Third Way Misleads Hard in a Weak Effort to Discredit Social Security Expansion

Third Way, the self-appointed sentries holding back the barbarians of progressivism from the gates of the Democratic Party, issued a new paper three days before the Iowa caucus, with the novel suggestion that Bernie Sanders’ proposal to expand Social Security – the consensus position among the party rank-and-file and a strong majority of the Congressional Democratic caucus – is “not progressive,” because more of its expanded benefits pass on to the rich.

This new tactic among Rubinite Democrats (Third Way’s funders include hedge fund managers Dan Loeb and Derek Kaufman, and their board features dozens of investment bankers and CEOs) seeks to capitalize on the Democratic base’s passions about the flow of economic growth upward to the 1%. And it will probably fool a few folks in the interim. But nobody is a more dishonest broker for that message than Third Way. Plus, the claim isn’t only ham-handed and ahistorical, it’s factually inaccurate.

Nancy Altman of Social Security Works took a hatchet to this over the weekend. First, she points out that Third Way has had it in for Social Security for years:

In a 2011 Politico column, “Progressives: Wise Up,” Third Way’s president and vice president for policy lectured advocates for Social Security to stop fighting a Grand Bargain that would have cut Social Security’s modest benefits – cuts that are opposed by 93.8 percent of Americans.

In 2013, the duo took to the Wall Street Journal where they attacked Senator Elizabeth Warren for proposing to expand Social Security as a solution to the nation’s looming retirement income crisis. This time, they lectured not just progressives; they warned the entire Democratic Party not to “follow Sen. Warren…over the populist cliff.” Since Senator Warren was standing with the 90 percent of Democrats (and 73 percent of Republicans) who want to increase Social Security benefits, it was no surprise that Third Way admitted that they represented, “no people,” beholden only to their wealthy paymasters.

It’s hard to accept that the same group who tried to browbeat liberals into cutting Social Security benefits, particularly for poor women – who would have borne the brunt of the changes to the Consumer Price Index calculation – have a genuine interest in the relative fairness of any expansion. But having lost a frontal assault on the program, Third Way is now retreating to a bank-shot – raise doubts about the progressivity of new benefits to taint the entire concept.

Altman goes on:

Sanders, who daily attacks the “billionaire class,” is proposing to benefit the rich at the expense of the rest of us? Sound preposterous? That is because it is […]

Here is what Sanders’s plan would do. First, it would increase Social Security’s benefits across-the-board, but in a progressive manner. Those with the lowest earnings would receive the largest increases as a percentage of those earnings. Second, it would increase Social Security’s minimum benefit so that those who work a lifetime at low wages would not retire into poverty, as they do now. Third, it would adopt a more accurate cost of living increase, so that Social Security’s modest benefits don’t erode in value more and more with each passing year, as they do now. To restore Social Security to long range actuarial balance, including paying for these improvements, Sanders’ plan imposes new taxes on those with annual incomes in excess of $250,000.

Incredibly, Third Way’s entire issue brief never incorporates this lifting of the cap on the payroll tax above $250,000 into their analysis of the distributional impact. They only look at the benefits being paid out, not what gets paid in. Lifting the cap raises $11.9 trillion over 75 years, and only $3.4 trillion of that goes toward expanded benefits, with the rest putting the program closer to actuarial balance. So the same wealthy people who allegedly prosper more from expanded Social Security are the ones who will be paying for the expansion. More from Altman:

Third Way only mentions the increased Social Security revenue to make the specious point that the new proposed revenue will “crowd out” other social spending. But what Sanders is proposing is simply to require the wealthiest among us to pay the same rate on their incomes into Social Security as less well-off Americans. Right now, someone with an annual salary of around $1 million pays one-tenth the rate on those earnings paid by a minimum-wage worker on his or her earnings.

The expansion plan makes the program less regressive on the tax side, in other words. This gets written out of the story with a straight claim that the rich can’t afford to have this severe inequity corrected.

