# Linda Lutton on Bush tax cut **URL:** \ **Category:** Great Debates\ **Created:** [August 17, 2001, 8:18pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804 "2001-08-17T20:18:38Z")\ **Posts on this page:** 20\ **Page:** 12
**Author:** ![CyberPundit](https://avatars.discourse-cdn.com/v4/letter/c/76d3ee/32.png) [@CyberPundit](https://boards.straightdope.com/u/CyberPundit)\ **Post date:** [August 26, 2001, 10:09pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/221 "2001-08-26T22:09:27Z")
Regarding the computers and all ,remember, that it’s not that the private accounts within SS are going to be that expensive compared to private investment plans (both are roughly 1% p.a). It’s just that under the current pay-as-you-go system the transaction costs for SS apparently are virtually nil ie. more like 1% for an entire lifetime. ---
**Author:** ![panzermanpanzerman](https://avatars.discourse-cdn.com/v4/letter/p/e9bcb4/32.png) [@panzermanpanzerman](https://boards.straightdope.com/u/panzermanpanzerman)\ **Post date:** [August 27, 2001, 5:19am UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/222 "2001-08-27T05:19:49Z")
Once again, in order to claim that allowing workers and capital markets to direct social security surpluses, rather than allowing government to spend it, would not stimulate growth, you must assume that government directs capital for the purposes of growing wealth every bit as efficiently as does the private sector. This is a pretty absurd claim to make. pmanpman: \<\<\<“diverting 2% of payroll from government spending directly to capital investment…”\>\> \<\\> No, not really. The money would be diverted from the Treasury general fund. Only a small fraction of that fund goes to pay down federal debt. You’re also completely ignoring the law of diminishing returns that kicks in as the government purchases more and more of its own debt. The only way the government can purchase its debt is to pay a premium. The more it purchases, the more expensive it gets to purchases. The increased demand for long term federal debt–of the government’s own making-- has already pushed T-bond prices way up–enough to actually invert the yield curve through most of last year and into this year–no mean feat. Eventually, as bond prices increase, and yields decrease correspondingly, it makes less and less sense to repurchase debt, as that money can be used more productively elsewhere. The economy will grow its way out of debt just fine. So long as we can continue to stimulate growth, and control spending so we don’t run an actual deficit, debt will not be a problem. Some debt repayment makes sense. But the kneejerk harping of Democrats on “paying down the debt” ignores some of the very central tenets of the Democrats’ favorite economic theorist John Maynard Keyes (anybody remember ‘marginal utility?’) As debt payments increase, the marginal utility of paying down the debt decreases. Time to do something else. Transitioning from a PAYG SS model to a fully funded model via the capital markets is that something else. ---
**Author:** ![panzermanpanzerman](https://avatars.discourse-cdn.com/v4/letter/p/e9bcb4/32.png) [@panzermanpanzerman](https://boards.straightdope.com/u/panzermanpanzerman)\ **Post date:** [August 27, 2001, 5:24am UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/223 "2001-08-27T05:24:00Z")
CP: \<\\> Well, that’s not too distant a figure from the return to the contributor, isn’t it? \ The transaction costs are low in SS as it stands now. But focusing on transaction and admin costs alone is a very narrow and simplistic way of looking at the problem. Trans. costs are low. But opportunity costs are crushing. ---
**Author:** ![CyberPundit](https://avatars.discourse-cdn.com/v4/letter/c/76d3ee/32.png) [@CyberPundit](https://boards.straightdope.com/u/CyberPundit)\ **Post date:** [August 27, 2001, 3:09pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/224 "2001-08-27T15:09:56Z")
This link seems to indicate that the repayment of the debt is going to be a much larger fraction of the surplus in the next few years than you seem to think regardless of what happened in the past. [http://w3.access.gpo.gov/usbudget/fy2001/guide04.html](http://w3.access.gpo.gov/usbudget/fy2001/guide04.html) See table 4.1 In any case since the money isn’t spend a budget surplus by definition adds to the national savings. The lower rates on 30-year bonds isn’t necessarily a problem. Since treasury bonds act as a bench-mark in the market lower treasury rates will lower long-term rates for the private sector as well which stimulates private investment which after all is the whole point of repaying th e debt. Oh and the law of diminishing marginal utility was invented by William Stanley Jevons not Keynes as you seem to think. You still haven’t explained how and by how much the private accounts will add to the capital stock of firms. If it just leads to a big increase in stock prices, won’t it just be a big capital-gains for the current owners of stocks? ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [August 27, 2001, 3:17pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/225 "2001-08-27T15:17:41Z")
