from overpopulation they elect to tweak a few social programs and defuse unrest before it amounts to something.
Changing the interest on student loans is such an example. So is adding 40 million to health insurance programs instead of eliminating all the useless middlemen and greedy drug patent policies by means of a real national plan.
What is different this time is that mother nature can't be fooled by changes in tax rates and the like. Either we scale back our consumption patterns to a sustainable level or we will face unfixable problems on a global scale. I don't see any of this being addressed by any prominent politicians of any outlook.
They still promise growth as the solution to inequality (backed by a strong military to help insure an adequate supply of raw materials and finished goods). Where are the leaders with real vision?
--- Policies not Politics
Daily Landscape
February 20, 2007 11:59 AM | Reply | Permalink
Howard Dean is the radical left? What did he do so wrong as DNC chair? Are you talking about the 50-state strategy? What is this extremism you're talking about? Does it consist of any actual policy positions?
February 20, 2007 12:21 PM | Reply | Permalink
Thank you for the clarification. I think that may be a semantic difference, though.
There are those of us who think some ideas on the left are correct and some on the right are correct, while on other issues a middle option best.
For example, I'm someone who thinks the left is correct on social policy (abortion, gay rights, etc.), the right is correct on Social Security reform (private market accounts are a good idea), and the right is broadly correct about trade.
The left was originally correct about Iraq (the decision to go to war), but the middle had the best ideas once the war was started (the Lugar/Biden/Hagel crowd had it right).
Since good ideas are distributed in every part of the spectrum, I kind of have to believe in a "third way" that draws freely from those various elements. If the third way goes away, even in a rhetorical sense, then so do I.
February 20, 2007 12:21 PM | Reply | Permalink
MR. Swann,
Charlie Munger, Warren Buffet's partner at America's most successful investment team, Birkshire Hathaway was once asked by an investiment reporter in 1999 at the hight of the dot com craze why Brikshire was not investing like mad in this 'explosive' sector.
Charlie calmly replied, In my experience when you mix chocolate raisins with rabbit turds, you end up with a big bag of shit.
I think after 8 years of conservative dominance and 30 years of rightward tilt in Americas domestic policy orientation we can see the results. Hard core conservative policy ideas are rabbit turds.
When you mix liberal policy ideas with conservative think tank turds in the name of "the Third Way" you end up with shit policies.
Just sell the liberal policy ideas already, its the best product you got.
That's the point.
February 20, 2007 12:22 PM | Reply | Permalink
A conservative Democrat with record of balanced state budgets and a perfect NRA rating gets elected to the head of the DNC. Yet because he dislikes Washington insiders and dares to be a partizan Democrat, he gets called 'a joke'. Tell it to the state chairs.
Sorry Mary, this isn't the Town Hall Web site. Your ideas are as laughable as Hugh Huwitts's.
BTW - thanks for Lieberman. I like walking around with a knife in my back all day.
February 20, 2007 12:31 PM | Reply | Permalink
No, Howard Dean is radical sham.. he's a republican who ran as a democrat to get elected in Vermont.
He was cherry picked by Joe Trippi, who is. Full knowing that Dean was neither capable or willing to achieve anything other than what profits him. He was a failure at his health care reform in Vermont, he only signed that gay rights bill when he was cornered with it after the state legislature had already done the hard work. He screwed up the ed system, he favored corporate factory farms and big corporations. Ho Dean was never any progressive wonder. Yet the radical left took a fit demanding that he had to be elected as he was the only one who would achieve anything positive.
There was no 50 state strategy, I know people all across the country who at least thought there'd be an effort made.. but there wasn't. I know a woman in Seattle who kept hoping, but while there would be news that there would be one meeting after another, nothing ever happened. The few instances there were, were in no way grassroots.. it was all a joke.
Tell me what Howard Dean has actually done at all as DNC chair? Not one darned thing, he even sucks at campaign fundraising.
The democratic party has issue positions.. and good democratic candidates have plans to address those issues. We need to get back to them, instead of wasting our time listening to the bigoted and classist leftist extreme
February 20, 2007 12:33 PM | Reply | Permalink
"..the right is correct on Social Security reform (private market accounts are a good idea):" Assuming you mean carve-out accounts, at the risk of hijacking my own thread, please read this in hopes that I might dissuade you. --Greg
February 20, 2007 12:35 PM | Reply | Permalink
Sure, I'll read that. And maybe you could look over either this or this.
