Joke Line Returns

Before JournoList kept Joe Klein relatively informed, he had a penchant for writing stupidities about issues he had not the first clue about. Apparently the demise of the JournoList has Klein going back to his old ways. In a generally clueless post about Social Security, this specific bit of ignorance caught my eye:

There is a strong progressive argument for fixing social security now. Actually, there are two. First, as we saw when Bill Clinton chose to address the federal deficit in 1993, markets respond to fiscal responsibility. In that case, interest rates declined and the economy boomed (despite higher taxes, I must repeat again and again); now, a move toward federal fiscal responsibility might encourage the U.S. business community to start investing the $1.8 trillion in cash it is hoarding and thereby create some jobs.

(Emphasis supplied.) Setting aside the fact that Social Security is not a fiscal problem, Klein simply has no understanding of our current economic problem - which is deficient aggregate demand. Paul Krugman has explained this point a million times already:

Under the kind of conditions we’re now facing, the main determinant of business investment is the state of the economy, as evidenced by the plunge in investment shown in the figure. This, in turn, means that anything that improves the state of the economy, including fiscal stimulus, leads to more investment, and hence raises the economy’s future potential.

That is, under current conditions deficit spending doesn’t lead to crowding out — it leads to crowding in. In fact, you could argue that the worst thing we can do for future generations is NOT to run sufficiently large deficits right now.

Things won’t always work this way. Eventually we’ll emerge from the liquidity trap, and the normal rules of economic prudence will reassert themselves. But we are not there, or anywhere close to there, right now.

Apparently someone told Klein at a cocktail party that cutting Social Security would spur business investment and he repeated it in that post. As Krugman has demonstrated, this is simply uninformed, indeed, idiotic reasoning. It demonstrates yet again that Joe Klein simply does not know what he is writing about. Bring back the JournoList!

Speaking for me only

< New Government Report on Sexual Abuse of Inmates | Government Drops Case Against Robert Blagojevich >
  • The Online Magazine with Liberal coverage of crime-related political and injustice news

  • Contribute To TalkLeft

  • Display: Sort:
    Oh, c'mon (5.00 / 3) (#10)
    by NYShooter on Thu Aug 26, 2010 at 08:06:32 PM EST
    They want to dump SS for one reason only, it helps those who, more often than not, need it. The elderly who haven't amassed enough net worth during their working years to sustain them for the duration are obviously too stupid to be concerned about.

    We are witnessing that same attitude right today in the economic transfer of wealth from the  "unwashed" many to the "deserving" few.

    This whole debacle was just a dry run for the Grand Prize to come, SS & Medi-care/aid.

    Can't wait to see what "emergency, must-do right now" scenario they'll use.

    They want the fees from privatization (none / 0) (#21)
    by lambert on Fri Aug 27, 2010 at 06:19:04 PM EST
    or "public-private partnership" or whatever scam The Big O is going to shill for.

    Sure, it screws over the elders, but that just makes it a two-fer.


    I bet if CEOs got stock options based on jobs (none / 0) (#1)
    by steviez314 on Thu Aug 26, 2010 at 02:34:58 PM EST
    created and not stock prices, that $1.8T would be gone in a flash.

    I take that back, they get stock options now based just on showing up, even if their stock prices go down.

    well, (none / 0) (#15)
    by bocajeff on Thu Aug 26, 2010 at 09:45:00 PM EST
    while true, the company probably wouldn't be as profitable and the stock price would plummet. But at least people would be working for companies that didn't do anything. Like your train of thought though: Hire people, lower profits, lower stock prices = better stock options.

    Oh, (none / 0) (#2)
    by Ga6thDem on Thu Aug 26, 2010 at 02:36:12 PM EST
    I just had to read that didn't I? Now, for the headache medicine. BTD i know you like point out idiocy and i really enjoy your posts but sometimes I should pass on the temptation.

    The Stupidity . . . It Burns!! (5.00 / 1) (#7)
    by The Maven on Thu Aug 26, 2010 at 04:48:07 PM EST
    I mean, we should expect this kind of idiocy from Klein, but this is at a level where Klein didn't even bother to think through whether his statement makes any sense whatsoever.

    Has Klein been been off in some alternate reality where a parade of Fortune 500 CEOs keep coming forward to explain that the reason their companies aren't hiring new employees or making major capital investments is because of concerns over federal budget deficits or Social Security?  It's certainly not the world we all happen to live in, but maybe these are the same places where the invisible bond vigilantes all hang out.


    Stealth tax reduction for business (none / 0) (#17)
    by BackFromOhio on Thu Aug 26, 2010 at 09:49:08 PM EST
    Perhaps part of the rationale is reducing portion of FICA that employers have to pay equals reduced taxation of business that would stimulate hiring.

    Hear you all too well (none / 0) (#12)
    by BackFromOhio on Thu Aug 26, 2010 at 09:07:30 PM EST
    I'm beginning to think that we've missed the last opportunity to fix the mess before another debacle, much the way some believe we have missed the critical window left before a descent toward catostrophic climate change.

    I vacillate between reading to become educated, and then taking breaks from reading about politics and the economy, as it's just too darned depressing to watch as Rome is looted and one of two attitudes prevails by those who are supposed to serve the public -- "Let 'em eat cake" or "we couldn't persuade the Repubs to support...."


    been hearing SS (none / 0) (#3)
    by Capt Howdy on Thu Aug 26, 2010 at 02:41:30 PM EST
    has nothing to do with the deficit, is that right?

