Brendan Nyhan

In a briefing on the President’s budget last week, OMB director Josh Bolten played yet more games with the phony deficit reduction plan. Here’s Reuters:

Joshua Bolten, the White House budget director, played down the impact of the private accounts on future budget deficits, saying it “is still consistent with the president’s goal to cut the deficit in half by 2009” and will not hurt the economy.

But when you read the fine print, you’ll discover that the private accounts only start in 2009 under Bush’s proposal and ramp up in cost dramatically after that. According to Reuters, “When these transition costs are factored into the administration’s budget forecasts, the deficit would grow by $23 billion in fiscal 2009 to $256 billion, and by $56.5 billion in fiscal 2010 to $263.5 billion, White House budget officials said.”

Bolten’s response?

Bolten said the impact on deficits would grow in the years that follow, but he offered no specifics.

“I expect it would ramp up. I don’t have numbers for that, but I expect it would become larger as a nominal figure beyond 2010,” he said.

Thanks Josh! Even though Dick Cheney has admitted that private accounts would cost trillions in later decades, all Bolten is willing to concede is that “it would become larger as a nominal figure beyond 2010” – phrasing that falsely suggests that the increased costs simply represent inflation.

Update 2/14: The Washington Post has more on how “Bush’s extensive tax cuts, the new Medicare prescription drug benefit and, if it passes, his plan to redesign Social Security all balloon in cost several years from now.” It’s what one analyst calls “a budgetary perfect storm.” And it’s been obscured by the sort of trickery used by Bolten above.

On Slate, Tim Noah claims that “buying commercial time on the Super Bowl is a waste of money!” His justification is that the cost per thousand viewers of the ads has tripled since 1970, a much greater increase than the price for ads on general network programming. As a result, it’s possible to reach up to 60% more adults 18-49 through a combination of ad buys than you can by paying for one Super Bowl ad.

But Noah misses the reason the Super Bowl is so important – tens of millions of people all watch the same show, including the ads. What that means is that you know other people watched the ads, and they know you know they watched it, and so forth. UCLA political scientist Michael Chwe has written an excellent paper (PDF) making this argument (which he extends in his book Rational Ritual). Chwe argues that ads on popular shows command a premium because they help solve a coordination game for advertisers of “social goods” – items like cars, sneakers and beer in which my preferences depend in part on what other people like. As a result, those companies pay extra for ads on popular shows.

This logic extends most strongly to the Super Bowl, which creates more common knowledge than any other TV event. As Chwe points out, it was completely logical that Apple debuted the Macintosh during the Super Bowl with its famous “1984” ad. You would only feel confident buying a Mac if you knew other people were going to do as well. And you can apply this same logic, for instance, to recent Monster.com Super Bowl ads; job seekers will only go to the firm’s website if firms are advertising on it, and vice versa. The ads help create the common knowledge necessary for the company to succeed.

Super Bowl advertising may be overpriced, but for producers of “social goods,” there’s just no substitute.

Unacceptable – Baltimore mayor Martin O’Malley compares Bush’s budget to the 9/11 attacks:

“Back on September 11, terrorists attacked our metropolitan cores, two of America’s great cities. They did that because they knew that was where they could do the most damage and weaken us the most,” O’Malley said. “Years later, we are given a budget proposal by our commander in chief, the president of the United States. And with a budget ax, he is attacking America’s cities. He is attacking our metropolitan core.”

But he didn’t mean what he obviously said!

In an interview, O’Malley said he “in no way intended to equate these budget cuts, however bad, to a terrorist attack.”

“The point I am trying to make is, for America to be strong, we have to strengthen our cities. Because we’re in the middle of a war, we need to be strengthening and protecting our cities, not weakening our cities. Two of our cities have already been attacked in this war.”

What a leader.

At Spinsanity, we showed how Slate’s “Bushisms” and “Kerryisms” columns twisted the two men’s words to reinforce pre-established storylines. Now Eugene Volokh, the UCLA law professor/blogger who is one of the chief critics of “Bushisms”, has nailed what might be the worst one yet:

Slate’s quote of Bush (subsequently deleted): “Listen, the other day I was asked about the National Intelligence Estimate, which is a National Intelligence Estimate.” — Washington, D.C., Sep. 23, 2004

Bush’s actual statement (Real Audio – go to 30:54): “Listen, the other day I was asked about the NIE, which is a National Intelligence Estimate.”