February 20, 2007 12:50 PM | Reply | Permalink
If you think privatizing Social Security is viable,
Lugar/Biden/Hagel are going to win the war in Iraq,
and slowly bleeding the country to death in favor of cheap sweatshop goods at Walmart is desirable then all I can say is bye, bye. Those aren't serious positions held by more than a tiny minority in this country and for good reasons.
February 20, 2007 1:00 PM | Reply | Permalink
The link Greg provided me above made the same inaccurate statement within the first pages -- calling the opposing plans "proposals to privatize Social Security", followed by some misleading statements suggesting they will eliminate part of the funds currently going to disabled recipients.
I don't think any of those guys think they can "win the war". They promoted a wholesale shift in policy in 2004 and 2005 that might have made a difference, but they see our options now as limited. They believe they can make the best out of a bad situation, and I think the presence or absence of those skills on the part of the next president will have a huge impact on our futures. We should all be looking for the president who *actually knows how* to work with the world, not just the one who promotes that as an ideal. You might have me there. A free market trade policy is undeniably painful. But I don't think there's a viable alternative to that general direction in economic policy. Globalization is going to happen either with us or without us, and we're ultimately better off trying to compete in world markets than protecting ourselves from them.February 20, 2007 1:23 PM | Reply | Permalink
Ooh, yummy! I can't wait for the GOPers to try to market that bag of poo as "new & improved"
February 20, 2007 1:53 PM | Reply | Permalink
William you can count out any Bush iniative as a non starter. His whole slide began with his non plan to "fix" Social Security after the election in 2004. I say non plan because he never did have the guts to make a proposal. In the face of overwhelming opposition he simply pawned it off on congress to come up with a solution to the "crisis". Republicans didn't want to touch it and Dems wisely resisted the urge to play his game. Politically it's a career killer.
Why? Because there's nothing wrong with SS. Bush himself got so twisted in knots trying to answer every objection to the ideas being floated that in the end he was talking about letting people invest that 2% or 4% in treasury bonds with a new government bureaucracy regulating their choices. There's no reason to do that when SS does the same thing and uses only 2% to administer the whole program. You want IRAs or 401K plans you already have them. There's no reason to make SS a welfare plan and put it on the road to phase out. That's my future you want to mess with. I don't want Wall St. getting their hands on it. I've never met a broker or a banker who was happy with a 2% profit.
As for Lugar/Biden/Hagel you've got guys who have sense enough to oppose Bush's disastrous foreign policy. Big deal. There's hundreds of millions of us in this country alone. Lugar and Hagel are Republicans. That disqualifies them.
It wouldn't take 5 minutes googling to find something godawful they stand for. Did I mention they're Republicans? Biden lost me with his disgusting grandstanding for the bankruptcy law.
Obama, Edwards or Hillary are better than any of them. So are Richardson and Clark.
On trade how about we insist our trading partners at least adhere to the environmental and labor laws we supposedly embrace? What are the Chinese and Indians gonna say in return? No we don't want breathable air or more than a buck an hour in wages?
Greg is right. There's no reason to adopt insidious or harebrained Republican proposals in order to win. There's even less reason to try to make them work.
February 20, 2007 2:16 PM | Reply | Permalink
I think you need to separate out "Third Way" ideology from "Third Way" politics.
In an era of massive Republican unpopularity, it is pretty clear that triangulating between left and right - the essence of Third Way politics - is wholly unnecessary like it was in 1992. The country has got a good dose of what the GOP has become and that alone will probably be enough to waive the need for any fancy political footwork. Greg Anrig is probably right that the correct message is that any of our guys are better than any of their guys.
But as a matter of ideology, Third Way-ism is really nothing more than moderation. And Democrats must always be aware that more people call themselves moderates than call themselves liberal or progressive.
What's interesting is the shifting definitions of what is moderate and what is liberal. Just as being an outspoken advocate of gay rights is no longer (for most people) enough to disqualify you as a moderate, so other issues are seeing similar shifts. I would not be surprised if single-payer health care, for example, exited the realm of the utopian liberal and became the default position among moderate centrists. Same with the Iraq War. Calling for troop withdrawals is rapidly becoming mainstream.