As Altman goes on to point out, Third Way isn’t even playing straight on the benefit side, to say nothing of ignoring the tax side. The report breaks beneficiaries into quintiles based on average lifetime income. But the top quintile income begins at a relatively paltry $63,000 a year. Looking at distributional impacts by lumping in everyone from the edge of the middle class to a multimillionaire does little to clarify anything.

Looking at the straight dollar amounts of support also obscures the percentage of replacement rate that beneficiaries receive in retirement. A high-income worker who pays more in gets some more out with their benefits. However, the replacement rate for the working poor is far higher than for the wealthy. Judged on these terms, the Sanders expansion plan remains highly progressive.

So when Third Way uses a sample case of a couple conveniently making $220,000 a year (inside the “doughnut hole” where the cap is not lifted) to highlight the inequity, they aren’t noting that, as a percentage of replacement rate, lower-income families fare much better.

At the root, this is really an attack on universal benefit programs, mainly because, God forbid, they parcel out to everybody. If anyone were to propose a Social Security expansion that only augmented benefits for the poor, with the rich paying for it, Third Way would be first in line to shout loudly about the gross unfairness of the redistribution of wealth.

They don’t like a universal program because it’s harder to break the national solidarity and funnel payroll contributions to Wall Street fund managers through privatization. And yes, programs for the poor are poor programs, particularly ones that primarily deliver cash assistance. For example, welfare, which supplements the bottom half of the poor, has been gutted, while tax credits for the working poor did OK. Isolating benefits to the poor is a good way to make recipients’ lives miserable (limits on withdrawals, drug testing, other forms of thinly veiled class discrimination) and to chip away at their benefits over time. By contrast, here’s what Franklin Roosevelt said about universal programs like Social Security over 80 years ago:

We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.

“Straight politics” is a good way to describe Third Way’s gambit, too. They want to discredit liberal ideas, at a time when progressive power is being built through the presidential nomination. Beset by the left, the radical center has adopted the famous Karl Rove strategy of attacking their opponent’s strengths, to turn them into weaknesses. If Third Way has to mislead to get there, that’s of no consequence.

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About David Dayen

David is a contributing writer to Salon.com. He has been writing about politics since 2004. He spent three years writing for the FireDogLake News Desk; he’s also written for The New Republic, The American Prospect, The Guardian (UK), The Huffington Post, The Washington Monthly, Alternet, Democracy Journal and Pacific Standard, as well as multiple well-trafficked progressive blogs and websites. His has been a guest on MSNBC, CNN, Aljazeera, Russia Today, NPR, Pacifica Radio and Air America Radio. He has contributed to two anthology books, one about the Wisconsin labor uprising and another on the fight against the Stop Online Piracy Act in Congress. Prior to writing about politics he worked for two decades as a television producer and editor. You can follow him on Twitter at @ddayen.

32 comments

  1. cripes

    Of course Third Way, and the entire demo-republican establishment is desperate to maintain the austerity delusion carefully cultivated over the past forty years.

    Fiascos like the Flint water crimes and the never-ending rapine of the commons by unrestrained corporate appropriation are making austerity harder to peddle. The republican voter base is closer to Bernie Sanders on this than they realize. Shame about his foreign policy.

    I’ll take an open revolt on economic policy and hope saner priorities in foreign affairs will follow.

    1. TomDority

      Cripes, not sure I understand your allusion to foreign policy and Bernie Sanders failings?

      I think using term corporations is overly broad when used negatively. It is those corporations that have taken the lazy course to “shareholder” value through financialization, financial engineering…. instead of producing something tangible, anotherwords, those firms taken over by finance and financial engineering and of course financial firms that have caused directly, the Flint situation et al….. your second sentence hits the nail on the head

    2. Rhondda

      “Shame about his foreign policy.”
      Indeed, it is the weak link for me. I like and support Bernie iwhen it comes to domestic policy but his foreign policy imho barely qualifies for the term policy. Initially, I suspected that his point of view (or lack thereof) reflects the “comity” of the Senate. The received wisdom of group think is strong in people who’ve spent their life within that context. But if he can see through the bankster’s smoke and mirrors how come he can’t seem to see through the neoliberal/neocon smoke and mirrors? That doesn’t make sense to me.

