A WEISMAN ONCE SAID

This is supposed to be a mostly apolitical weblog (to invert a phrase used by Mickey Kaus) but in the past 24 hours that isn't quite how it's worked out. Apparently I stumbled onto a pretty big story with Jon Weisman's botched (some say hoaxed) Social Security reporting; Instapundit and Donald Luskin were both kind enough to bless this site with links, and 18 hours later the readers are still pouring in. Welcome!

Now, on to new developments: To his credit, Weisman did correct his error yesterday — but not before the likes of Paul Krugman and Brad DeLong used it to make some purposefully confusing arguments against the proposed reform. For example, Krugman begins by quoting the anonymous senior administration official that Weisman talked to in the first place:

"In return for the opportunity to get the benefits from the personal account, the person forgoes a certain amount of benefits from the traditional system. Now, the way that election is structured, the person comes out ahead if their personal account exceeds a 3 percent rate of return" -- after inflation -- "which is the rate of return that the trust fund bonds receive. So, basically, the net effect on an individual's benefits would be zero if his personal account earned a 3 percent rate of return."

Translation: If you put part of your payroll taxes into a personal account, your future benefits will be reduced by an amount equivalent to the amount you would have had to repay if you had borrowed the money at a real interest rate of 3 percent.

Does that "translation" sound more confusing than the first paragraph? It does to me.

Peter Orszag of the Brookings Institution got it exactly right: "It's not a nest egg. It's a loan."

What loan? (And there's that Orszag quote again.) Your money would be split between two accounts: 1) the regular Social Security fund that exists today, and 2) another one that would return interest. One doesn't have to pay anything more than one already pays. How much interest one would earn is unknown, though it's likely you would do better than the 3% bandied about, based on past market performance; it's possible it could be a wash. But as a Bush official (possibly the same one as yesterday, though it's impossible to know for certain) explains in Weisman's follow-up today, it would still be better than the current system:

"Even if I break even, we would argue I'm still better off because I own the money," a White House official said, speaking on the condition of anonymity. "If I die, it belongs to my estate. If I divorce, it's a marital asset. And it's protected from political risk. Government can't take it away."

And if that still sounds unappealing, then that's just fine — it would be optional in any case.

I tend to believe Weisman made an honest error, but I can't say the same for DeLong and Krugman. They're the kind of ideologues whom I believe would write whatever they felt was needed in order to dissuade people from supporting Bush's plan. If that means writing about it in an intentionally misleading way, then I bet they'd do it.

P.S. — A rather Squiggy-like Weisman was on C-SPAN's Washington Journal this morning, talking about Bush's Social Security plans. I haven't watched it yet, but I'm curious to find out what he says about the article. I doubt Brian Lamb reads the blogs all that much, but they usually do their homework.

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posted by WWB at 3:35 PM |