I think if Democrats play their cards right, and have the good sense to nominate a strong leader in '08, the differences between moderates and liberals will fade. As long as the GOP is in power, people will see that what unites the various wings of the Democratic party is far greater than what divides it. The real test will come when the Democrats assume power.
February 20, 2007 3:00 PM | Reply | Permalink
This is, unfortunately, exactly wrong, and understanding that it's wrong has been one of the keys of the right's success. Look at the last two presidential elections as examples: the windsurfing ad, the "I feel safer with Bush" stuff, and so on. Or the 2000 election, which was far more about the number of buttons on Al Gore's suit jacket than about any particular set of policy proposals -- in fact, Gore was mercilessly attacked for his policy expertise by the media. Ignoring the issues and doing dirt on the other side is how the Republicans have succeeded; it wasn't until a whole bunch of things blew up in the public's face and people were forced to pay attention to issues that Democrats won. And even then, Democrats won without a specific set of policy proposals: "A new course in Iraq" isn't a policy proposal. As anyone who has done sales knows, people make decisions based on emotional rather than rational considerations, and electoral politics is just another game of sales.
In times of peace, the wise man prepares for war. -- Horace
The blade itself incites to violence. -- Homer
February 20, 2007 4:15 PM | Reply | Permalink
Re: I also don't think that the group of people who are better off financially under Bush is limited to the top 10%. It's possibly as big as 30-40%.
Maybe. But most of that 30-40% (and I am one of them) are only better off by some trivial margin. My taxes are c. $500 lower than they would have been otherwise. Big whup. And meanwhile I've been laid off two jobs under Bush's tenure, seen my health benefits shrink, and watched the cost of home ownership zoom beyond my reach.
February 20, 2007 4:51 PM | Reply | Permalink
Do not be misled, the Capitalist system is not going to relinquish control.
It will give the people choices alright, just so happens they have so many to choose from. Left of center, center, and right of center. Problem is they’re still Capitalist systems.
Don’t misunderstand me though, I think a person should see the fruits of their labor.
My experience , has shown me that when the United States had a viable alternative, in the form of Labor Unions, the middle class expanded, no longer were we, and our children , just slaves to be exploited. Many Capitalists fought against the right to organize, calling it Socialism.
http://en.wikiquote.org/wiki/Eugene_V._Debs
Debs ran for political office, eventually he was arrested for sedition for opposing the war.
His indented quotes, are applicable today almost 100 years later
Third Way?
Many new parties are intended to appease the population, giving the appearance of addressing the concerns of the agitated populace, but when they come to power, they'll not answer to you the working class, but they'll succumb to the pressure of Capitalism .
February 20, 2007 5:40 PM | Reply | Permalink
Swann,
There is absolutely no need to change the functioning of Social Security. The basic fix to the program is to reduce its regressivity by removing the income cap and applying it to unearned income without changing its benefit program. This would make it healthier than a horse and give it enough money to help out Medicare.
The problem with Social Security is that it has been used to reduce the progressivity of the income tax. As this effect shifts in the next 20 years, those who have been riding on the effect will now have to reimburse the program and they don't like it. Changing the program is just a disguised way of ripping off the boomers who paid all those regressive taxes for the last 25 years.
February 20, 2007 6:31 PM | Reply | Permalink
The Thrift Savings Plan offers a small set of investment choices that include bond and stock index funds. So yes, you can choose to invest in bonds in this plan. Most federal workers have a conservative portfolio split between the bond and S&P stock index funds. They've earned an average 8.8% on their money even with this conservative approach.
The funds in the plan outperform the market because their expenses are extremely low -- just 0.06% of the funds invested. So yes, if you use simple index funds and put them out for bid in the financial services industry, you get firms like Morgan Stanley or Barclays who are willing to do it very cheaply.
Some of the promise of this approach can be seen in a new set of investment options just offered by the Thrift Savings Plan. They just started offering life-cycle funds that invest in a mix of their other funds geared toward various retirement years. So their near-term plan is more conservative, for those near retirement, and the long term plan more growth-oriented. The logical thing would be to have contributions switch between these plans as a default setting through the years, so people won't have to make any choices if they don't want to. Then you have an account balanced somewhere near an appropriate level for wherever you are in your work history.
