Soc Sec XXI: When personal isn’t private

Just a brief shot before going out the door.

In both the Obama and McCain camps there are separate but related discussion of ‘privatization’ and charges that in particular McCain is lying, or that the people who claim that Bush never supported ‘privatization’ are lunatics. But I fear that a rhetorical trap is being laid that we need to watch out for. Because it all goes to the precise definition of ‘privatization’.

You can argue that even a system of personal accounts whose investment choices are totally controlled by the end beneficiary is not ‘privatization’ as long as those accounts remain under governmental custodial control, and particularly if the government also limits your ability to withdraw your funds at will. That is you can design a plan that guts Social Security’s current intra-generational insurance model as well as eliminating all progressivity in the benefits schedule and with a straight face claim you have not ‘privatized’ it, even though the net result is equivalent to simply abolishing the program outright.

I issue this warning because I see signs in both the MSM and the comment threads that this is the impending talking point and we don’t want another ‘withering on the vine’ moment.

For those who don’t remember Gingrich proposed some Medicare changes that ultimately would have gutted it. He unwittingly revealed as much by using the phrase ‘withering on the vine’ to describe the process. When called on this he made the ridiculous claim that he wasn’t talking about Medicare but just about HCFA, the agency that administers it. This doesn’t make sense, as long as you have Medicare, somebody will be having to pay the bills, if not HCFA who? But not only did he get away with it, he turned around and claimed that Democrats were deliberately distorting his position. And the MSM lapped it up.

The way the gutting worked was that Gingrich deliberately confused ‘nominal’ and ‘real’ and blurred the difference between ‘dollars’ and ‘cost’. He claimed that because under his proposal nominal dollars going to Medicare would still be increasing, it was a deliberate lie to suggest that he was ‘cutting Medicare’. Now anyone who stopped to think about what this means in a context of an increased pool of eligible beneficiaries and a pace of medical inflation well in advance of core inflation would realize that nominal dollar increases could still result in service cuts per beneficiary and so a degraded system (which could then be depicted as proof of Big Government is the problem). Describing this plan as ‘cuts’ was perfectly fair. But apparently nobody stopped to think and ultimately Newt was able to transform the whole thing into a campaign talking point on the lines of ‘Democrats are lying about my Medicare proposal’.

Well that is what happens when you allow the opposition to define what ‘privatization’ means or what ‘cuts’ mean. Don’t let them sell the message that in this context there is no overlap between ‘private’ and ‘personal’. Because while the concepts are not in fact identical, in the context of Social Security it is a distinction without a difference.