The Adults are Back In Charge

Putting the Bush Administration’s Plans into Plain English

Fortunately for the Bush Administration, most Americans, including his opponents, have the attention spans of gnats. If this wasn’t the case, a little bit of work and there’d be a lot of screaming about social security privatization.

For those wanting to catch up, read Yglesias on the three distinct phases

Yglesias then takes a crack at the notion of default and some of the think tanking on the issue that seems to think it isn’t such a bad idea (incredible).

The Clawback issue is dealt with by Krugman. Twice

Atrios continues to cover this issue from a technical perspective well, and links to DeLong who suggests the economists at the Council of Economic Advisors are
hacks and that if they were right, it’d be a good time to move out of stocks.

I was going to copy some of my lecture notes from a class I’ve taught in the past on the American Welfare State (such that it is) to explain the basics of social security, but Atrios does it fine here. It’s clear and I can’t improve upon it–especially since my notes are just that.

There is a problem with the Social Security system, but there is no crisis. The problem can be fixed in two ways. One is to reduce benefits and the other is to increase taxes. Trying to sell half ass non-plan as a free lunch is silly. It is in fact a lowering of benefits. Bush tries to sell it as an increase in the chance you’ll do better and strictly speaking that is true, but when one gets a higher chance at risk with the same cost, that’s a loss of value and effectively that is what this plan delivers by forcing you to utilize the same percentage of your income while increasing the risk. Make no mistake about this, on the face of this, this is a cut in benefits.

A Couple Things About Social Security

The most disturbing argument to date I heard on Diane Rehm the other day from David Keene of the American Conservative Union. Keene tried to argue that the money in the trust fund was a problem in paying back itself.

Now, this is a significant issue of confusion for most people. The money in the trust fund simply holds the money that is over and above what is being paid out now, but is the safest investment you can make. Make no mistake about it, most of the current expenditures in SS come from current payees into the system. The extra is then invested in government bonds.

Keene suggested that money couldn’t be paid back without deep affect on the federal budget–but that is grossly stupid to say unless one expects the federal government to default on its debt.

Federal bonds are sold to finance federal debt. Bond holders can be the guy down the street or foreign investors who take the bond as a safe investment because no one expects the US Government to default on its debt or devalue its currency so greatly that dollars become worthless. The dollar is now like gold was in years past.

So the extra money in the system is invested in bonds. To recover that money the federal government has to either pay back bonds without reissuing new ones or just issue new ones.

If they federal government cannot pay back bonds or issue new ones for social security, the country would be defaulting on its public debt which would have catastrophic implications for the global economy.

It does mean that when those bonds begin to be used for social security that if they can’t be retired–as a huge deficit has ensured is likely to be the case, then other borrowers must be found. Right now that isn’t a problem and other than having to adjust the rate paid to bondholders to loan the US money, it shouldn’t be a problem in the future.

Keene completely misunderstands or misrepresented this basic idea of how the government pays its debt. If the President is indeed suggesting that debt is not good as Keene did, that would be impeachable. Those who suggest the Trust Fund is illusory are proposing something that is unimaginable to the US economy.

Keene is economically incompetent or purposefully misleading people. Dionne let’s him off the hook too easily in the bit.

Many Reasons to Oppose Social Security Privatization

Atrios has a couple good posts for those who gloss over at the discussion of actuarial predictions, but I’ll introduce a different reason.

The many economic problems created by social security privatization aren’t nearly as bad as the likely political problem created by social security privatization. No system of private accounts can guarantee the same level of support for beneficiaries as the current system can. At best, such a system will be uneven, as is the basis of any system with increased risk. But what happens when retirees find that they don’t have enough to pay bills?

Two things to think about here.

1) Who votes?

Answer: Old people

2) Who else votes?

Answer: Middle aged people who really don’t want their elderly parents moving in.

So what does any government elected from the two groups above do?

Answer: Make them happy.

So when a bunch of bad decisions are made by private account holders or the government depending on the mechanism and there isn’t enough to support seniors how seniors were supported previously, the logic of political action is that the government will move to make benefits similar to those before and hence, blow a hole in the budget again and regulate the investment mechanisms being used then more.

So if you want the government more involved in the stock markets and how they operate beyond fixing information assymetries, push a privatization plan and wait to become more like France.

I Love It When a Plan Comes Together

I mean, who could have thought we could create a giant block of Shiite authority right in the middle of the oil producing Middle East?

For those who think it’s pretty cool to show off their purple thumbs, the foreign policy problems created by having a friendly government to Tehran in Baghdad should give you pause.

