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Wall Street Journal - “Spring Planting”
I have pounded the table on numerous occasions regarding the Wall Street
Journal’s reporting of Federal Reserve policy. In particular I have
been critical of articles by Jon Hilsenrath. Jon’s writing and reporting
have been excellent. My problem has been that he clearly has been
projecting the words of Ben Bernanke into his reporting. He has done
that without appropriate attribution. For me this is dis-information. If
Bernanke has something he wants to say, let him say it so all can read,
understand and critique it. Leaking his thoughts on policy toward QE2
was a way of Bernanke using the press to shape public opinion on
monetary policy. The cozy relationship between the WSJ and the Fed
facilitated the implementation of the policy. Call that a “snow job”. A big one.
I believe we have another example of this today. The WSJ has a front page article by Damian Paletta titled: Insolvency Looms as States Drain U.S. Disability Fund.
This is an excellent article that I would put on the 'must read' list when this issue of entitlements in America is discussed. But I’m convinced the article was functionally planted by Washington Inc.
It’s quite possible that the WSJ article will be the basis for policy
choices that are adopted by our legislators over the next year or so. If
you accept that the story was a plant, the question(s) to ask are who planted it and why?
That thing that we know of as Social Security is made up of two
distinctly different programs. The OASI (Old Age Survivors Insurance)
and the DI fund (Disability Fund). Even a cursory look at the dynamics
of what is generally referred to as OASDI (combined) shows that the
immediate problem facing SS is the Disability Fund.
The WSJ article describes in detail just how far the DI side of the
equation has fallen out of whack. DI is an accident and needs to be
fixed. So the Journal did ‘us’ a service with the story. Right? I think wrong. The plant article sets up a “solution” to SS. Fix up DI and don’t touch OASI.
The DI fund could be patched by (I) tighter availability requirements
(II) small (relative) increases in payroll taxes and (III) some
contribution to the DI operating expense from the general budget.
However, a quick fix on DI is just a mask for the much larger problems that are brewing at the Retirement Fund. The SS Trust Fund forecast benefits payments for the combined OASDI as follows:
DI Benefits 2011-2019………$1.4T……16%
OASI Benefits 2011-19….......$7.1T……84%
We are going to put a patch on 16% and ignore the 84%.
My conclusion that the WSJ story was planted is based on the following from the article:
"Beatrice
Disman is in charge of the Social Security Administration's New York
region, which oversees operations in Puerto Rico. She said…………………."
Ms. Disman does not talk to the WSJ. Ever. Her boss does
not have the authority to permit her to talk to the Journal either. The
Press Office at SS does not let the WSJ talk to staff employees. The
decision to allow Ms. Disman to speak with the WSJ was made at the
highest levels of SS. In my opinion this interview was granted with
express consent of Stephen Goss the Chief Actuary at SS.
My guess is that this story was his idea. If that were to be the case
then even Mr. Goss would not have done this without the blessings from
the White House. Those blessings (and urgings) would have come from the current budget director Jack Lew. I doubt even Mr. Lew would have initiated this without a nod from the President. That is the way Washington works. When people “willingly” talk to the press they do it with an objective in mind. And that means that every word is scripted. (the "Who")
The Retirement Fund is truly a political third rail. No one wants to
touch it. The DI is not such a hot potato. When American learns (thanks to the WSJ)
that the folks in Puerto Rico and other states are milking the DI
system there will be no opposition to some “fixes”. The end result will
be that all the politicians will be able to say that they were
responsible for saving SS when in fact all they have done is kick the can down the road on the much larger issue of the retirement entitlements. That's the "politically desirable" short-term solution. (the "Why")
To be sure the DI needs a fix. But if that is done without touching the OASI it will be at our country’s long-term peril. And that is exactly what I think the Journal’s article portends.
I wonder if the folks at the Journal understand that they are getting dangled on a string. I think they do. I’ll ask them, but I’m not expecting a reply.
