The Conspiracy to Keep You Poor and Stupid is a trademark of Donald L. Luskin

Latest
Media Infiltrations:

Republicans and the Populist Temptation
Wall Street Journal
February 9, 2010
Why Taxing Stock Trades Is a Really Bad Idea
Wall Street Journal
January 6, 2010

Krugman Truth Squad logo, courtesy Tom Miller, Atomic Art: admin@atomicart.com

Peter Sellers and Peter Bull in ''Dr. Strangelove'' Columbia Pictures, 1964 -- Click to order!

"What has been your worst blogging experience?
Donald Luskin."
-- Brad DeLong

"That's a guy who actually stalks me on the Web and once stalked me personally."
-- Paul Krugman

"I'm saying this...guy's a jerk."
-- Charlie Gasparino

What I'm reading:
cover
The Happy Body
Aniela and Jerzy Gregorek

What I'm listening to:
cover
Langley Schools Music Project

What I'm watching:
cover
Star Trek

What I'm playing:
cover
Speed Racer

Order these from Amazon.com
at Amazon's normal low prices...
and a fraction of your order goes
to help support this site.
Thanks!

Thanks to Irwin Chusid, public editor.

Copyright 2002 thru 2009
Donald L. Luskin
don-at-luskin-dot-net
All rights reserved.
"The Conspiracy to
Keep You Poor and Stupid"
and "Krugman Truth Squad"
are trademarks of
Donald L. Luskin
www.poorandstupid.com

Logo by Tommy Carnase 1995

"The road is cleared," said Galt.
"We are going back to the world."
He raised his hand
and over the desolate earth
he traced in space
the sign of the dollar.

From Atlas Shrugged
by Ayn Rand

From each as they choose,
to each as they are chosen.

From Anarchy, State and Utopia
by Robert Nozick

"there is some shit I will not eat"

From i sing of olaf glad and big
by e. e. cummings


In Association with Amazon.com

Powered by Blogger Pro™

Chronicle of the Conspiracy
Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation -- and show you how to fight back!

Saturday, May 14, 2005

ANOTHER DELONG HOWLER   Check out this howler. Marxist economist Brad DeLong presented a prepared statement opposing Social Security reform to the Democratic Policy Committee on Friday. Feeling correctly that his own credentials weren't sufficiently impressive, he quoted Warren Buffett -- and DeLong got the quote massively wrong. You see, DeLong wasn't really quoting Buffett at all -- he was quoting a fellow Leftist blogger quoting Buffett -- errors and all. Here's how DeLong presented the quote on Friday, according to his own website:

...a [Social Security] deficit of $100 billion a year, something, 20 years out, seems to terrify the administration. But the $400 plus billion dollars deficit currently does nothing but draw yawns.... [T]he idea that this terrible specter... a small fraction of the deficit we happily run now seems kind of interesting.... [T]he Bush Administration is ignoring the most serious economic problems facing America... ideological[ly]-driven.... The most serious fiscal issues are: the General Fund deficit, the current account / trade deficit, and health care. Why are we talking about Social Security?

But here's what Buffett really said, according to the transcript of an interview with Lou Dobbs:

...a deficit of $100 billion a year, something, 20 years out, seems to terrify the administration. But the $400 plus billion dollars deficit currently does nothing but draw yawns. I mean the idea that this terrible specter room looms over us 20 years out which is a small fraction of the deficit we happily run now seems kind of interesting to me.

All that other stuff came from "musenla" on the De Profundis blog. Here's what "musenla" added to Buffett's quote, himself making it seem that the words were Buffett's, not his own:

There is no question that the Bush Administration is ignoring the most serious economic problems facing America and that they are more interested in ideological driven issues. The most serious fiscal issues are: the General Fund deficit, the current account / trade deficit, and health care. Why are we talking about Social Security?

As of this writing, the error has not been corrected on either DeLong's site or on De Profundis. At least when I took DeLong to task for posting an outdated CV on his site -- which gave the false impression that he was currently a columnist for the New York Times -- he removed it. But I suspect this error will stay online for the ages. And will DeLong's misquotations help the Democrats defeat Social Security reform? Yeah, right -- just like his testimony in the disputed 2000 election helped Al Gore become president.