> [@](#): > > \*Originally posted by CyberPundit \* > \*\*… private accounts within SS are going to be that expensive compared to private investment plans (both are roughly 1% p.a. \*\* One per cent of what? Also, the expense of private investment plans is a known quantity. The rate for private accounts within SS is someone’s projection or guess. What’s the source for the 1% estimate? ---
**Author:** ![CyberPundit](https://avatars.discourse-cdn.com/v4/letter/c/76d3ee/32.png) [@CyberPundit](https://boards.straightdope.com/u/CyberPundit)\ **Post date:** [August 27, 2001, 4:20pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/226 "2001-08-27T16:20:29Z")
It’s presumably 1% of the funds invested in the private account every year which after compounding over the average working life becomes about 30%. I guess we can wait for the “forthcoming” CBO study for the details. You will have to ask Tejota for the source for the transactions costs under the current system. I think he put up the 1% figure in one of the earlier posts. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [August 27, 2001, 6:03pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/227 "2001-08-27T18:03:22Z")
**pman2:** \*The transaction costs are low in SS as it stands now. But focusing on transaction and admin costs alone is a very narrow and simplistic way of looking at the problem. Trans. costs are low. But opportunity costs are crushing.\* Not according to the 1994–1996 Advisory Council on Social Security, which compared the effective rates of return on three different projected Social Security schemes: > [@](#): > > - One set of recommendations, known as the Maintain Benefits proposal, did not include individual accounts. Instead, it called for consideration of investing a portion of the Social Security Trust Fund reserves in the stock market. > > - Another recommendation, the Individual Accounts proposal, included individual accounts on top of Social Security. The accounts would be financed by payroll contributions equal to 1.6 percent of wages, in addition to the current payroll taxes devoted to Social Security. To reduce administrative costs and for other reasons, the accounts would be centrally managed by an entity governed by federal appointees, based on the investment model used in the Thrift Savings Plan for federal employees. > > - Under the final proposal, the Personal Security Accounts proposal, individual accounts would be financed by diverting a portion of the current payroll tax equal to five percent of wages from the Social Security Trust Funds to the accounts. In other words, the current 12.4 percent Social Security payroll tax would effectively be reduced to 7.4 percent, and the 5 percent-of-payroll difference would be deposited in individual accounts. The accounts would be managed by the private sector. > > The three plans thus adopted very different approaches to individual accounts, from no individual accounts (under the Maintain Benefits plan) to relatively large individual accounts (under the Personal Security Accounts plan). The simple rate-of-return comparison — which emphasizes that the historical rate of return on the stock market is substantially higher than current and future rates of return on Social Security contributions — would suggest that these plans should produce significantly different rates of return. > > But despite the sharply different treatment of individual accounts in the three proposals, their estimated rates of return are very similar. Consider, for example, an average two-earner couple born in 1997. According to projections made by the Social Security actuaries and published in the Advisory Council report, the real rate of return for such a couple would be: > > - Between 2.2 and 2.7 percent per year under the Maintain Benefits plan, depending on the share of the Social Security Trust Fund invested in equities; > > - 2.2 percent per year under the Individual Accounts plan; and > > - 2.6 percent per year under the Personal Security Accounts plan. So actually, retaining a pay-as-you-go plan with minimal transaction and administrative costs does not seem to entail high opportunity costs: investing some of the funds of the existing system in equities brings the expected real rate of return to a level comparable with those of the “private-account” alternatives, which are not particularly high. **december:** _Also, the expense of private investment plans is a known quantity. The rate for private accounts within SS is someone’s projection or guess. What’s the source for the 1% estimate?