Even more troubling is that the non-Kurdish Sunnis are certain to be underrepresented. While the grand talk of democracy is great, it might have been a good idea to try and put in a circuit breaker in the institutional design that guaranteed a proportion of seats based on the block of voters in the general population.

You know, like a Electoral College or something.

No one knows where this is heading, but I’m not terribly comforted by the thought of Iran gaining a huge ally in the region at the same time some countries are trying to force its hand on nuclear weapons.

Reminding of Central America Again

See, Barry heard of me through a friend of mine from college. Brad teaches with Barry and Brad and I both went to Nicaragua in 1991 for a short, but incredibly packed trip meeting with the coalition government at the time and the opposition Sandinistas. Brad then went on to teach high school in Latin America and Spain and is now back in the states teaching.

I bring this up as Atrios links to the Alicublog who takes on the most recent bit on the subject by Jonah Goldberg and Glenn Reynolds (whens the last time I even mentioned these two?)

Reynolds and Goldberg take to task this point in the Newsweek article:

Now, NEWSWEEK has learned, the Pentagon is intensively debating an option that dates back to a still-secret strategy in the Reagan administration?s battle against the leftist guerrilla insurgency in El Salvador in the early 1980s. Then, faced with a losing war against Salvadoran rebels, the U.S. government funded or supported “nationalist” forces that allegedly included so-called death squads directed to hunt down and kill rebel leaders and sympathizers. Eventually the insurgency was quelled, and many U.S. conservatives consider the policy to have been a success?despite the deaths of innocent civilians and the subsequent Iran-Contra arms-for-hostages scandal.

Both complain that Nicaragua and El Salvador are different countries so Iran-Contra has nothing to do with El Salvador. The problem with this logic is that it avoids the factual evidence that not only were both efforts a part of a larger strategy, but the operations overlapped quite frequently. From the Walsh investigation into Iran-Contra:

Donald P. Gregg in 1951 began a career of more than 30 years with the Central Intelligence Agency. That service included several overseas postings, including a tour in South Vietnam during the war. In 1979 Gregg was detailed by the CIA to the National Security Council staff, where his responsibilities included Asian affairs and intelligence matters. Following the election of Ronald Reagan in 1980, the new Administration requested that Gregg remain at the NSC. Until 1982, Gregg headed the NSC’s Intelligence Directorate. In August 1982, he resigned from the CIA and accepted the position of national security adviser to Vice President George Bush, holding that position until the end of the Reagan Administration. In early 1989, President Bush nominated Gregg to be U.S. ambassador to the Republic of South Korea. Gregg was confirmed by the Senate for this position on September 12, 1989, and served as ambassador until 1993.

During the Vietnam War, Gregg supervised CIA officer Felix Rodriguez and they kept in contact following the war. Gregg introduced Rodriguez to Vice President Bush in January 1985, and Rodriguez met with the Vice President again in Washington, D.C., in May 1986. He also met Vice President Bush briefly in Miami on May 20, 1986. As a teenager, Rodriguez had participated in the ill-fated Bay of Pigs invasion of Cuba and remained, following that debacle, an ardent anti-communist.

In 1985 and 1986, Rodriguez worked out of the Ilopango air base in El Salvador, where he assisted the Salvadoran Air Force in anti-guerrilla counterinsurgency tactics. In late 1985 and during 1986, Rodriguez — whose alias was “Max Gomez” — became increasingly involved in the contra-resupply effort that was based at Ilopango at that time. Because of Rodriguez’s close association with General Juan Bustillo, who headed the Salvadoran Air Force, Rodriguez was vital to Lt. Col. Oliver L. North’s contra-resupply operation by coordinating flights based at Ilopango.

Following the shootdown of the contra-resupply aircraft carrying American Eugene Hasenfus on October 5, 1986, Rodriguez became a center of public and congressional attention. Because of Rodriguez’s close friendship with Gregg and his three personal meetings with Vice President Bush, questions arose whether the contra-resupply operation was being directed by Gregg through Rodriguez. Questions also arose about when the Vice President’s office became aware of Rodriguez’s and North’s active participation in the contra-resupply operation at Ilopango.

Both Gregg and his deputy, Col. Samuel J. Watson III, were investigated for possible false testimony regarding their denial of knowledge of Rodriguez’s involvement in North’s contra-resupply operation. OIC obtained Watson’s immunized testimony in an effort to further its investigation. Despite unresolved conflicts between documentary evidence and the testimony of the principal witnesses, OIC determined that it could not prove beyond a reasonable doubt a criminal case against Gregg.