Thanks to reader Steven Shepard for the link.

Update [5/15/2005]... I don't care whether anyone thinks this is fair or not. I think it is. Physiognomy is destiny. From a reader who understandably wishes to remain anonymous, and obviously didn't intend to have this printed here:

I chanced to see him testifying, via C-span. It took a few seconds to register that the guy talking was the guy you've been undressing for some time.

So, I sucked it up and watched him for a few minutes. Forget about his ignorant leftist BS. We can't get "personal" in PC-land, so let me use this e-mail to do so. He is a fat, soft, slob. Sort of the male -- or is that androgynous --counterpart to ugly females who make up the feminist movement.

Talk about the perfect model for the "professors" who've taken over the academy!

Update [5/16/2005]... And then there's this interpretation, which is even less charitable (believe it or not), from another reader who wishes to remain anonymous:
Looks like clear cut plagiarism to me. He took the argument of the other guys without attribution, as far as my quick read can tell. Even getting the quote wrong. If it were an undergrad, he would be run out of Berkeley.

Annotation [5/17/2005]... The Calculated Risk blog claims to be the source of the text that DeLong misquoted. If so, then I apologize to Calculated Risk for not correctly acknowledging their authorship. However this in no way exculpates DeLong. In fact, it makes his error worse, since the quote was given correctly on Calculated Risk.

Annotation 2 [5/18/2005]... Calculated Risk has provided this link to a DeLong post from a week ago in which DeLong made the very same misquotation, ths time attributing it directly to Calculated Risk. In his his speech to the Democrats he repeated the error for the second time, without attribution to Calculated Risk. This makes the De Profundis blog entirely an innocent bystander, so my original statement above that it was the origin of the error was not correct. The fault is entirely DeLong's, based on distorting the correct quotation as originally found on the Calculated Risk blog.

Posted by Donald L. Luskin at 6:43 PM | link  

THE LIBERAL CLOISTER   There have been many effective rejoinders to Paul Krugman's New York Times column several weeks ago, in which he lodged the absurd charge that conservatives were not well represented on American college faculties because their supposedly religious obsessions disqualified them from legitimate academic pursuits. This excellent Chicago Tribune column by Victor Davis Hanson is the best yet, though it doesn't direct itself explicitly to Krugman. Hanson makes the point that liberally dominated American colleges are themselves a religion:

Sometime in the 1960s, many faculties felt the proper role of the university was to gravitate away from the Socratic method of disinterested inquiry, and instead to press for a preordained and "correct" worldview. Since America was supposedly guilty of being oppressive to those not white, conservative, male, capitalist, Christian and heterosexual, the university offered a rare counterpoint.

Tenure became part of protecting this strange culture in which the ends justified the means: Bias in the classroom was passed off as "balance" to an inherently prejudiced society. Academia came to resemble the medieval church that likewise believed its archaic protocols were free from review, given its vaunted mission of saving souls.

Thanks to reader Chris Masse for the link.

Posted by Donald L. Luskin at 9:27 AM | link  

TAKE THOSE SHOES OFF, PLEASE   A new GAO report finds that airport security screeners employed by private firms outperform their federally employed counterparts. This comports with what is, for me, virtually an axiom -- that the private sector always outperforms the public sector in that vast majority of tasks in which the two compete. Strangely, though, it does not comport with my experience. I travel a great deal, and have many data-points on this. My overwhelming impression is that the quality of airport screening markedly improved when it was federalized, in all dimensions -- speed, courtesy and consistency. And since there have been no hijackings, we can assume that its core mission -- to prevent hijackings -- has been satisfactorily met. I have no explanation for this, although my belief in the axiom is so strong that I don't doubt there is some explanation somewhere.

Thanks to reader Jill Olson for the link.

