Alan Simpson, co-chair of Obama's committee on reducing federal deficits, shoulders the heavy burden of objectively deciding whether or not people's Social Security really must be cut. Part 1

Some slides from a presentation prepared for the deficit commission by Social Security's chief actuary

Senator Simpson: He's Not Just Offensive, He's Ignorant

by Dean Baker
Posted: August 25, 2010 05:56 PM

Former Wyoming Senator Alan Simpson, the co-chairman of President Obama's deficit commission, has sparked calls for his resignation after sending an offensive and sexist note to Ashley Carson, the executive director of the Older Women's League. While such calls are reasonable -- Simpson's comments were certainly more offensive than remarks that led to the resignation of other people from the Obama administration -- the Senator's determined ignorance about the basic facts on Social Security is an even more important reason for him to leave his position.

I was also a recipient of one of Simpson's tirades. As was the case with the note he sent to Carson, Simpson attached a presentation prepared for the commission by Social Security's chief actuary. Simpson implied that this presentation had some especially eye-opening information that would lead Carson and me to give up our wrong-headed views on Social Security.

While I opened the presentation with great expectations, I quickly discovered there was nothing in the presentation that would not already be known to anyone familiar with the annual Social Security trustees' report. The presentation showed a program that is currently in solid financial shape, but somewhere in the next three decades will face a shortfall due to an upward redistribution of wage income, increasing life expectancy, and slow growth in the size of the workforce. The projected shortfall is not larger than what the program has faced at prior points in its history, most notably in 1982 when the Greenspan Commission was established to restore the program's solvency.

It was disturbing to see that Simpson seemed surprised by what should have been old hat to anyone familiar with the policy debate on Social Security. After all, he had been a leading participant in these debates in his years in the Senate.

Simpson's public remarks also seem to show very little knowledge of the financial situation of the elderly or near elderly. He has repeatedly made references to retirees driving up to their gated communities in their Lexuses. While this description may apply to Simpson's friends, it applies to very few other retirees, the vast majority of whom rely on Social Security for the bulk of their income. Cutting the benefits of the small group of genuinely affluent elderly would make almost no difference in the finances of the program.

Furthermore, the baby-boom generation that is nearing retirement has seen most of its savings destroyed by the collapse of the housing bubble that both wiped out their housing equity and took a big chunk of the limited money they were able to put aside in their 401(k)s. Simpson shows no understanding of this fact as he prepares to cut benefits for near retirees.

He also doesn't seem to have a clue as to the type of work that most older people are doing. While it is possible for senators to continue in their jobs late in life, nearly half of older workers have jobs that are either physically demanding or require they work in difficult conditions. Simpson seems totally clueless on this point when he considers proposals to raise the retirement age.

The key facts on Social Security are not hard to understand. The shortfall is relatively minor and distant. Most retirees have little income other than their Social Security, and most workers would find it quite difficult to stay at their jobs in their late 60s or even 70. We might have hoped that Senator Simpson understood these facts at the time when he was appointed to the commission, but we should at least expect that he would learn them on the job.

His determined ignorance in the face of the facts is the most important reason why he is not qualified to serve on President Obama's commission. Someone who is co-chairman of such an important group should be able to critically evaluate information, not just insult and demean his critics.

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC.
 
He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. His blog, Beat the Press, features commentary on economic reporting.

He received his Ph.D in economics from the University of Michigan.

He has written numerous books and articles, including The United States Since 1980, Cambridge University Press, March 2007; The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, Center for Economic and Policy Research, 2006; Social Security: The Phony Crisis (with Mark Weisbrot), University of Chicago Press, 1999; "Asset Returns and Economic Growth," (with Brad DeLong and Paul Krugman), Brookings Papers on Economic Activity (2005); "Financing Drug Research: What Are the Issues," Center for Economic and Policy Research, 2004; "Medicare Choice Plus: The Solution to the Long-Term Deficit Problem," Center for Economic and Policy Research, 2004; The Benefits of Full Employment (with Jared Bernstein), Economic Policy Institute, 2004; "Professional Protectionists: The Gains From Free Trade in Highly Paid Professional Services," Center for Economic and Policy Research, 2003; "The Run-Up in Home Prices: Is It Real or Is It Another Bubble," Center for Economic and Policy Research, 2002. His book Getting Prices Right: The Battle Over the Consumer Price Index (M.E. Sharpe, 1997) was a winner of a Choice Book Award as one of the outstanding academic books of the year. He was also the author of the weekly online commentary on economic reporting, the Economic Reporting Review (ERR), from 1996 - 2006.

He has worked as a consultant for the World Bank, the Joint Economic Committee of the U.S. Congress, and the OECD's Trade Union Advisory Council.

His columns have appeared in many major media outlets including the Atlantic Monthly, the Washington Post, and the London Financial Times. He is frequently cited in economics reporting in major media outlets, including the New York Times, Washington Post, CNBC and National Public Radio.