"The Cult of Peter Orszag"
A colleague sends this along, hoping to spark a cult of personality around American history’s first blogger-turned-OMB director:
That said, I did want to associate myself with something Chris Bowers said yesterday namely that I wasn’t, and continue not to be, enthusiastic about the Diamond-Orszag Social Security proposal that was unveiled back during the last run of talking about Social Security. I thought that was a useful document in some ways. For one thing, it highlighted the fact that conservatives’ desire to phase Social Security out and replace it with an entirely different, riskier, less-progressive retirement scheme with more profits available to financial services firms has nothing to do with long-term Social Security actuarial projections. For another thing, it highlighted the essentially small-bore nature of the changes that would need to be made to make the actuarial projections line up. With Medicare and Medicaid, in other words, you need to do something structural. With Social Security, you can just get by with tweaks.
That said, the Diamond-Orszag proposal not only partakes of benefit cuts, but of further extension of the prefunding/trust fund model of actuarial solvency. I don’t think that particular path, chosen back in 1982, has any any really noteworthy benefits for fiscal responsibility over the past 25 years, for progressive politics, or for Americans’ retirement security. In effect, it served as a way for the Reagan administration to sell a less-progressive tax base as somehow related to Social Security. In reality, benefits are paid out of current taxes, and that’s fine, but there’s no real need to pretend they aren’t.