_ Well, you were the one who said above that private accounts within SS could be run similarly to existing private investment plans, so I’m a little puzzled as to why you would want specific evidence that they would cost about the same—it seems pretty evident to me that they would. However, if you want a source for that estimate, I did find an [analysis of the Heritage Institute report](http://www.cbpp.org/10-5-98socsec.htm#N_15_) that discusses it: > [@](#): > > Based on data on IRA and 401(k) accounts, two eminent Social Security experts — Henry Aaron of the Brookings Institution and Peter Diamond of M.I.T. — have estimated that the administrative costs for retirement accounts like IRAs or 401(k)s would consume 20 percent of the amounts that otherwise would be available in these accounts to pay retirement benefits. They note that a one percent annual charge on funds in such accounts eats up, over a 40-year work career, 20 percent of the funds in the accounts. The 1994-1996 Advisory Council on Social Security estimated an annual charge of one percent on the assets in privately managed individual accounts. > > Furthermore, recent financial data indicate that a one percent annual charge is a conservative estimate. In 1997, the average annual charge on stock mutual funds was 1.2 percent of the amounts invested in those funds. In addition, Diamond has noted that administrative and management costs consume approximately 20 percent of the amounts in individual accounts in Chile’s privatized retirement system and more than 20 percent of the funds in privatized retirement accounts in Great Britain and Argentina. > > Some of these costs are fixed-dollar expenses that do not vary with the size of an account. As a result, such costs would generally consume a larger percentage of the amounts in smaller-than-average accounts (and a smaller percentage of the amounts in large accounts). This suggests these costs would, on average, consume more than 20 percent of the funds in the accounts of lower-wage workers. They also take up the question of additional costs required to convert such accounts into annuities, but that’s another issue. By comparison, administrative costs of the entire current SS plan are less than one cent for every SS tax dollar, i.e., less than 1% of benefits. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [August 27, 2001, 6:25pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/228 "2001-08-27T18:25:53Z")
**pman2:** \*Every graph I’ve seen has the number of workers per retiree continuing to contract through 2075 or so (beyond which time we have no clue what will happen, as those retiring beyond that time have not yet been born.) \* But the simple ratio of workers to retirees is not the only important factor, either: as [this article](http://www.theatlantic.com/issues/98jul/socsec.htm) points out, “To assess the burden accurately it is necessary to examine the total number of dependents – beneficiaries and children – each worker will have to support. It is projected that this ratio will rise from 0.708 per worker at present to 0.795 in 2035. But even this number is well below the ratio of 0.946 that prevailed in 1965. And the fund’s trustees project a lower birth rate, meaning that the increased costs of providing for a larger retired population will be largely offset by the reduction of expenses associated with caring for children.” Note also that the effect of demographic change is accounted for in the very pessimistic assumptions on which the projections I discussed above were based: “that growth will average just 1.8 percent over the next twenty years, a lower rate than in any comparable period in U.S. history; that growth will slow even further in later years, until the rate is less than half the 2.6 percent of the past twenty years; that there will be no increase in immigration even when the economy experiences a labor shortage because of the retirement of the Baby Boom generation; and that this labor shortage will not lead to a rapid growth in wages. Both possibilities excluded in these projections – increased immigration and rapid wage growth – would increase the fund’s revenues.” So you’re trying to compare just about the **best** case scenario for a privatized system—in which all workers are expected to get a fairly optimistic long-term annual rate of return, you don’t take into account the effects of privatization on non-retirement benefits, you assume minimal transition and administration costs, and you assume no “bailout” costs to make up for bad investments—with the **worst** case scenario for the existing system, which I don’t think is a fair assessment. I also rather take issue with your description of any possible change to the current benefits structure as “slashing benefits”. As **december** pointed out, the real long-term demographic issue is that with rising life expectancies, more people will be living longer. If people are living longer, why should we assume that a social insurance plan that provides retirement savings should maintain the same retirement age in perpetuity? When my mother retired, the age for full-benefits eligibility was 65 (which it still is now); when I retire, that age will be up to 67. You call that “benefit slashing”, but I don’t see why; since current life expectancies continue to increase, why should we expect to have all that time in our retirement years rather than our working years? Applying the term “benefit slashing” to the inevitable effects of demographic changes sounds to me kind of disingenuous. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [August 28, 2001, 2:34pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/229 "2001-08-28T14:34:05Z")
> [@](#): > > \*Originally posted by CyberPundit \* > \*\*It’s presumably 1% of the funds invested in the private account every year which after compounding over the average working life becomes about 30%. I guess we can wait for the “forthcoming” CBO study for the details. > \*\* From today’s Smarter Times > [@](#): > > The letters to the editor section of today’s New York Times carries a letter from the director of the Congressional Budget Office responding to the August 21 Reckonings column. That August 21 column claimed: “Managing millions of small individual accounts would be very expensive. That last point is important. A forthcoming study by the Congressional Budget Office suggests that as much as 30 percent of the value of private accounts would end up consumed by administrative costs. This compares with costs that are less than 1 percent of benefits in today’s Social Security system.” > > [Smartertimes.com](http://Smartertimes.com) pegged that claim as highly questionable back on August 21. But now the director of the Congressional Budget Office writes to set the record straight: “The figure is from a 1999 draft study . . . . Not surprisingly, some design choices could imply high administrative costs. Other design choices could dramatically lower cumulative administrative costs to as little as 1 percent of an average account’s value at retirement. The number Mr. Krugman cites is at one end of a range and is not the C.B.O.'s estimate of the likely administrative costs of private accounts.” [http://www.smartertimes.com/](http://www.smartertimes.com/) The full letter itself from the Times will not be available after today. It’s at [http://www.nytimes.com/2001/08/28/opinion/L28KRUG.html](http://www.nytimes.com/2001/08/28/opinion/L28KRUG.html) > [@](#): > > August 28, 2001 > > Social Security Costs > > Reckonings: Fabricating a Crisis (August 21, 2001) > > To the Editor: > > Paul Krugman (column, Aug. 21) says that “a forthcoming study from the Congressional Budget Office suggests that as much as 30 percent of the value of private accounts” at retirement in a partially privatized Social Security system would be consumed by administrative costs. > > The figure is from a 1999 draft study that tried to show that choices made in the design of private accounts could have important implications for administrative costs. > > Not surprisingly, some design choices could imply high administrative costs. Other design choices could dramatically lower cumulative administrative costs to as little as 1 percent of an average account’s value at retirement. > > The number Mr. Krugman cites is at one end of a range and is not the C.B.O.'s estimate of the likely administrative costs of private accounts. > > DAN L. CRIPPEN > Director > Congressional Budget Office > Washington, Aug. 22, 2001 ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [August 28, 2001, 3:29pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/230 "2001-08-28T15:29:18Z")
Pretty sneaky of Krugman to misrepresent the results of a CBO study that wasn’t published yet.☹ ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [August 28, 2001, 9:27pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/231 "2001-08-28T21:27:35Z")