    As I understand it (5.00 / 1) (#14)
    by BackFromOhio on Thu Aug 26, 2010 at 09:44:15 PM EST
    -- Payments collected from individual taxpayers and employers under the Social Security system have been exceeding what the government is required to pay out in SS benefits, and that surplus is loaned to the treasury in return for bonds.  Interest on the bonds is a a deficit to the Treasury.  The surplus is expected to last at least until 2037.   Basics about how Social Security works are discussed in an article at Atlantic Monthly.


    It seems to me that any of the 'fixes' (assuming SS is broken) often suggested -- raising the maximum amount of income which can be taxed for Social Security or increasing the age of partial and full retirement -- would not require all the secrecy. And means testing -- if only for the purpose of lowering benefit payments to the wealthy, would also not require secrecy.  If, however, what's on the table accompanying means testing to lower benefits to the wealthy is a corresponding reduction in the rates for the wealthy, that's another story, because lowered contributions by wealthiest taxpayers might mean SS payments would not equal or exceed benefits owed at current rates, and benefit payments would have to be reduced.  


    Well (none / 0) (#4)
    by Big Tent Democrat on Thu Aug 26, 2010 at 02:44:31 PM EST
    it is "reducing" it now because people don't count the T-bills Social Security buys from the federal government for some reason - as if they are different from all the other T-bills on the market.

    It is a different pool of money structurally.


    They are different from all other T-bills on the (1.00 / 1) (#5)
    by me only on Thu Aug 26, 2010 at 02:58:56 PM EST
    market.  There is only one buyer.

    They are different from all other T-bills on the (1.00 / 1) (#6)
    by me only on Thu Aug 26, 2010 at 03:00:25 PM EST
    market.  There is only one buyer.

    Indeed (none / 0) (#8)
    by vicndabx on Thu Aug 26, 2010 at 05:30:42 PM EST
    Apparently someone told Klein at a cocktail party that cutting Social Security would spur business investment

    Another theory: Klein is trying to get his portfolio back up to snuff.

    Even if he was right about SS and the deficit, (none / 0) (#9)
    by ruffian on Thu Aug 26, 2010 at 06:49:29 PM EST
    'confident' investing in the stock market has nothing to do with job creation. If it did, there would have been jobs created throughout the Bush administration. Hint for Joke Line: there weren't.

    Someone fed him a line of bs over the cocktail weenies.

    is it true (none / 0) (#11)
    by efm on Thu Aug 26, 2010 at 09:01:54 PM EST
    that social security is expected to run out in 30 years or so?

    No (5.00 / 2) (#13)
    by Warren Terrer on Thu Aug 26, 2010 at 09:35:01 PM EST
    The surplus is expected to end in 30 years or so and the plan will revert to its original form whereby receipts equal expenditures.

    "the plan will revert to its original (none / 0) (#19)
    by coast on Fri Aug 27, 2010 at 08:41:52 AM EST
    form whereby receipts equal expenditures", that is a rather deceptive statement since it is totally false.  For starters, no one predicted that we would be tapping the surplus this early.  This is due to the recession, but who can accurately predict how long the funds surplus will last?  Answer, no one.  So the 30 year number is bogus.  Also, once the surplus is gone the fund will have to redeem the bonds it holds to make up for any deficit.  Its projected that receipts will only cover about 75% of the expected expenditures (another projection that is questionable).  Now here is the fun part.  When the fund redeems the bonds, the government has to have the money to pay the fund.  This means either the government has to have a surplus or they will have to borrow the money increasing any deficit the government is currently running.  In the end one of two things has to happen, or a combination of the two, either receipts into the fund have to increase thru increased taxes or expenditures have to be reduced by cutting benefits or both have to occur.  Pick your poison, but something has to change.

    Okay, let's address a couple of things here (5.00 / 1) (#20)
    by cenobite on Fri Aug 27, 2010 at 11:43:41 AM EST
    First, because there is uncertainty about the number, does not mean it can be any old random number, like 3 or a billion, with equal probability. All measurements and estimates have uncertainty. The 30 year number isn't "bogus", it's probably more accurate than one significant figure, which would be 25-35 years. The social security actuaries have a pretty good track record.

    Second, the US treasury can always and forever redeem those bonds. They are in dollars. The US treasury is sovereign over dollars. It can't "run out of dollars any more than a bowling alley can run out of points." That might cause inflation (but probably it won't), and if it does, the government can raise taxes to cool off the economy.

    Of all the economic problems the government has right now, social security is pretty insignificant. Unemployment is a serious and present problem. Low aggregate demand is a serious and present problem. Underwater, fraudulent mortgages are a serious and present problem. The TBTF banks are a serious and present problem. Any potential problems with social security are minor and decades away.

    Don't help Pete Peterson pull off the biggest heist in history.


    wouldn't it (none / 0) (#22)
    by efm on Fri Aug 27, 2010 at 10:39:16 PM EST
    be better to try and address any problem now when it would be easier to fix than wait for theproblem to become a serious and present problem.  I'm not saying make SS a major issue right now, and put the unemployement and mortgages on hold to address SS, but usually the earlier you fix problems the smaller the fix has to be.

    Duh, (none / 0) (#16)
    by bocajeff on Thu Aug 26, 2010 at 09:48:51 PM EST
    Cutting any expense to a business from S.S. to the electric bill to coffee would increase money that businesses can use to reinvest. The question has to do with priorities.

    Um (none / 0) (#18)
    by Big Tent Democrat on Thu Aug 26, 2010 at 10:49:37 PM EST
    what does that have to do with Klein's post, even if it were true (it's not)?