Posted by Donald L. Luskin at 9:16 AM | link  


Friday, May 13, 2005

NOT EXACTLY A PROFILE IN COURAGE   They call this a plan. Great... With plans like this, who needs stonewalling? According to an Associated Press story,

WASHINGTON - Breaking with party leaders, a Democratic congressman plans to introduce Social Security legislation, saying his first commitment is to his constituents.

Rep. Robert Wexler, D-Fla., said Friday: "I have the largest amount of Social Security recipients of any Democrat anywhere in the country. My allegiance to seniors is greater than my allegiance to the Democratic Party."

...Wexler's bill calls for a 6 percent tax on all income above the current $90,000 cap. Three percent would be paid by workers and 3 percent paid by their employer...Wexler's proposal, which he will unveil in Florida on Monday, would not require any cut in scheduled benefits or increase in the retirement age, and it does not provide for private accounts.

..."The president traveled the country for the past two months and effectively challenged the Democrats to make their own plan," Wexler said. "Today, that challenge is responded to."

Thanks to reader Jill Olson for the link.

Posted by Donald L. Luskin at 9:36 PM | link  

YOU CAN NEVER BE TOO RICH OR TOO DESPOTIC   Meet the world's "royal billionaires" -- heads of state (to use the world "state" loosely) -- who are no doubt worth every penny in the hearts of their adoring people. For instance, Fidel Castro turns out to be worth $550 million. Would Yasser Arafat have made the list if he hadn't croaked before publication?

Thanks to reader Drew Hoffman for the link.

Posted by Donald L. Luskin at 6:38 PM | link  

LOCKING IN THE LIBERALSIM   Okay, we'll cash that $1.46 billion check. But don't mess with our pseudo-progressive editorial platform opposing plutocracy:
CHICAGO When Lee Enterprises Inc. agreed to purchase Pulitzer Inc. for $1.46 billion, it also agreed that the flagship St. Louis Post-Dispatch will keep its longstanding liberal editorial slant for at least the next five years, according to the purchase agreement mailed to Pulitzer shareholders Friday...

The Post-Dispatch platform statement, adopted in 1911, includes the pledge that the newspaper "will always fight for progress and reform... always oppose privileged classes and public plunderers, never lack sympathy with the poor, always remain devoted to the public welfare... never be afraid to attack wrong, whether by predatory plutocracy or predatory poverty."

Thanks to reader Paul Anderson for the link.

Posted by Donald L. Luskin at 6:31 PM | link  

DEMOCRATS: SOCIAL SECURITY FOR THEE, BUT NOT FOR ME   Democratic Senate minority leader Harry Reid makes it sound like Social Security is the bestest government program in the whole, wide world. But guess who introduced a bill in 1983 that would exempt senators and representatives from that very same wonderful program? You guessed it -- the people's friend in Washington, Harry Reid. From a Deroy Murdock column on Scripps Howard:

"Social Security is the most successful program in the history of the world, and we're going to protect it," Senate Democratic leader Harry Reid of Nevada said April 10 on CBS' "Face the Nation." "People depend on Social Security," Reid declared two days later. "That's the way it has been, and the way it should be, and we're not going to allow that to change."

But when President Ronald Reagan signed legislation in April 1983 to bring senators and representatives into Social Security, Harry Reid reacted like Harry Houdini. Reid tried to help lawmakers escape history's "most successful program." H.R. 3589, which then-Rep. Reid introduced on July 18, 1983, aimed "To repeal the recently enacted provisions providing for coverage of Federal employees under ... the Social Security Act."

Max Baucus, Charles Rangel and Paul Sarbanes are all caught in the same net of hypocrisy. Read the whole thing...

Posted by Donald L. Luskin at 12:13 PM | link  

IS KRUGMAN ON GENERAL MOTORS' ADVISORY BOARD?   "I'm not trying either to romanticize the General Motors of yore or to portray Wal-Mart as the root of all evil," says Paul Krugman -- friend of the working man, in the mode of the Michael Moore of "Roger and Me" -- as he sings the praises of General Motors and vilifies Wal-Mart in today's New York Times column. But it was not ever thus (things are always different for Krugman when a Republican is in the White House).