Now, Slate was fooled by an inaccurate White House transcript. But that’s no excuse — given that Bush’s statement as quoted is nonsensical, they have an obligation to check it carefully before calling him an idiot. Not exactly responsible journalism.

Washington Post economics columnist Robert Samuelson, fresh from forgetting the history of Bush’s budget plans, is back with another masterpiece:

The unspeakable truth — unspeakable because hardly anyone speaks it — is that benefit cuts are inevitable, because the baby boom’s retirement costs will force them. The combined spending of Social Security and Medicare, according to government projections, would require at least a 30 percent tax increase by 2030. “Personal accounts” don’t come close to closing the gap. Sooner or later, chances are there will be a political backlash or a budget crisis. The wiser policy is not to wait; it is to pare benefits now.

It’s true that some benefit cuts are inevitable. But this passage is a mess. First, Samuelson conflates Social Security and Medicare, but as this chart illustrates, Medicare is a vastly larger problem over time. Second, the tax increase figure from 2030 exaggerates the problem by assuming we do nothing for 25 years; the funding gap in Social Security can be closed with a more modest combination of revenue increases and benefit cuts if we act today. Medicare, on the other hand, is a much more serious problem. Third, it’s misleading to say that personal accounts “don’t come close to closing the gap”; they don’t do anything to close the gap, as even the administration admits. In fact, they make the Baby Boom funding crunch worse by requiring the government to take out trillions in new debt.

What’s especially annoying is that Samuelson acknowledged the first two points in a previous column. Unfortunately, the compressed version isn’t nearly so clear.

Very interesting – I just received a fundraising letter from the Cato Institute, and they use the term “Social Security privatization” right on page 1 even though conservatives are waging a campaign against use of the term. Cato did change the name of their Social Security project from “Project on Social Security Privatization” to “Project on Social Security Choice”, but apparently they haven’t completely given into the dictates of the pollsters.

And, contradicting those in his party who have disavowed the phrase “private accounts,” President Bush went off-message recently too, referring to a “private account” and “private retirement account” during a speech in Florida. When politicians can’t even keep their own spin straight, you know we’re in trouble…

The Republican machine that savaged Tom Daschle from 2001 until his defeat in November has turned its attention to Harry Reid, the new Democratic leader in the Senate. Here’s the story from Roll Call (via Tapped):

The Republican National Committee is set to begin a prolonged attack against newly installed Senate Minority Leader Harry Reid (D-Nev.) aimed at weakening his support in his home state as well as on the national level.

Drawing on a blueprint used successfully against former Senate Minority Leader Tom Daschle (D-S.D.), the RNC will send a 13-page research document today to roughly 1 million people — a group that includes journalists, donors and grass-roots activists — detailing Reid’s alleged obstructionism among other topics.

“This is the initial salvo in the upcoming discussion that we are going to be having with Sen. Reid,” said RNC Communications Director Brian Jones.

RNC Chairman Ken Mehlman has already done a series of radio interviews in Nevada criticizing Reid. Other events, like a gathering of medical professionals in the Silver State to protest Reid’s stance on medical malpractice reform, are in the works.

“This is a national and local communications strategy that will look to strip the bark off the Senate Minority Leader,” Jones added.

This RNC research document is the first prong of the assault, which Reid denounced yesterday.

For a primer on how these tactics work, see the Spinsanity archive of analysis of attacks on Daschle, as well as Chris Mooney’s American Prospect article on the offensive. Kevin Drum reminded me of the most disturbed attack, which was Rush Limbaugh’s description of Daschle as “El Diablo” (aka the devil). I happened to be listening to Limbaugh that day, so Spinsanity was the first to publicize the attack — see the full transcript of the rant or our original article on it.

In any case, I’m no fan of Harry Reid after working in politics in Nevada, but these sorts of demonization campaigns always turn nasty regardless of whether it’s a Republican (Newt Gingrich) or a Democrat (Daschle) in the crosshairs.

George W. Bush, 3/7/02: “America is ushering in a responsibility era; a culture regaining a sense of personal responsibility, where each of us understands we’re responsible for the decisions we make in life.”