      1. Elizabeth Burton

        No single candidate is going to be good at everything. The thing to look for is the candidate’s willingness to learn. Sen. Sanders has shown over and over that he is not only willing to learn but actively seeks out those who can teach him. For that reason, any weakness he might have in his foreign policy credentials is almost certainly something that will be corrected.

        Nor do I believe someone who has shown he will stand up for his principles the way Sen. Sanders has done for the last 40 years is going to suddenly become all wishy-washy in the world theater. In other words, look at the overall character of the individual rather than the resume. Because it seems to me we need more character right now.

        It would be lovely if we could have the perfect Superman/woman candidate who could be all things to all people, but that’s fantasy. It’s also the kind of thinking that allows people to self-righteously refuse to vote or to vote for a candidate they know hasn’t a snowball’s chance of winning in protest of not getting their favorite. In other words, if they can’t win, they’ll take their ball and go home.

        I can’t speak for others, but I outgrew that kind of behavior by the age of ten. :-)

  2. so

    Whenever I read an article like this the anger just flows to the back of my neck. You know what i’m talking about? So I google image a persons name. In this case, Derek Kaufman. Usually after a few moments of imagining pummeling his face in, I just start feeling sorry for the guy. Then I read he lost a billion dollars of his clients money last year. And then I start thinking about social security privitization……Time for me to make art.

  3. Peter Pan

    I agree that incorporating the lifting of the cap on the payroll tax above $250,000 is a good starting point. But I believe more can be achieved with the payroll tax, especially regarding excessive C-suite compensation.

    I would also suggest doubling of the payroll tax on excessive C-suite compensation (salary, bonuses, options, etc.) in the future. This could be based on a fixed sum compensation or a ratio of C-suite compensation to average employee compensation. So both the C-suite executive and the corporation would pay double on the payroll tax (an employee pays half and the company pays half). This could have an effect of either reeling in C-suite compensation and/or expanding employee compensation. Of course, this would be “redistribution” to offset income inequality and would make Third Way squeal like a stuck pig.

    1. Rhondda

      I agree. I also think something needs to change in regards to all trades and jobs being treated the same in terms of when you can claim benefits. For example, when I was poking around in the TTP stuffs, I noted that the gubmint has just passed a special law to allow firefighters, law enforcement and other “heroes” (gag) to withdraw money from their pensions without penalty at 50 years old. The bodies of those who who do hard physical work or repetitive work in a non-ergonomic environment fall apart, and the gubmint recognizes that in this law for their favored constituency. But ignore/deny it re SS and the general population…I think earlier retirement is needed, not later — which is what the austerians and Third Way charlatans lobby for…from their Aeron chairs and limos.

    2. jrs

      Why are we advocating raising the cap again and on a MMT blog at that? It will make it more of a welfare program, which like the article states and I agree, don’t work (don’t work because they generate so much opposition).

      And even if we agree taxes on the rich should be raised, revenue impact or not, it’s not wage income that is the main problem. There are high paid employees, but the really wealthy aren’t working for it. Now tax capital gains like income is taxed, that would make sense.

      No, I don’t earn 250k, that would be the laugh of the day. I just think fooling around with SS (in any way besides just raising it) is risky.

  4. flora

    The Third Way’s statement is a good proxy for what Clinton will try to do re: social security, regardly of what she say’s on the campaign trail. The Clinton’s are Third Way Wall corporate dems.
    Thanks for this post.

  5. Jim Haygood

    Hiking taxes, instead of bringing Social Security out of the 1930s by investing it in a mix of stocks and bonds, is the “hair shirt” way of expanding benefits.

