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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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Bruce, don't get all conspiratorial on us.
[/sarc]
Bruce, there is very little difference between the USA today and the beginning stages of any other Fascist regime throughout history. Planting stories with the media is just the beginning.
....nothing new here...Gulf of Tonkin revisited....Remember The Main....a long history of D.C. successfully leading the press around by the nose....works as well today as it did decades ago....it appeals to our herding instinct...we are genetically programmed to follow the lead.
This policy is NOT new. It just confirms past policy. As for the WSJ, it is part of the "Murdoch Says What's News" as told by the elite monarchs.
The Wall Street Journal has confirmed that its financial and monetary policy stories are vetted by the FRBNY before they go to press. Why? Because the WSJ is too "influential" in the markets to risk destabilization due to a poor choice of words.
Such as telling the truth. With respect to monetary issues, the WSJ is the house organ of the Fed. Nothing new about it, although a lot of people seem not to notice.
Great insight as always.
Set the "disabled" against the "retired" and watch the hilarious high jinks that ensue!
sounds like a zany new reality tv show: put a bottle of medicare-paid xanax in-between them and watch them fight for it. Should be a big hit and could even fill the Two-and-a-half boners slot.
Love your avatar, btw, Almost Solvent....something about an underwater pig is just plain funny.
Beware when the toothless get ruthless...