The [President’s] budget is notable for including limits on spending that are unlikely to be enacted and for excluding expenses that are sure to be incurred. Here are the most important points:

The excuses:

The spending plan [White House budget director Joshua] Bolten outlined was a model of fiscal responsibility. But as he fielded questions for an hour, it became steadily clearer why the new budget seemed so restrained: The White House left out a lot of expenses the government is likely to have, while including savings the government is unlikely ever to see.

For example, Bolten granted that it is certain that more money will be needed for Iraq and Afghanistan in 2006 and beyond. “But,” he added, “it wouldn’t be responsible for us to take a guess at what those costs are.”

Yet, moments later, Bolten explained why it was perfectly responsible to guess about new revenue from drilling in the Arctic National Wildlife Refuge — even though such a program has not been approved by Congress. “Well,” he said, “the budget is the right place to present the entirety of the president’s policies, so all of his proposals are reflected in there.”

The theme repeated itself throughout Bolten’s briefing: Potential good news was embraced, and potential bad news was left out of the equation. How about the hundreds of billions of dollars the government would borrow to convert Social Security to personal accounts under Bush’s plan? Not included. “The budget went to bed . . . before the president’s proposals were announced,” Bolten explained.

Nor are the hundreds of billions of dollars that it would cost to change the alternative minimum tax, which Bush had vowed to do as it hits more middle-class taxpayers. “It does need to be reformed,” Bolten said, but it is not in the budget forecasts.

…Some of the questioners were clearly skeptical about the administration’s assumptions: its decision to focus on growth in “non-security discretionary spending” (which ignores 80 percent of the federal budget), its belief that such spending could be held steady for five years (it has never happened before), and its dropping of 10-year budget forecasts (they show exploding deficits).

No quantity of skepticism, though, would disturb the budget director from his Zen state. “None of this makes us feel uncomfortable,” he said.

E.J. Dionne notices the nasty new racial politics being practiced by conservatives:

[I]ncreasingly, it is conservatives who are using political correctness to sidestep hard issues. Consider the bait-and-switch in the Gonzales case: Democrats thought it appropriate to use Gonzales’s nomination to launch a debate about torture policy. Gonzales is Latino. Therefore, Republicans insisted, Democrats who wanted to debate torture policy were anti-Latino.

The New America Foundation’s Ray Boshara makes a strong case for promoting asset ownership through social policy in the Washington Post today, including establishing “a privately owned ‘KIDS Account’ at birth for each of the 4 million children born in this country every year and fund those accounts progressively — thus creating a lifetime platform for saving, asset accumulation, retirement security and wealth that can be bequeathed.” This is a cause I’ve believed in for a long time, and one with increasing bipartisan support.

In the New York Times, meanwhile, David Brooks offers a paint-by-numbers version of the same argument. He says Bush might want to shift from his push for private accounts in Social Security to an asset promotion plan (yes!), but then things go off the tracks:

The Social Security problem is a chance to enact this kind of thing on a decisive scale, with the KidSave proposal serving as a framework for a new vision of personal accounts.

We could start by indexing Social Security benefits to prices, not wages, so the system wouldn’t go broke. Then we could give everybody under a certain age KidSave accounts. This money could either supplement the reduced Social Security benefits, or individuals could divert some of their payroll taxes into their KidSave accounts, trading guaranteed benefits for more ownership.

We’d have to take care of today’s 20-somethings, who are already too old to benefit from the new accounts, but this proposal would lead to less red ink than the president’s current plan. And let me commit an act of heresy: it would be smart for Republicans to forgo making the Bush tax cuts permanent in exchange for these kinds of accounts. The Bush cuts are going to be repealed by the next Democratic president anyway, but these accounts, once created, would be forever.

If people can divert their payroll taxes into the KidSave accounts, it creates most of the same problems as Bush’s current proposal, and is likely to face most of the same opposition. Price indexing will also be fiercely opposed by Democrats. This ends up sounding like a repackaged version of Bush’s current proposal. Despite Brooks’ preening, it is not going to break the logjam on Capitol Hill. He’s right to call for rolling back some of Bush’s tax cuts, though; if we could use some of that money to pay for the asset-building accounts and figure out a separate, bipartisan package of fixes for Social Security, then we’d really be making progress. That’s utterly unrealistic, of course, but it highlights the problem – there’s no money for these accounts in the general budget without tax cut rollbacks. Bush can only fund personal accounts by siphoning payroll taxes. So there are very few alternative options as long as the President holds the line on his signature policy initiative.