    It takes a LOT of taxes to pay higher benefits, when your portfolio earns only 2 percent in Treasuries and is only 20% funded. Fixing Social Security is a third rail, because somebody has to fess up to the looting that’s already occurred.

    Calpers got authorization in 1966, via Proposition 1, to invest up to 25% of its portfolio in dividend-paying stocks. Whereas fifty years on, Social Security remains mired in the Dark Ages.

    Persistent financial Luddism, in the country where Modern Portfolio Theory was developed a half century ago (with Nobel prizes for several of the participants), suggests that know-nothingism runs deep in the USA.

    1. TedWa

      Are you serious?? Invest SS in stocks and bonds? Do you really believe that wouldn’t make looting by Wall St that much easier? wow. We don’t have free markets and we don’t have un-manipulated markets. Why would you want SS to be eaten away by hedgie and bank fees? Raising the cap on SS is not saying to tax those who make less, more.

      1. Jim Haygood

        According to the Milliman study for 2015, the 100 largest public pension plans have 30% of their portfolios in fixed income, and 70% in equities and real estate (Figure 7, Asset Allocations, page 4):

        http://www.milliman.com/uploadedFiles/insight/Periodicals/ppfs/ppfs-2015.pdf

        Why do they do this? Because it provides the highest benefits for the lowest contributions. This approach is universal in pension plans.

        While NC has extensively documented high fees associated with private equity, no such issues have arisen with public equities.

        Social Security is the outlier with its Treasury-only portfolio, frozen in amber since 1935.

        1. Vatch

          Stocks lost value during 2015, and they continue to do so in 2016. I’m a little skeptical about the Milliman statistics for 2015. Most of that information probably isn’t available yet.

          Anyhow, if the government were to experiment with a change in the way that Social Security funds are invested, jumping to 70% in equities and real estate would be extremely risky, and would also probably distort the markets. Better to start with a goal of something small, such as converting to 5% variable rate equities over a 5 year period. But 2016 isn’t the year to start, since the markets are declining.

      2. jrs

        Having the government invest in stocks and bonds would certainly not be free markets. If the government is actually going to own the means of production anyway (via shares), I want my proletarian utopia, and for it to be done for the good of society.

    2. JTMcPhee

      Hey, Jim — Maybe you have been profiting from investing in a mix of stocks and bonds. I have been through three cycles over several decades with “investment advisers” who have shown me how to serially shrink several hundred thousand via mixes of stocks and bonds in a diversified Fee-generating “portfolio” that provided “balanced exposure to risk.” “Exposure to risk,” the replacement and more accurate, but by usage apparently comforting yet seductive phraseology, for what used to be called “investment.”

      Good on you, and your personal skills at taking care of yourself. The vast majority of us are neither smart enough nor gifted with the time it takes to even make a stab at figuring out how to “profit” in a “market” that maybe even you would allow is totally gamed in favor of a very few. The cognoscenti who ‘”succeed” at all the ripoffs and short sales and the rest, refer to the rest of us “investors” as “muppets” and “dumb money.” Your pitch to put the SS funds into “the market” makes all that actual hard-earned wealth, REAL money that comes from WAGES, available for the slicks and sharpies to leverage off of, collect fees on, and sell short into, knowing that they are ripping off the futures of all those people who are not astute and tutored and advantaged enough to survive “exposure to risk.” Modern Portfolio Theory, my as$. “Muppet Pilfering Trap” fits the acronym a lot better: “Modern Portfolio Theory Assumptions — The Root Of All Evil,” http://www.selfgrowth.com/print/3542776, and more at http://travismorien.com/FAQ/portfolios/mptcriticism.htm,as follows:

      … The Capital Asset Pricing Model is based entirely on beta. Without a reliable beta you can’t have CAPM any more than a value investor can buy stocks without knowing anything about assets or earnings. Somehow all this managed to be ignored until Eugene Fama, one of the original researchers who in 1973 had been right at the centre of the development of the Efficient Market Hypothesis, put out a new paper on risk and return in 1992. (Fama and French, “The Cross-Section of Expected Stock Returns” Journal of Finance 67 (1992), pp 427-465). Fama and French examined 9,500 stocks between 1963 and 1990, concluding that a stock’s risk, measured by beta, was not a reliable predictor of performance. Fama stated “beta as the sole variable in explaining returns on stocks … is dead. … What we are saying is that over the last 50 years, knowing the volatility of an equity doesn’t tell you much about the stock’s return.”

