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Daily Howler: Sununu's plan doesn't seem to make sense. At the Times, an ace scribe fails to notice
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A VERY LONG DISENGAGEMENT! Sununu’s plan doesn’t seem to make sense. At the Times, an ace scribe fails to notice: // link // print // previous // next //

A PUZZLING PROPOSAL: In this morning’s New York Times, letters appear beneath the following headline:
The Great Debate: The Future of Social Security
But does your press corps have the technical skill to conduct and steward this “great debate?” They have bungled this topic for year after year—and they show few signs of improving. Indeed, Richard Stevenson’s front-page piece in this morning’s Times makes us raise this crucial question once again.

First, a word of praise for the Times reporter. Repeatedly, Stevenson manages to report the fact that privatization plans would allow workers to invest two to four percent of their wages in private retirement accounts (not two to four percent of their payroll taxes). This may seem like a minor achievement, but major reporters have bungled this fact in recent weeks in both the Times and the Washington Post (links below)—and yes, as we’ve noted, this bone-simple blunder helps fuel a pro-privatization disinformation campaign. Indeed, Stevenson’s article helps readers see that emerging proposals would let workers invest a large portion of their payroll taxes. We present his full text on this subject below. On this topic, he gives useful information.

But is Stevenson up to the task of stewarding America’s “great debate?” Another, larger part of today’s piece is almost completely incomprehensible. Will major reporters be able to deal with the basic issues in this discussion? Based on what Stevenson writes today, we must again voice our doubts.

The problem comes when Stevenson describes a novel approach to private accounts—an approach which he says is favored by many important Republicans. According to Stevenson, this group “is pressing the administration to make the [size of future private] accounts as big as possible, preferably permitting the investment of all or nearly all of the 6.2 percent levy on wages that individuals contribute to Social Security.” In other words, this group would let workers invest all their payroll taxes into private accounts. But Stevenson’s prose is hard to parse when he explains another part of this plan:

STEVENSON (1/6/05): Many of the same Republicans have also come out forcefully against a proposal to deal with Social Security's long-term financial problems by reducing the part of future retirement benefits that would come from the government.

Their approach is embodied in legislation introduced in Congress by Senator John E. Sununu, Republican of New Hampshire, and Representative Paul D. Ryan, Republican of Wisconsin. Their plan would allow investment of 6 percent of the wages subject to the payroll tax and would not mandate across-the-board reductions in scheduled benefits.

Say what? Does that passage say what it seems to say? Stevenson seems to say that Sununu proposes making no reductions in scheduled Social Security benefits. But if future benefits aren’t reduced, how would Sununu’s plan address the central problem which has allegedly triggered this whole debate? How would Sununu’s plan address the much-hyped “unfunded liability” which faces SS in future years? According to the CBO, payroll taxes won’t produce enough revenue after the year 2052 to pay for the scheduled level of benefits. If Sununu fails to raise payroll taxes—indeed, if he removes tons of money from payroll tax coffers—and if he keeps paying the same level of benefits, how would his plan address the problem around which this debate has been centered?

This question would occur to almost anyone, but it isn’t clear that it ever occurred to Stevenson. Later in his report, he does make it clear that some Republicans want to establish private accounts while “mak[ing] no effort to adjust benefits.” But the obvious oddness of this proposal is barely addressed in his piece. Here is the closest Stevenson comes to addressing this obvious problem:

STEVENSON: [Sununu’s] approach is viewed warily by many other Republicans. Those Republicans say that diverting money that would otherwise go to pay benefits into the private accounts would lead to a sharp spike in the budget deficit in the short run. They say the approach would also raise what they say is a false expectation that Social Security's problems can be addressed without any painful steps.

But the approach has been embraced by some other high-profile Republicans, who say it would be a bold move to harness the power of markets to address social and economic issues and would in the long run leave the nation in much stronger financial condition.

To us, this makes no apparent sense. Why would Sununu’s approach only lead to a spike in the budget deficit “in the short run?” If Sununu takes large sums away from payroll taxes, but keeps on paying the scheduled level of benefits, this would presumably lead to gigantic deficits as far as the eye can see. But go ahead! Read all the way through Stevenson’s piece and try to find this conundrum resolved. See if you see a single sign that Stevenson sees the oddness involved here. See if he makes the slightest attempt to explain this to “non-expert” readers.

Does our press corps have the skill (and the courage) to steward this ongoing “great debate?” According to Stevenson, “high-profile Republicans” want to keep paying full scheduled benefits while diverting huge chunks of payroll taxes into private accounts. This proposal seems to make no sense—but Stevenson barely seems to notice. What would happen to future revenue shortfalls under the plan of these high-profile fellows? Stevenson doesn’t seem to wonder, and once again we see an odd fact: Even at the highest levels, our “press corps” seems to be over its head as it stewards this “great debate.”

A VERY LONG DISENGAGEMENT: As noted, Stevenson does avoid screaming misstatements about how much money workers could put into their private accounts. Indeed, he makes it clear that, under Sununu’s plan, workers could invest all their payroll taxes:

STEVENSON: One group of Republicans is pressing the administration to make the accounts as big as possible, preferably permitting the investment of all or nearly all of the 6.2 percent levy on wages that individuals contribute to Social Security. (Under all proposals, employers would continue to pay an additional 6.2 percent tax on each employee's wages up to a wage cap that this year is $90,000.)
In simple language, workers could invest all their payroll taxes under this plan, while employers would continue to pay their matching contribution into the traditional SS fund. Later on, Stevenson notes that Bush won’t likely go quite that far when he finally presents a real plan:
STEVENSON: White House officials have made no secret that they are most comfortable with proposals that hold the size of the accounts to well below the 6 percent proposal in the Ryan-Sununu bill. They often point to plans like one developed in 2001 by Mr. Bush's Social Security commission that would allow lower-income workers to place up to 4 percent of their wages into their accounts, up to a cap of $1,000.
Readers have to engage in a bit of inference, but the facts start coming clear in this passage. Sununu would let workers invest all their payroll taxes; Bush would let them invest about two-thirds. Of course, this flies in the face of decades of spin in which “non-experts” have been told, again and again, that workers would only invest “a small portion” of their payroll taxes, a reassuring claim which makes it seem that minor adjustments are being proposed. Just yesterday, hapless Jeff Birnbaum told Post readers that workers would only be allowed to invest four percent of their payroll taxes. Edmund Andrews made the same scripted blunder in the great Times just last month.

Are these habitually hapless harriers up to the challenges of this debate? Routinely, their work suggests they are not. It’s easy to slam big reporters for bias, but harder to notice a larger problem—their disengagement and technical blundering, which seem to know few limits. Four years into this great debate, it takes a special kind of incompetent to make the mistake Birnbaum made in the Post. Do you really think that such a bungler will be able to steward this tricky debate? But then, we’re forced to ask the same question today after reading Stevenson’s piece: What do you think when he fails to flag the puzzling problem with Sununu’s proposal?

VISIT OUR INCOMPARABLE ARCHIVES: Jeff Birnbaum bungled the “small portion” spin (see THE DAILY HOWLER, 1/5/05). But then, so did Edmund Andrews before him (see THE DAILY HOWLER, 12/16/04).