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The WSJ article does not provide the context or at least doesn't make the point that Mr. Krasting makes, so his point is well taken, but not necessarily politically wise. Holy hell, the government's got to start cutting somewhere. In terms of cost cutting, conservatives and libertarians alike had better take what they can get when they can get it. It's hard to build momentum to cut programs as deeply entrenched as SSDI, the dependency of whose recipients has been damn near permanently institutionalized. No politician wants to return to his or her district and deal with the recipients of monthly SSDI checks and free health care who will be off the dole if/when a reform bill becomes law. If you think what we witnessed in Wisconsin was bad, try cutting SSDI and see what happens in Puerto Rico....and West Virginia. Molotov cocktails will be flying. Politics isn't about ideals. Let's not bitch about what "really needs" to be done. Wise political operatives would capitalize on an article like this and use it to start a movement to cut SSDI. Politicians can use an article like this as political cover to hopefully avoid Molotov cocktail hour. Then use that as a platform to build on reforming the rest of social security.
More like a blow than a snow job, but the FEDs probably like it very cool.
For what this is worth Bruce; Short GBP/USD @ 1.6360, no stop, and short EUR/CAD @ 1.3905, stop at 1.4005
More important than trade calls or the WSJ whatevers, I hope Orly comes back. Not the same here without her around.
Yeah, maybe. But you're fighting the Fed. Losing proposition.
"..But you're fighting the Fed. Losing proposition.."
Hohoho... Brucie just can't shut up in his admiration for the power of the establishment despite everything they touch turns to crap. Regulation (fascism) has failed miserably to regulate but Brucie can't get enough of the stuff. The Fed has failed at everything it has touched but Brucie thinks you shouldn't bet against them. Tell me Bruce, as a crone with his head stuck up the arse of the establishment, what bet/fight do you think the Fed has ever won?
So you think zero government is a good thing, you love anarchy and you perceive Bruce to be an enemy because he doesn't agree with you.
Is this correct?
no i don't "love anarchy" which is precisely what we have if you look around you retard... we have the anarchy of the Western elite blowing up people in no less than 3 countries ...we have the anarchy of bankrupt bankers who have committed systemic fraud on a national scale being given societies money (robbery via the tax system) to continue being bwankers. We have parasitical central banking monopolies destroying peoples wealth to bailout their criminally incompetent buddies in banking and Govt. We have a bankrupt housing market, bankrupt healthcare, bankrupt pensions, bankrupt public transport and bankrupt education systems..
..in fact the US Govt is completely insolvent and most European Govts are utterly bankrupt too... but nobody who caused these crumbling nightmares (Barney Frank, where are you?) has either been sacked or is in jail but running free popping champagne corks like nothing ever happened
You want anarchy by a cancerous minority running riot across society? Look around you you delusional halfwit?
The alternative to this vast systemic sack of steaming shit (Govt) is a free society and free markets. As I've explained to the high IQ but zero common sense Brucie Baby freedom works for free not only to nip systemic risk in the bud quicker but kill systemic cancers (parasites) much faster too.
The problem (cancer) is Govt and everything it does including another sack of shit, Law and Regulation, which does not work. Nothing Govt does works. Period
You may be right, but it is a short with defined risk at 'a' top. I hope I am onside with price into the Portugal austerity VOTE, the Irish NoGoTiation, the UK budget with tricks in the fine print, and the German, French and British Bank BAILOUTS on top at the expense of higher interest rates for the periphery EZ.
Have to start to question the BOJ intervention too since 81.00 USD/JPY looks tough to break to the upside after trillions spilled.
PS.......the FED is Dead. Choked on its own hedonics.
Who's gonna pay on that? You gonna Pay?
Stop placed at 1.6360 entry for GBP/USD short so now a risk free trade. Current price into the budget 1.6255.
Also placed stop on short EUR/CAD at entry price 1.3905 so another risk free trade. Current price as of 7:15 PM 1.3835.
That 'losing proposition' booked 330 points of profit.
To be fair about it did drop 60 on a short AUD/USD trade and bailed under the stop up at 1.0255.
"I’m convinced the article was functionally planted by Washington Inc."
Have you written an article yet that isn't 'functionally planted' by the US Govt Brucie Baby?
If you're not promoting (ass-licking) for more fascism, sorry Govt financial regulation, (despite its abject failure) you're promoting (ass-licking) a marxist like Julia Bair (another miserable failure) should be promoted from bank regulator to head the Fed or Treasury
I gave up on the WSJ years ago. Good reading but not much help. I switched to IBD. I used to tell people that IBD was the Attila the Hun of financial news papers. I'm getting more annoyed with IBD because it repeats a bunch of government statistics as fact. ZH is a great source for criticism that is hard to come by.