      This was like the Pope announcing that there is no God, anyone who knows what a central role Fama’s early 1970s work on EMH and MPT played would appreciate that this was an astounding development. As the Chicago Tribune put it: “Some of its best-known adherents have now become detractors.”

      If not volatility, then what? “What investors really get paid for is holding dogs.” said Fama’s coworker French. Their research found that stocks with lower price to earnings ratios and price to book ratios, as well as smaller capitalisation companies provided the highest returns over time. Stocks are more positively related to these measurements than to beta or other similar risk criteria.

      Fama’s words “beta is dead” reverberated around the world. As one finance professor put is in discussing the Fama and French findings:

      Modern finance today resembles a Meso-American religion, one in which the high priest not only sacrifices the followers – but even the church itself. The field has been so indoctrinated and dogmatised that only those who promoted the leading model from the start are allowed to destroy it….

      … So what assumptions and fundamentals does Modern Portfolio Theory rely on? There are ten of them which are particular doozies. The following are key concepts around which MPT has been constructed:

      -There are no transaction costs in buying and selling securities. There is no brokerage, no spread between bidding and asking prices. You pay no taxes of any kind and only “risk” plays a part in determining which securities an investor will buy.
      -An investor can take any position of any size in any security he wishes. No one can move the market and liquidity is infinite. You can buy a trillion dollars worth of stock in a small speculative mining stock or buy one cent worth of Berkshire Hathaway. Nothing stops you from taking positions of any size in any security.
      -The investor does not consider taxes when making investment decisions, and is indifferent to receiving dividends or capital gains.
      -Investors are rational and risk adverse. They are completely aware of all risk entailed in an investment and will take positions based on a determination of risk, demanding a higher return for accepting greater volatility.
      -Investors, as a group, look at risk-return relationships over the same time horizon. A short term speculator and a long term investor have exactly the same motivations, time horizon and profit target. Regardless of who you are, you will always give an investment the same amount of time to work out and volatility will be your only concern.
      -Investors, as a group, have similar views on how they measure risk. All investors have the same information and will buy or sell based on an identical assessment of the investment and all expect the same thing from the investment. A seller will be motivated to sell only because another security has a level of volatility corresponding to their desired return. A buyer will make a purchase because this security has a level of risk corresponding to the return that he wants.
      -Investors seek to control risk only by the diversification of their holdings.
      All assets, including human capital, can be bought and sold on the market.
      -Investors can lend or borrow at the 91-day T-bill rate – the risk-free rate – and can also sell short without restriction.
      -Politics and investor psychology have no effect on the markets.

      In fact transaction costs have a major effect on whether you want to be a long term or short term investor, and taxes have a major impact on what kind of investments make sense. Liquidity is a major factor in keeping most people out of thinly traded issues and the difference between dividends and capital gains very much affects the type of securities an investor will buy.

      Investors are not rational, they go for “hot” sectors and markets boom and bust regularly because of speculative excesses…. [My emphasis, on just a few of the uglies in the link.]

      And it takes balls of brass to point to CALpers and the Prop1 investment authority to jump into “the market,” given where that entity has placed the people to whom it owed a silly thing called fiduciary duty… “The Pension Fund That Ate California — CalPERS’s corruption, insider dealing, and politicized investments have overwhelmed taxpayers with debt.” http://www.city-journal.org/2013/23_1_calpers.html

      Or maybe your whole post is just snark?