February 21, 2007 6:47 AM | Reply | Permalink
Missouri Democrats abandoned their rural and small town areas in the state some time ago. It takes time to rebuild in those areas and I can tell you that here in Missouri it is being rebuilt. I know you're an activist, Mary, but not everyone is and it is very, very time-consuming to gather up activists in a long-neglected area.
A second point is there are still Democratic political machines functioning--particularly in the urban areas. It is very difficult for newcomer Democrats who don't have an automatic tie with blood relation/longtime friend/union connections.
Even with these long-standing issues, the GOTV effort by the Democrats here in Missouri resulted in Senator McCaskill's win. The Senator also helped the Democrats by campaigning heavily in the non-urban areas--something Missouri hadn't witnessed in decades as the Democrats had "given up" on those areas and relied heavily on the machine operations in the urban areas. Part was the Senate Committee but part was also Dean's operation--particularly in our rural areas.
I suspect, Mary, you are only communicating with individual activists and not party activists. There's a difference.
February 21, 2007 7:12 AM | Reply | Permalink
I don't often agree with you but this is a solid piece of analysis. I'm not sure whether you think the upshot of this will be a good thing or a bad thing (I think it is a good thing) but so far we're reading from the same page.
February 21, 2007 7:48 AM | Reply | Permalink
In the short run, anything that removes Republicans from power and relegates "conservatism" as it is now constituted to the ash heap of history is a good thing. I'm willing to overlook ideological differences to remove Republicans from power or keep Democrats in power.
Sadly, many progressives don't feel the same way, which is what I detect in this post from Greg Anrig. Anyone who writes a post entitled "Third Way Go Away" is probably not interested in overlooking differences for the greater good of defeating Republicans. From this perpective, the entire campaign against Joe Lieberman was, to my mind, a complete and total waste of time and money.
February 21, 2007 10:15 AM | Reply | Permalink
Brad, Again, the whole point of this post is that progressives should be focusing their fire on the right, not on each other. In the title of the post, I am clearly referring to the rhetorical tactic of the "third way" -- which is inherently designed to equate some ill-defined bad guys on the left with the right -- as opposed to the group itself. I honestly don't see how you can "detect" what you say you detect from what I actually wrote. --Greg
February 21, 2007 10:21 AM | Reply | Permalink
Perhaps I was being a tad unfair. But then so are you, given that I don't seem to recall Bill Clinton or Tony Blair, the very personification of Third Way politics, spending a lot of time talking about "bad guys" on the left. And I would say that your post notwithstanding, the vitriol hurled at groups associated with Third Way politics such as the DLC by the left is way stronger than what they throw back. Ed Kilgore, this blog's resident DLC expert, spends a great deal of time swatting down one myth after another about that organization.
With your post, I'll accept your explanation. But I still think phrases like "the “Third Way’s” tepid and incoherent policy agenda" are not exactly designed to foster anti-Republican unity.
February 21, 2007 11:01 AM | Reply | Permalink
Even the most conservative stock funds have no guaranteed payout. If you dump 150 million new investors and their money into the market at the same time what do you get? Too many dollars chasing too little worthwhile investments further crowded together by your lifecycle funds or other restrictions.
Who pays beneficiaries when (not if) the market periodically tanks? Will you be part of an unlucky demographic caught without a chair when the music stops? Republicans seem hellbent on destroying our economy with debt and idiotic trade policies that depend on shaky economic partners like Venezuela, China and India. That doesn't give me a lot of confidence.
But I say again, there's nothing stopping you from investing in the stock market, you can even do it with various tax advantaged accounts. Just don't ask all of us to assume the same amount of risk you're comfortable with. It's 6 years after the bubble burst, 4 years after Enron and I still don't see the kind of regulation or transparency that makes me think it's anything other than a rigged game for the biggest investors and insiders.
And what message does it send our creditors (Chinese, Japanese and Saudi bankers) when the president says US treasury bonds aren't good enough for our retirees?
I've been paying FICA taxes since 1969. Been overpaying them since 1982 when Greenpsan brokered that deal between O'Neill and Reagan so there'd be trillions in the Trust Fund when I retired. The Trust Fund according to the three projections the SSA puts out each year isn't scheduled to go broke until 2041, 2072 or never.
that third projection (never) has been historically the most accurate. Leave Social Security alone. You have plenty of opportunities to chase riches without forcing the rest of us to sacrifice our security in your risky schemes.