Gregg, Rodriguez and North

When Gregg assumed his position as assistant to the Vice President for national security affairs in August 1982, he consciously disassociated himself from former colleagues with whom he had worked during his CIA career. The exception to that rule was Felix Rodriguez. Gregg testified: “. . . I have made it a conscious decision really not to reach back into that part of my life to bring other people forward. Felix is the only exception I have made to that.” 1 Gregg lost track of Rodriguez for a period of time after Vietnam and did not see him until the early 1980s, when Rodriguez came to Washington sporadically and talked with Gregg about old times. Gregg was not certain what Rodriguez was doing at that time, and he did not inquire; however, they remained friends.2

And, of course, the Boland Amendments that prohibited aid were circumvented by funnelling arms through El Salvador arms shipments as part of North’s efforts to circumvent the Boland restrictions. El Salvador and its civil war was very much a part of Iran Contra.

The larger problem is that both Goldberg and Reynolds seem to lose their moral clarity pretty quickly in regard to these events. It’s hard for Brad and I to do after meeting several people who worked as literacy workers or other civilian position tell you of their story of being raped by Contras as a part of the efforts to bring down the Sandinistas. Targeting civilian populations with such torture tactics has a name: Terrorism.

For those who need reminding, the US is supposed to be against terrorism. Death squads or whatever you want to call them, don’t just target insurgents. Their primary aim is to target civilians and scare people into submission.

Hey, I Got An Idea, Let’s Train Assassins….

You know, it’ll work, kind of like everyone in Iraq just laying down and following an Iranian Spy on the American payroll did.

Who wants to bet if these idiots try this, we’ll end up fighting them later? The Middle East is far from Central America and there are resources beyond belief that simply didn’t exist for the Salvadoran rebels. While the idea of Soviet help (and there was some marginal help) played big in the American mind, the leftists in El Salvador had few resources compared to what the insurgents in Iraq have in an oil rich area.

More than that, the notion that the Salvador option is acceptable in any way is only possible because of the broad ignorance over what happened in El Salvador in the 1970s and 1980s. It wasn’t just Communists and FMLN activists who were killed, it was Christian Democratic Party members who were centrists and anti-communist. They just thought they should beat the leftists and communists at the ballot box and not kill them all.

From the Truth Commission findings

The United States Embassy reported a total of 5,639 people killed, of whom 2,330 were civilians, 762 were members of the armed forces and 2,547 were members of the guerrilla forces. Christian Legal Aid reported that during the first eight months of 1982, there were a total of 3,059 political murders, “nearly all of them the result of action by Government agents against civilians not involved in military combat”. 49 The same source reported that the total number of civilian deaths in 1982 was 5,962. 50

The death squads >51 continued to operate with impunity in 1982. On 10 March, the Alianza Anticomunista de El Salvador published a list of 34 people who had been condemned to death for “discrediting the armed forces”. Most of them were journalists. The Inter-American Commission on Human Rights, referring to the discovery of clandestine graves of death squad victims, reported that on 24 May the bodies of more than 150 people had been dumped at Puerta del Diablo, Panchimalco. 52 On 27 May, the bodies of six members of the Christian Democratic Party were found at El Play?n, another clandestine mass grave used by the death squads. 53 President Duarte publicly denounced the extreme right wing, holding it responsible for the murder of hundreds of PDC members and mayors. Four Dutch journalists were killed on 17 March 1982 (see the case in chap. IV

Nearly 6000 civilian deaths in a country that had less than 6 million people. Think about the impact of 9-11 in this country of over 250 million with a loss of half of that. In one year.

I don’t think anyone expects a situation like this to be an easy problem to solve or that there won’t be someone who crosses the line from time to time and that may benefit the larger cause, but you can’t create a stable democracy while destroying the rule of law. For all those screaming about moral clarity, it’s about time to stand up and point out this administration is careening out of control on the moral highway.

Worse, Christopher Dickey points out the administration is learning the wrong lessons from El Salvador.

I’ll go one step farther and point out that Jose Duarte’s Presidency provided a wedge between the FMLN and the citizenry by offering peace talks on reasonable terms, thus isolating the FMLN in public opinion. It’s hard to see how the death squads worked as much as a political alternative that reduced potential support for the FMLN.

Who Will Be the New EPA Chief

Since the current one is moving over to be health secretary? (like that isn’t ironic for a guy who has tried to gut the regs on the oldest most polluting power plants).

As Wolcott said last month–does it really matter?

I have no interest in listening to a Chris Matthews panel speculate on who might replace this or that person in the cabinet, as if they were engaging in Rotisserie League baseball. I assume whomever Bush picks will have horns, cloven feet, and a connection to an oil company, so who cares what name the minion goes by?