      1. Jim Haygood

        One hundred largest public pension plans are invested 70% in equities and real estate (Milliman study linked above).

        Likely they aren’t going to make their bogie of targeting 7 or 8 percent annual returns. But with a bond-only portfolio earning 2 percent, it is a mathematical certainty that they won’t.

        Arguing against institutional (not individual) equity investment with warnings about “slicks and sharpies” is like warning sailors of sea monsters as they approach the edge of the earth.

        1. jrs

          What’s the difference between individual versus institutional investing? I guess the ability to even out market timing problems maybe? I mean an individual might need that money at a specific time. What else?

      2. craazyboy

        I’d put it 100% in water futures. In the latest Mad Max movie, the dude that had all the water controlled the world. So even if the stock market evaporates 20-30 years from now, SS will still be a 10 bagger!

  6. TomSchmidt

    Correct me if I am wrong, but isn’t the over-65 set the wealthiest group in the country, while the young, largely minority new workers in the workforce the poorest? At some point, some populist politician will point out that the SS recipients, born when the population was 90% white, are living off the contributions of a debt-slave class of minorities. That will not end well, and sanders, with his campaign ads showing over 95% white faces, seems not to get this.

    If Sanders REALLY wanted to be a revolutionary, he’d propose a welfare system that didn’t mulct the young, poor, and minority to ensure the comfort of the old, rich, and white.

    1. Yves Smith

      Please take your Pete Peterson-Ken Druckenmiller funded hate elsewhere. And learn to reason better while you are at it.

      Older people SHOULD be wealthier than young people. They’ve had a lifetime of working to accumulate savings (hopefully). There is something very wrong (like war that has destroyed physical assets on a widespread basis) if that is not the case.

      And the group of the elderly that is doing well is the one that retired at the end of the 1991-2007 long stock market appreciation. How one does in retirement is very much a function of investment results in the decade immediately preceding retirement. So the “well off” cohort is mainly those over 75. You can see that reflected in the fact that many people near, at, or over retirement age are not retiring because they can’t.

      I’m disgusted to see you advocate a position that amounts to “Die faster so I can have mine.”

    2. Waking Up

      Well Tom, it appears you will be happy to learn the following as reported by Margot Kushel: “In the early 1990s, only 11 percent of the adult homeless population was aged 50 and over. That percentage was up to 37 by 2003. Today half of America’s homeless are over 50.”

  7. Dan Lynch

    Dayen’s post is an example of the failure of the American left.

    Even if FDR’s claim was true at the time that the regressive FICA tax was necessary for political reasons, it has since been proven untrue by the numerous attacks on SS here in America and the attacks on public pension systems in Europe. Far from strengthening public pensions, the myth that pensions must function as an actuarial insurance program are a huge liability as our population ages. SS has already been cut due to that myth and it will continue to be cut in the future.

    FDR was wrong and Warren Mosler is right, scrap the FICA tax and just give retired people money. That is the true leftist position.

    Bernie is no leftist. Stop defending Bernie. It is not the citizen’s job to defend compromised politicians.

  8. TedWa

    Clinton : You don’t want Bernie’s plan for free college because that would mean the rich get to go to college for free. Exactly the same logic used in the article. They are obviously coaching her in her strained logic…. That reasoning may have worked in the 90’s, but not now (fingers crossed). I re-a-l-l-y hope she loses.

  9. WanderingMind

    Of course, the entire discussion around taxes vs benefits operates on the false assumption that the federal government “needs” taxes to fund itself.

    The fact that taxes do not fund the federal government, in turn, underscores the point made that payroll taxes are there for political purposes only.

    What I find concerning about that approach is that the author of the post is essentially advocating for lying to the public about why payroll taxes exist, or at the very least leaving the more salient point about the non-relationship between taxes and federal budget funding unstated.

    To me, that does more harm than good.