February 21, 2007 12:59 PM | Reply | Permalink
The Kolbe-Boyd plan also has a safety net that kicks in should your account fail that amounts to between 80% and 120% of the poverty level, depending on the length of your work history. And it has matching funds for low-income workers that help juice up their accounts and make it less likely, over time, that the account will fail.
Those figures are for the date the trust fund theoretically runs out. I say "theoretically" because we draw down on the fund for many years before then, and because the fund doesn't have any actual "funds" in it to draw down.A more meaningful date might be around 2018, when the balance tips from a yearly surplus to a yearly deficit in the trust fund. We will then be making those payments out of the general tax pool and either running higher deficits or raising taxes to pay for it.
I don't pretend that private market accounts solve those problems. They put a lot of stress on the system in the early years, as you're trying to prefund a system that has genuine savings while continuing to "pay-as-you-go" for the baby boomers. It's something that will only be helpful in the long-run, when investments experience cumulative growth over decades.
Basically, I think people will get excited about the new system in, say, 2030 or 2040, when real wealth starts to result from it and when Social Security finances are substantially relieved by it. It's something that will strengthen America down the road, when more Americans can benefit from the markets.
February 21, 2007 2:18 PM | Reply | Permalink
"But then so are you, given that I don't seem to recall Bill Clinton or Tony Blair, the very personification of Third Way politics, spending a lot of time talking about 'bad guys' on the left."
They let others do it for them.
February 21, 2007 3:41 PM | Reply | Permalink
No just up to 30% of Social Security benefits.
You've already said that. I say if you dump a lot of money into the market you'll skew the market. You're pumping up stocks and the underlying companies not because they're wise investments but simply because that money has to go somewhere. What companies get government sanctioned investments? The Fortune 500? Is that fair to their competitors? Is that smart? I wouldn't invest in GM on a bet. I won't invest in Exxon or Microsoft on principle. What does it do to other investments like real estate?
Paid for how? Out of general revenues. So just when the economy hits a bad patch the budget takes an unexpected punch too. At least with SS you know ahead of time the amount needed and can plan for what needs to be carved out of the budget. Never mind that your "work history" formulation discriminates against men and women (mostly women) who are out of the job market for any amount of time to raise children.
Yeah we're going to have start cashing in those treasury bonds in about 2018. Good thing George Bush agreed with Al Gore about that lockbox promise back in 2000. I think the rest of the world would breath a sigh of relief if we cut back on our whopping military budget and started paying more attention to our fiscal policy. Here's another solution for that problem. Issue more bonds to refill the Trust Fund as it depletes. That will help if there's another baby boom or we do the right thing and take in 5 million or so homeless Iraqi war refugees in another couple of years.
And of course your solution intially makes things worse, much worse right when we really need the cash to overhaul Medicare and the rest of our healthcare system which is an expensive mess. That's where the crisis will be and where we have to focus. Not some government directed investment program in big business. Ask the Russians how that worked out.
February 21, 2007 4:22 PM | Reply | Permalink
The only thing special about 2018 is that is the estimated year in which INCOME taxes (progressive taxes) have to start reimbursing PAYROLL taxes (regressive taxes) after what will then be over 30 years of the inverse relationship. So, after the Boomer generation lived through regressive taxation, the Xers will be back in the more sensible progressive taxation arrangement. This is the dreaded 2018 effect. The only people who object are ... oh yeah... the people who got even richer off the regressive tax schemes of the current era.
February 21, 2007 7:14 PM | Reply | Permalink
I have a different take on the Third Way paper. As policy, it's not great, but as an opening gambit, it's actually not a bad way of reaching out to libertarians. The longer version of the argument is available at Catallarchy.
February 22, 2007 4:55 AM | Reply | Permalink
Joe, I guess your point is exactly my point. The last thing progressives should be trying to do is reach out to libertarians, who supported SS privatization, the tax cuts, and the evisceration of regulations. Their mindset of hostility toward government is precisely what needs to be emphatically defeated. --Greg
February 22, 2007 5:38 AM | Reply | Permalink
I don't think this is necessarily wrong even though Swann's policy proposals are. I spent last fall volunteering for Tammy Duckworth in one of the most expensive house races ever. The Repubs ran their typical negative campaign. Daily mailers and dozens of TV commercials a day on their two pet issues claiming Tammy wanted to give illegal immigrants social security/welfare and tax everybody but the family dog to do it.
