September 07, 2010
Dean Baker
TPMCafé, September 4, 2010
See article on original website
The Washington Post insists that its columnists either produce top-quality work or toe the company line. Dana Milbank falls into the latter group of columnists as he showed once again with his warm praise for former Wyoming Senator Alan Simpson sexism and ignorance.
Senator Simpson has been in the news lately for writing crank letters to his critics in his capacity as a co-chair of President Obama’s deficit commission. In one of these letters he compared Social Security to a cow with 310 million tits. This letter was sent to Ashley Carson, then the executive director of the Older Women’s League.
Apparently Mr. Milbank does not even understand why Simpson was widely denounced for sexism over this letter.
Mr. Simpson’s lack of understanding of bovine anatomy is humorous, his contempt for Social Security, and those dependent on it, somewhat less so. But the sexism in the letter was his clear implication that the director of a major national woman’s organization could not read a simple graph.
He also concluded the letter by telling Ms. Carson to contact him when she “finds honest work,” implying that representing the interests of tens of millions of older women is not honest work. Is Mr. Simpson equally “blunt” with the lobbyists who represent the interests of Goldman Sachs and British Petroleum? Or does he view their work as more honest?
If Senator Simpson brought great insights to the debate then perhaps we should overlook his rudeness and sexism, but there is zero evidence that he has advanced beyond the silly platitudes that pass for profundity in the pages of the Washington Post. In his letter he referred Ms. Carson to a presentation prepared by the chief actuary of Social Security for the deficit commission.
Simpson seemed to believe that this presentation would be a real eye-opener to Ms. Carson. In fact, the presentation contained no information that would not be well-known to anyone involved in the Social Security debate. All of the information in the presentation is readily available in the Social Security trustees report and other public documents. If the presentation was news to Simpson, then it suggests that he is seriously ill-equipped for his current job.
This is not the first time that Simpson has indicated that he is totally clueless in debates over the deficit and Social Security. I was on a radio show with Senator Simpson back in the mid-90s when the hot fashion in policy circles was cutting the cost-of-living adjustment for Social Security.
The cost-of-living adjustment is tied to the rate of inflation, as measured by the consumer price index (CPI). At that time, story went that the CPI hugely overstated the true rate of inflation. Therefore, the Social Security cutters wanted to reduce the annual cost-of-living adjustment to at least 1 percentage point below the rate of inflation shown by the CPI. This meant that if the CPI showed 3 percent inflation then the cost of living adjustment would be just 2 percent.
This might seem like a small cut but it adds up over time. After 10 years the benefit cut would be about 10 percent, after 30 years it would be almost 30 percent. (Compounding reduces the effect slightly.)
Senator Simpson was a big proponent of these cuts, hurling his usual lines about greedy geezers and high-living seniors. When he was on the radio show with me he argued that the CPI’s overstatement of inflation was well over 1 percentage point and could even be over 2 percentage points. He then said that our children would be living in chicken coops.
Okay, now let’s imagine that Senator Simpson had learned arithmetic in third grade like the rest of us. We know how fast nominal wages/income is rising. Let’s say this averages 3.0 percent a year. If the rate of inflation as shown by the CPI is 2.0 percent, then real wages/income are rising by 1.0 percent a year (3-2 = 1). This would be the rate that we are getting richer.
Now suppose the Social Security cutters of that era were right and the CPI overstates the true rate of inflation by 1 percentage point. Then real wages/income would be rising by 2.0 percent a year. Since the true rate of inflation would be just 1 percent a year, then a 3.0 percent rate of nominal wage and income growth would translate into a 2.0 percent rate of real wage/income growth (3-1 = 2).
Suppose that Senator Simpson’s sources were right and that the CPI overstated inflation by 2.0 percentage points. Then the true rate of inflation in this story would be zero. In this case the 3 percent rate of wage/income growth would translate into a 3.0 percent rate of real wage/income growth.
This would lead to a conclusion 180 degrees at odds with Senator Simpson’s assertion. Instead of describing a situation where our children and grandchildren would be living in chicken coops, the Senator was describing a situation in which they would all be rich. But, he was so clueless on logic and arithmetic that he did not even understand this simple point.
Yet, he can still count on getting praised by Dana Milbank and the Washington Post. See, if you give the company line – knowledge of arithmetic is optional, and you can still be a co-chair of President Obama’s deficit commission.