  10. John

    Social Security was never meant to be a pension.
    Here is the purpose from the original act:
    “An act to provide for the general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment …’
    General welfare is different from a pension. It is a safety net.
    The rich were taxed and forced to participate in the system for political reasons of “fairness” so they could not ax the program later…(Not that they haven’t tried)
    For the MMT crowd, (I am one), Social Security was developed in quasi gold standard days and so the taxes were actually necessary. We weren’t on full fiat until Nixon.
    The prime purpose of taxes under MMT is to reduce inflation when it arises. We now have deflation for the 99%. But the 1% live in a highly inflationary world. Look how little the Kochs are getting for the $millions they spending to buy the election. Look at the cost of the exotic art, the yachts and palaces. going up outa control. Even the stock market is an inflationary artifact that needs to be taxed. Think Tobin tax. We would be helping the rich to remove the inflation from their 1% economy.

    I admire Warren Mosler very much, but I wish he would talk about when and what kind of taxes are needed under MMT in our current circumstances. In fairness, he does talk a lot about social purpose. I understand that Social Security does not need the taxes collected for it to be paid as long as we have fiat money. But there are MMT reasons to have taxes now beyond just giving status to the money.
    It would be wonderful if the MMT proponents would put forth a comprehensive real world plan or budget guided by MMT principles. What would Congress have to do on the fiscal side? The Fed? Tax system reform? The States?

    1. John

      The economy is like an engine that best functions with the right amount of oil (money.)
      Meanwhile the Money level varies because
      Money continuously drains from economy with trade deficit, savings, taxes and fiscal surplus
      Money increases with net bank loans and fiscal deficit spending
      The amount collectively needed by population varies with population (more people means more money), with inflation, and with distribution, i.e. If a greater fraction of income goes to wealthy that already saves a substantial amount, then the economy needs more to offset the increased savings.
      So lots of moving parts, very complicated. Fortunately, there is an easy gauge available to inform policy makers as to when to increase or decrease deficit spending and/or modify tax rates; if unemployment is high most people have too little money, spending (demand) is too low. This means deficit should be increased and/or taxes reduced. Otoh, too low unemployment can boost inflation, as happened in the late 60’s when the massive Vietnam war combined with the moon program, resulting in a shortage of technical workers (which benefitted me personally.) (as the moon program ended the shortage of technical people, and the resulting inflation, subsided).
      Caution: high inflation nearly always begins with shortages and not excessive money printing, e.g. The 70’s stagflation was caused by massive oil price increases and embargoes. In this case best to wait it out until the system absorbes the shock.

  11. Knute Rife

    In 1980 the Reagan Revolution drove everyone to the left of Genghis Khan (including Yours Truly) out of the GOP. Overton Window successfully relocated. By 1986 the DLC was challenging for control of the Democratic Party. Instead of lining the DLC up against a wall en masse and giving them the St. Valentine’s Day send-off they so richly deserved, the overwhelming bulk of progressives decided all they needed to do was perform more street theater and join hands around the campfire and sing “Kumbaya.” The results were predictable: The DLC took control of the party, and there was nothing out there to push the Overton Window back anywhere near where it belonged (Witness how radical Sanders’s thoroughly moderate proposals appear when contrasted with everything else on the table.). The DLC remains in control of one of the two parties that count in this country, and so they are treated as Serious People by all the other Serious People. We are simultaneously in the midst of a tragedy and a farce.

  12. M.R.Fred

    They lost me at “because more of its expanded benefits pass on to the rich” Riiiiight. It should be pretty obvious why expansion is “bad”. If not, make it a point to watch cable or broadcast television one evening. If you do, you might notice that one out of four commercials deals with retirement and investment planning. The big investment firms, hedge funds and components of the shadow banking system (listed as “contributors” by Third Way ) are licking their collective chops at the thought of getting their paws on Social Security money. They have been for years. Privatizing Social Security ( the ultimate goal of Third Way and its fellow travelers) will generate billions in new fees and commissions. If Social security is not “expanded” then they will pay less tax as a percentage of income while making those big commissions.

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