The DCCC and Duckworth's campaign returned fire branding Roskam too extreme, even more extreme than the retiring Henry Hyde. Roskam is too extreme but the DCCC's ads were terrible and backfired. As soon as the first one came out the response at front doors was discernable. People who had been enthusiastic about Tammy were turned off. Even though she had no control over the DCCC ad campaign she became just another politician willing to say anything to get elected.
This is what Carville was trying to tell Emanual
that last month. Polling done for Democracy Corp by Stan Greenberg showed people were fed up with
negative cmapaigning and that even bigger gains could be won if Dem candidates went positive. I really believe that would have worked for Tammy.
People in IL-06 were fed up by election day and a lot of them, especially the indys Tammy needed to win stayed home.
When you're trying to change the status quo you need to be positive to get voters to take a chance on the benefits of the new way. When you're trying to protect the status quo you have to be negative to scare people away from making a change. Confusing them, clouding the issues gets you a tie. And ties go to the incumbunt because indy voters will stay home rather than risk making the wrong choice.
February 22, 2007 8:11 AM | Reply | Permalink
Well, with the Thrift Savings Plan, it goes to the following:
1. The companies in the S&P 500 stock index.
2. The companies in the Wilshire 4500 Index (small and mid-cap companies).
3. Two intermediate-term bond funds.
4. The companies in Morgan Stanley's international fund.
Basically, it uses broad index funds. You're not really inveseting in one or a few large companies.
That happens with the current system too. We don't notice it because Social Security runs big surpluses, but as soon as it switches to deficits you've gotta think a down year in the economy, with less tax revenues, is going to make it difficult to make the payments.The advantage of reform is that there will be some sort of pre-funded savings to help fill in during the difficult years. Even if those investment accounts do poorly, there are some actual savings there to draw upon, while the current system has no such resource.
More significantly, as I mentioned, the accounts won't really make much difference until people have had them for a couple decades or more. Those long-term accounts are unlikely to be impacted much by short-term economic cycles.
I guess I would put it this way. The type of economy that would undermine those accounts is one that turns down and remains down for long periods. The market hasn't stayed in the red for any such broad historical stretch in it's history. But if it did, that's *precisely* the scenario in which the traditional Social Security system would have the most problems. If the U.S. economy tanks, it's hard to see how we have enough tax revenues to pay for the peak period of the boomer retirements.
February 22, 2007 9:34 AM | Reply | Permalink
William, Unless I missed it, you haven't yet addressed the transition problem, which in its own right pretty much undercuts every rationale for privatizing (the word Cato and Heritage used to use, remember?). --Greg
February 22, 2007 9:43 AM | Reply | Permalink
You're right to point out that the transition aspect of it is huge.
That's one reason I point out that private accounts won't mean that much for a couple of decades. We're too close to the baby boom retirements to kind of sweep the problem away through an investment strategy, or any sort of savings-based strategy.
So yes, switching from a pay-as-you-go system to a pre-funded system is quite difficult, particularly under current demographic trends.
However, I don't think it's fair to say I haven't addressed that problem. The second of the two links I provided you is a study by Centrists.org of the impacts of implementing one of the proposed plans (along with some comparisons to some of the others). Transition costs are a key part of it (note the first paragraph).
Here's a link to the study.
And here's a link to an overview of the more recently introduced version of this bill.
Yeah, but Heritage and Cato are conservative and libertarian think tanks, respectively. They're playing to an audience that *wants* to hear that you're privatizing the program in some sort of wholesale fashion.I'm not conservative, so the reality of a partial privatization is fine with me. Why not call it what it is? Josh Marshall spent months on his blog calling this the "Social Security phase-out plan" -- even more draconian rhetoric than what we're talking about here. He's wrong. And Heritage is wrong.
February 22, 2007 12:10 PM | Reply | Permalink
J. McCutchen
IF you hate Joe Madrick you will love Lou Dobbs's show today. Try to catch Madrick in the crossfire of WAR ON THE MIDDLE CLASS in rerun
Lou controls the horizontal
Lou controls the vertical
Lou controls the questions
Lou controls the answers
February 22, 2007 3:58 PM | Reply | Permalink