In 1998 he mocked General Motors as the very model of businesses run as "command-and-control systems, and people did what they were told." That was in the same Fortune article in which he praised Enron as the model of the ideal new-era business (while on Enron's payroll, by the way). And in 1993, he praised Wal-Mart as "the most significant American business success story of the late 20th century," and "an example of how "technology is beginning to help improve productivity in the service sector. If they are right, middle-class living standards, which have stagnated for the past 20 years, could start to improve."

Posted by Donald L. Luskin at 8:57 AM | link  


Thursday, May 12, 2005

DO THEY KISS HIS RING?   I can't top reader Jill Olson's comment on this one: "This will make you sick." From the New York Sun, lobbyists begin to swarm around New York governor-to-be Eliot Spitzer, and he's only too happy to be swarmed:
ALBANY - Attorney General Spitzer hasn't even been nominated yet for governor, let alone elected, but he is already starting to meet with people as if the job was his, sources say...

Sources said he has been meeting with lobbyists at his offices at New York City and Albany in recent weeks to discuss issues that would come before him as governor. They said the meetings would not be taking place if Mr. Spitzer were not expected to win next year's election.

"Everybody's going down to meet with him," a lobbyist who recently spoke with Mr. Spitzer said on condition of anonymity. "I've heard everybody is going in to meet with him about things that have nothing to do with the AG's office, because it's pretty clear he's the guy."


Posted by Donald L. Luskin at 9:54 PM | link  

Get new major postings to this weblog via email -- free.
Click here to sign up!
TRADESPORTS LISTS SOCIAL SECURITY FUTURES CONTRACTS  
Tradesports, the Dublin-based electronic exchange that trades futures contracts on sporting events and political elections -- and whose markets had uncanny predictive ability in last years presidential and congressional elections -- has now listed contracts on Social Security reform. Below is a live updating quote feed for their three Social Security contracts. Click on the Tradesports logo to learn more -- but here's the skinny.

Each contract pays off either 100 or zero on expiration day, depending on whether a law providing for Social Security personal accounts has been enacted by then -- 100 if personal accounts have been enacted, and zero if not. There's one contract for year-end 2005, and others of mid-year 2006 and year-end 2006. Let's say you bought a 12/05 contract today at 17. At year-end, if a law providing for personal accounts has been enacted, your contract is worth 100 and you profit by 83 (100 minus your initial investment of 17). If there is no law, then you lose the 17. For each contract, 100 points equals $10 -- so a price of 17 points means $1.70. So in the example, you would invest $1.70 to make $10.00, for a profit of $8.30, times however many contracts you wish to trade. You can sell the contracts at any time -- you don't have to wait until expiration. And you can short them, if you want to bet against private accounts. Don't you just love markets?

You can interpret the price of each contract today as the percentage probability that personal accounts will be enacted. So as of this writing, this market gives it only a 17% chance of happening by year-end. Sounds like a good betting opportunity to me!

Posted by Donald L. Luskin at 2:18 PM | link  

OKRENT'S SWAN SONG   New York Times public fig-leaf Dan Okrent is telling Salon that his final column, to run on May 22, will take another look at the Times' columnist corrections policy. I can hardly wait. Just as he has via email with me for the last year, here he continues to find moral equivalency between William Safire's assertion of factual knowledge about the connection between Iraq and al Qaida, on the one hand, and Paul Krugman's outright lies and factual errors on the other:

William Safire continued to refer to an al-Qaida's leader's connection to Saddam Hussein. The various government reports said there was no connection. Safire kept writing that there was a connection. Many people challenged him on it. I went to him on it. He said, "I know there's a connection."

Well, who is to say? Just because this report said so doesn't mean that there isn't a connection. He was relying on his sources. Many people thought I was a total wimp for not challenging him and insisting that there be a correction. But if you turn it around, and put it in the context of a Paul Krugman column, when Krugman makes an assertion that he knows to be the case, then in that case the Safire critic would probably defend Krugman.

We can be sure his farewell column will end Okrent's tenure just as it began -- with a whimper, not a bang.