Just raise the cap on earnings subject to the tax, Bruce.
Thanks, Bruce, for another nice connecting of dots I hadn't noticed.
Buy USO for oil and GLD for gold and ignore them.
We are guaranteed QE666.
I'm shocked, shocked to hear that there is fraud in the system. Given that the whole ball of wax is a ponzi scheme, it seems kind of trivial to get outraged about touching one corner of it under the guise of fixing another corner of it.
Keep it up Bruce - seeing thru the propaganda machine!
This is not good. Preferred sources being replaced due to ZH exposure.
Will TBT pay off before it, too, goes to zero?
Thank You for sharing your thoughts and insight with the rest of us. Even though I do not always get the full meanings of the things that go on I appreciate the opportunity to learn & see things in ways that I would otherwise miss.
What's more disturbing is that our taxes fund this type of idiotic, political logrolling. Why do I need someone in SS (funded by my taxes), whose job is paid for by my taxes, to direct someone else, also on my tax payroll, to speak to the WSJ to effect public opinion on the 16% of the fund?
Good catch Bruce. Let's fire all the politicians and government workers and reclaim their salaries and pensions as a starting measure to address the funding shortfalls. Then when the complex system they built collapses under its own weight because there isn't anyone left to maintain complexity, we can radically simplify the approach. I think it would all be much much cheaper.
What will the little people do who are on the gov. payroll (I consider much of it expensive welfare) when you eliminate their jobs. You have to do these things gradually or you will be creating more misery than we already have. The vast majority of government employees have the same needs and troubles you do. It is the ones who create, maintain and expand the system who need to be tossed out to panhandle for their cold cans of baked beans. The rest have to slowly be retrained to do a useful function.
via CNBS
Published: Tuesday, 22 Mar 2011 | 3:22 PM ETUS Approaching Insolvency, Fix To Be 'Painful': Fisher
http://classic.cnbc.com/id/42209447/&thisis%20CNBS
The day we cut off disability checks to the freeloaders can't come soon enough. If the govt is "using" the WSJ to pave the way, let it be.
So according to your data, OSDI will need cumulative $7.1 Trillion during 2011 and 2019 or about $788 million per year. The real question is what is the actual shortfall(deficit) of revenues vs outlays? I would guess between 40-100 billion per year.
You know that is at most 0.5% of GDP assuming that GDP won't increase between 2011 and 2019. All the enlightened pundits tell me that current military spending which is at historical low level of about 5% of GDP is nothing to worry about--it's cheap. So why should I worry about 0.5% when that money is spend on supporting human beings instead of killing them?
I have read a number of articles that you wrote on Social Security , and I can conclude that you have a very biased position on select piece of what is not even a true entitlement program.
The cash deficit was $48.9b in 2010. It will be about that number for the next few years but then it will jump. Over $300b per year by 2020. After that it REALLY gets big.
Not sure what numbers you are using. SS expenditures are 5.4% of GDP. More than the military.
If you've read me you know I favor a means test on SS. My bias is to keep the system going so that older people who desperately need benefits continue to get them as scheduled. My bias is to do that without crippling the real economy with new taxes. My bias is to achieve this without putting (another) unpayable burden on the next few generations.
You're right. I'm biased.
I know an older wealthy couple who donate their SS check amounts monthly to a nonprofit feeding program for the poor. But they are definetely not the norm, I suspect.
+100% Bruce. I knew an older couple that did not need SS to get along. They thought what they had paid into the system for INSURANCE shouldn't go to them because they did not have the misfortune to have accidentally needed INSURANCE. Insurance is for serious trouble not for when you are sitting on top of the world. People that have paid for SS INSURANCE should not be able to collect when they haven't had misfortune. Just like a health INSURANCE policy you pay every year for, you don't get to collect if you haven't had a medical problem.
More Propaganda compliments of UN King Obama de la Soetorro's Prophesier of Academic Malfeasance
"The Cazzzz"
Oh heck, who wants to retire anyway.
If we force the disabled to work then that entire program will be taken care of, no more worries.
When Greg Ip covered the FED, everything was Ip-so facto true.
Let there be money. Let there be news.
I am the Dollar Bill.
Unfortunately, I would guess that a sizable portion of the compensated disabled could work just fine if a) there was no check in the mail, and b) there were enough jobs for them to land someplace suitable. I knew a girl who was emotionally immature, she had a tantrum/nervous breakdown. Recovered nicely while pursuing a music career on DI, she did. Years and years of DI. No medication required or requested. I suppose she is saving her next breakdown for the day her benefits end.
In Canada that's called long term disability. My whack-a-doo sister works for the feds. She took 8 months off for a boil on her ass and because her shoulder was stiff. Mainly because she was over 40 and probably wasn't wiping her own ass properly.
Should mention that she's off because her knees hurt...for the last two years...making 96k a year on long term disability being a federal civil servant. Why are her knees fucked? She took up down hill sking while recovering from ass boils and a sore shoulder.
Solution--Shift all past present and future congressional people (Reps and Sens) to social security and take away their pensions. Social security problems will then be immediately taken care of--no more kicking the can down the road!
Bingo
++++++++ WE HAVE A WINNER
beginning the campaign to "manufacture consensus"; which used to be called spin doctoring; which used to be called, Propaganda. I'm so much happier now, that the government "manufactures consensus".
Seems like a trial balloon to see which way the wind is blowing and an interesting way to kick it down the road but this won't out distance the depreciation of the currency, making the OASI pension checks pretty much worthless. My brother's in-laws came to the US from the Philippenes, never worked here or paid into the system but collected a nice check every month for years. It soooo easy to give away other people's money, the collectivist wet dream.
The gov credit card scheme of rolling over and transferring balances to new cards is close to the end point. In my mind (sadly) this doesn't matter, bailing with a tea cup as the debt grows in buckets, might as well turn off the 3rd rail and tie the politicians to it just for laffs. Regardless of the disdain in which I hold Bernbanks, he isn't clueless of the ultimate outcome and is scared sh**less.
Funny how I oftimes think, 'BK is a smooth writing, tag-popping-plant, but to what end? Is he here to take our eyes off the ball?'.
Ah! You got me. I spend all this time actually just trying to pull the wool over your eyes. The truth is that I work for Tim Geithner. I'm part of the disinformation team you keep reading about.
Good analysis, Bruce. Once again the old Navy axiom regarding scuttlebutt comes to mind...." Believe nothing you hear and only half of what you see and you'll always be well informed."
Excellent catch BK.
this article is sterling....wonderful analysis and understanding of how the military industrial complex works....
the press are an extension of the government and more specifically the cia....conspiracy can be malign or benign....
this blog was an excellent tutorial on how incestuous is the relationship between power and press....no establishment press organ is anything but a mouthpiece for the government...anyone who thinks that the press is independent and trustworthy is a fucktard...
the wsj is a neighborhood newsletter for the salons of georgetown and manhattan....if you want a frontside seat to what is happening in power, read it...but don't take it at face value.
Isn't this the 'salami' approach? You cut a bit off Disability eligibility and most people approve. You also prune Medicare a bit in the process because those on DI also get Medicare. That'll get you past the next election. Then you do a bit of means testing on OASI and that too gets you past the next election.
Most Congressman and Senators can't afford to throw more than a couple of percent of their constituents under the bus for any given election. But if you cut benefits and entitlements for a couple of percent each election it adds up.
Great stuff as usual Bruce.
It would appear that TPTB are trying to pave the way for SS Reform. This has been a "third rail" for a long time. They have to start making their case public now. This DI issue is just the beginning.
Why would you think the WSJ would be any different than the NYT or WAPO in terms of journalistic integrity? It's like some commenters at ZH who think Al Jazeera is different that CNN or FOX and that AJ is delivering truth or something similar.
It's all prop Bruce and needs to be filtered. Thanks for taking the time to discect the WSJ article, let that be a lesson that nothing, even stuff here on ZH should be taken at face value without appropriate scrutiny or at least a bit of skepticism.
Deficit fix plan: Raise taxes, stop corporate welfare. See, we're done.
Your supposition is that corporations pay taxes. You might want to give that some further thought.
Let's try the opposite and do away with all taxes on corporations. That makes more sense in the long term.
Yes, because it's my responsibility to pay off the banker bail-out.
excellent report.
Lots of cans being kicked just past the 2012 election cycle...