Posted by Donald L. Luskin at 8:27 AM | link  


Wednesday, May 11, 2005

JOKE OF THE DAY  

Posted by Donald L. Luskin at 3:53 PM | link  


Tuesday, May 10, 2005

PROGRESSIVE PREVARICATING   My column for National Review Online, posted this morning...
Two weeks ago President Bush threw Democratic opponents of Social Security reform for a loop by adopting one of their own reform ideas: “progressive price indexing.” It’s a political masterstroke, one that has breathed new life into an initiative that many had given up for dead. It cures most of the program’s solvency problems, guarantees higher benefits than today’s for all retirees, and promises the fastest benefit growth to America’s neediest.

Sounds pretty good, doesn’t it? So how are die-hard Democratic opponents of reform responding? The usual way, of course: they are lying.

Consider, for example, how Paul Krugman — America’s most dangerous liberal pundit — twisted the truth in his New York Times column last week. Krugman flat-out lied when he wrote that “benefits for the poor would be maintained, not increased” in the president’s proposal.

It’s true that under progressive indexing benefits for the lowest-wage earners would stay the same as under current law. But progressive indexing isn’t all the president has proposed. In his prime-time press conference two weeks ago he also proposed that the minimum Social Security benefit never fall below the poverty line. President Bush said,

By providing more generous benefits for low-income retirees, we’ll make this commitment: If you work hard and pay into Social Security your entire life, you will not retire into poverty.

Krugman is lying when he fails to recognize this as a major improvement over current law. As a White House fact sheet explains,

Today, roughly two million retirees who paid into Social Security their whole lives are collecting benefits that leave them below the poverty line.

Krugman also lied when he portrayed progressive indexing as “a plan to slash middle-class benefits.” It’s not a plan to “slash” benefits at all, or even reduce them. Under progressive indexing, everyone’s Social Security benefits will be greater than they are today, by the rate of inflation or more. What progressive indexing does is slow the runaway growth in benefits that is profligately promised under current law, growth that virtually dooms the program to insolvency and renders those very benefits unpayable.

Whatever it is — a “slash” or a “growth slowdown” — Krugman is lying when he says that progressive indexing will hit the middle class the hardest. In his Times column Monday, Krugman wrote that “cuts” under progressive indexing

will have their biggest percentage impact on the retirement income of people making about $60,000 a year.

We could disprove this lie by citing data from the Social Security Administration’s actuaries. Or we could cite data from the Center on Budget Policies and Priorities, the leftist think-tank whose work Krugman once called “absolutely impeccable.” But instead, let’s just look at a table published in Krugman’s own newspaper, the New York Times, which accompanied a May 1 story on progressive indexing. There you will see in America’s “paper of record” that, in fact, the impact of progressive indexing falls heaviest on the highest-earning retirees — those making $90,000 a year or more, and not those earning $60,000. Sounds like it’s time for Krugman to make what he would call a “humiliating correction.” Either that or the Times itself should; one of the two is wrong.

Here’s another lie. Krugman wrote in Tuesday’s column,

Suppose you’re earning $60,000 a year. On average, Mr. Bush cut taxes for workers like you by about $1,000 per year. But by 2045 the Bush Social Security plan would cut benefits for workers like you by about $6,500 per year. Not a very good deal.

This is a lie because progressive indexing isn’t all there is to what Krugman falsely labels “the Bush Social Security plan.” Bush’s plan, in fact, includes personal accounts that could be invested in securities markets, and would effectively replace the majority of the benefit-growth deceleration coming from progressive indexing. According to the Social Security Administration actuaries, returns from a conservative mix of stocks and bonds trim that $6,500 a year benefit-slowdown to about $2,600.

Now, suddenly, that $1,000 a year tax cut doesn’t look like such a bad deal. Just think what would happen if you invested that $1,000 a year tax cut every year from now till 2045 in an IRA? If it earned 4.9 percent after inflation and costs — the conservative return suggested by the actuaries — then by 2045 you’d have a nest egg worth more than $131,000 (in 2005 dollars). That’s a large enough endowment to generate tax-free income of $2,600 a year, forever. That would replace the impact of progressive indexing without ever touching your initial investment, which would just keep on growing and which you could leave to your grandchildren.

The desperation that motivates all these lies is the Left’s nightmare vision that somehow President Bush will beat the odds and manage to leave his compassionate conservative mark on the signature social program of the New Deal. Krugman painted the nightmare for the Times’ liberal readers by quoting Jason Furman, the leftist economist at the Center on Budget Policies and Priorities:

“For millions of workers,” Mr. Furman writes, “the amount of the monthly Social Security check would be at or near zero.”

A theocon world without Social Security? Heaven (so to speak) forefend, because Krugman has even lied in the way he quoted his friend Furman. What Furman actually wrote was that earnings from personal accounts would supplant a portion of traditional benefits, and for some retirees much of the residual traditional benefit would be used for automatic payment of Medicare premiums. So it’s most emphatically not the case that anyone’s Social Security benefits will be anywhere near zero.

Wouldn’t it be simple for the Left if that’s all the vision of President Bush portended? But for the Left it’s way worse than that. By way of his tax cuts and personal accounts and all the other ingredients of the “ownership society,” Bush doesn’t seek a world without Social Security. He seeks a world where no one will need it anymore. And that’s also a world in which no one needs the Left.

Posted by Donald L. Luskin at 8:56 AM | link  


Monday, May 09, 2005

YOU GOT A PERMIT FOR THAT BUFFER?   Those whacky Free-Staters are making life hell in their adopted home of New Hampshire. Now one of them has gone and practiced manicuring without a license!
CONCORD, N.H. -- A self-proclaimed manicurist decided to open for business in Concord on Monday without the state's approval, attacking state licensing laws with a nail file.

Michael Fisher, 23, of Newmarket, N.H., was arrested and charged with violating the state's license law. He said he organized the protest to call attention to what he said are needless obstacles facing small businesses in the state.

His first and only customer was Kat Dillon, of Frost, Texas, who said it was her first manicure. It was also Fisher's first time giving one.

"I'm going to buff it and shine it with one of these, a buffer, basically," he said.

Thanks to reader David Loboy for the link.

Posted by Donald L. Luskin at 10:39 PM | link  

DEADLINE HOLLYWOOD, INDEED   The incomparable Nikki Finke on Arrianna Huffington's blog bomb:
What Arianna Huffington's bizarre guru-cult association, 180-degree conservative-to-liberal conversion, and failed run in the California gubernatorial-recall race couldn't accomplish, her blog has now done: She is finally played out publicly. This Web-site venture is the sort of failure that is simply unsurvivable, because of all the advance publicity touting its success as inevitable. Her blog is such a bomb that it's the box-office equivalent of Gigli, Ishtar and Heaven's Gate rolled into one. In magazine terms, it's the disastrous clone of Tina Brown's Talk, JFK Jr.'s George or Maer Roshan's Radar. No matter what happens to Huffington, it's clear Hollywood will suffer the consequences.

It almost seems like some sick hoax. Perhaps Huffington is no longer a card-carrying progressive but now a conservative mole. Because she served up liberal celebs like red meat on a silver platter for the salivating and Hollywood-hating right wing to chew up and spit out.

Thanks to Irwin Chusid for the link.

Posted by Donald L. Luskin at 10:35 PM | link  

KRUGMAN'S $60,000 QUESTION   A remarkable collection of lies in Paul Krugman's New York Times column today. Trying to assail President Bush's adoption of Democrat Robert Pozen's idea of "progressive price indexing" of Social Security benefits, Krugman writes that its so-called "benefit cuts" will "have their biggest percentage impact on the retirement income of people making about $60,000 a year." Of course the whole point of progressive indexing is to lodge the largest impact on those at the very top of the scale of earnings subject to Social Security benefits -- not those in the middle, earning $60,000. As the New York Times itself proved in a graphic accompanying a story on May 1 based on Social Security Administration actuarial estimates (see below), maximum earners at $90,000 do see a larger percentage impact.

Krugman then goes on to extend his lies about the impact of Bush's proposals on those who earn $60,000 per year, writing:

Suppose you're earning $60,000 a year. On average, Mr. Bush cut taxes for workers like you by about $1,000 per year. But by 2045 the Bush Social Security plan would cut benefits for workers like you by about $6,500 per year. Not a very good deal.

First, here Krugman is not talking about "the Bush Social Security plan" but rather the Democrats' Social Security Plan -- because the Bush plan includes personal accounts, which the Democrats have sworn to oppose at all costs. According the Social Security Administration actuaries, earnings from personal accounts of the type Bush has proposed would replace about $3,900 of the $6,500 lost to progressive indexing -- leaving only a $2,600 effective deceleration in benefits.

Second, consider what someone earning $60,000 a year can do with an extra $1,000 -- thanks to Bush's tax taxes. Let's say he invests that $1,000 in an IRA, in a conservative mix of stocks and bonds earning 4.9% per year after inflation and fees (the same return assumption used by the Social Security Administration actuaries). In 2045, that account would be worth more than $131,000. That would be more than enough of an endowment to generate tax-free income of $2,600 per year -- to make up for the residual deceleration in benefits -- forever.

Update... Tim Worstall has a version of the same observation.

Update 2... A reader adds:

Krugman and CBPP are citing this $60,000 figure as being "middle-class." That is completely incorrect. That figure refers to the average annual lifetime earnings figure that is used to calculate benefits (the Average Indexed Monthly Earnings, or AIME, would be $5,000). The deception lies in the fact that a worker with average annual lifetime earnings of $60,000 ends up being in the richest 15 percent of the income distribution. While "$60,000" sounds very middle class, it is most certainly not when it comes to one’s average annual lifetime earnings. Nancy Pelosi characterized $90,000 as "solidly middle class," but only 1 percent of the population has average annual lifetime earnings greater than $90,000.

Update 3... Jack Kemp piles on, faulting Krugman's statement that "Repealing Mr. Bush's tax cuts would yield enough revenue to call off his proposed (Social Security) benefit cuts, and still leave $8 trillion in change." Kemp uses a classic supply-side argument to suggest that repealing the tax cuts would have devestating consequences to growth. That's true, but Krugman's statement can be assailed without making recourse to that. Krugman's statement comes from bogus research by -- you guessed it -- the Center on Budget Policy and Priorities. The research compares the 75-year present value of fedeeral tax receipts with and without the 2003 tax cuts. Yes, the value is higher without the tax cuts (and yes, Kemp is right about why that isn't a fair analysis). But the real heart of the matter is this: over 75 years there is no much "real bracket creep" as wages grow, that revenues even after the tax cuts are more than enough to pay for Social Security and everything else. So repealing them doesn't make any difference to the analysis -- just let the economy grow (and don't cut taxes and further) and everything will be fine. Well, at least for 75 years. Thanks to reader Keir Ketel for the Kemp link.

Posted by Donald L. Luskin at 1:07 AM | link  


Sunday, May 08, 2005

DEMOCRATS TRIANGULATED UNTO DEATH   David Brooks in today's New York Times, on how George Bush has checkmated the Democrats by adopting their idea of "progressive indexing" into his Social Security reform agenda:

George Bush has been willing to address a long-term, politically thorny problem. He's pursued it doggedly while most members of his party wish he would just drop it. But his Democratic counterparts are behaving like alienated junior professors. No productive ideas. No sense of leadership. Just half-truths from the peanut gallery.

This is the difference between the party with a governing mentality and the party with the opposition mentality. The governing party leads. It takes the arrows. It casts about for productive ideas and slowly absorbs the other party's good ones. Bush has now absorbed progressive indexing of retirement benefits.

The opposition party opposes. It doesn't feel any responsibility to come up with positive alternatives. Its main psychological need is to be against its nemesis at all costs. If the governing party steals one of its ideas, it will oppose that idea.

In this way the opposition party is pushed further and further to the edge. It loses control of its identity - it's simply a negative reactive force to whatever the governing party happens to be doing at the moment. It finds itself in a cycle of opposition, negativity and irrelevance.


Posted by Donald L. Luskin at 10:38 AM | link