**december:** _Pretty sneaky of Krugman to misrepresent the results of a CBO study that wasn’t published yet._ You’re stretching it a bit there, I think. According to your own quote, what he said was that “a forthcoming study from the Congressional Budget Office suggests that as much as 30 percent of the value of private accounts” (emphasis added) could be eaten up in admin costs. To me, that phrasing says quite clearly that the figure is at the high end of possible results, and also that it is an estimate based on currently unpublished data, not a firm prediction of the exact expected result. In other words, he wasn’t making a positive assertion about what the results **would** be, he was making a point about how bad the results **might** be in the worst case. There’s nothing inherently “sneaky” or “misrepresenting” about that, especially since it’s clear from the quote that that’s what he was doing. Your efforts to show that Krugman is unreliable or a liar all seem to rest on nitpicky minutiae like this, and I have to say that the total effect so far is pretty unconvincing. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [August 29, 2001, 12:48am UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/232 "2001-08-29T00:48:23Z")
> [@](#): > > \*Originally posted by Kimstu \*There’s nothing inherently “sneaky” or “misrepresenting” about that, especially since it’s clear from the quote that that’s what he was doing. Your efforts to show that Krugman is unreliable or a liar all seem to rest on nitpicky minutiae like this, and I have to say that the total effect so far is pretty unconvincing. \*\* **Kimstu** , I suggest that you go back and read the earlier posts on this thread. PK fooled _you_ and your allies into believing that 30% was a reasonable estimate of the admin cost, whereas the actual CBO range went as low as 1%. Instead of blaming PK for misrepresentation, you defend him. I had hoped that you and **Cyberpundit** would support privatization, now that you know the that the lifetime admin expense might be only 1%. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [August 29, 2001, 5:12pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/233 "2001-08-29T17:12:36Z")
**december:** _PK fooled you and your allies into believing that 30% was a reasonable estimate of the admin cost_ Sez you. I never made any assumptions about what a “reasonable estimate” of the admin costs would be based merely on a very qualified passing remark from Krugman. Instead, I read a lot of sources (including the ones that I linked to above) that gave specific reasons for estimating that the admin costs of individual accounts under most projected privatization plans would be much higher than those of the current SS system. \*Instead of blaming PK for misrepresentation, you defend him. \* Because he didn’t actually misrepresent anything, according to the evidence you’ve provided. All he did was to mention one extreme of the range of possible costs—making it very clear that it was a high-end estimate—without mentioning the other extreme. So? _I had hoped that you and Cyberpundit would support privatization, now that you know the that the lifetime admin expense might be only 1%._ You should know by now that we’re nowhere near that gullible! 🙂 As I pointed out above, I try not to form my opinions on complicated socioeconomic policy issues on the basis of casual sound bites. The fact that the CBO director mentioned briefly that the admin costs of some unspecified privatized plan, under some unspecified conditions, **might** be as low as 1% cuts no more ice with me than the fact that Paul Krugman mentioned briefly that they **might** be as high as 30%. If you really want to convince me that a privatized plan would be no more expensive to administer than the current system, don’t just wave an out-of-thin-air possible estimate at me: tell me the details and show me the numbers. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [August 29, 2001, 5:43pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/234 "2001-08-29T17:43:53Z")
> [@](#): > > \*Originally posted by Kimstu \* > \*\*The fact that the CBO director mentioned briefly that the admin costs of some unspecified privatized plan, under some unspecified conditions, **might** be as low as 1% cuts no more ice with me than the fact that Paul Krugman mentioned briefly that they **might** be as high as 30%. \*\* **Kimstu** , give me a break. The CBO director did NOT “mention briefly that the admin costs of some unspecified privatized plan, under some unspecified conditions, **might** be as low as 1%.” On the contrary, his letter said that a variety of invesment plans were being considered, with lifetime costs ranging from 1% to 30%. This is a fair summary. PK did NOT, “mention briefly that they **might** be as high as 30%.” He quoted a CBO report as having made that statement. But, the CBO Report had a range a 1% to 30%, so PK’s version was an unfair summary. On 8/26, I posted: > [@](#): > > . PK’s articles are not dispassionate analyses; they are one-sided debates. They take advantage of the fact that most readers don’t have the technical knowledge to find the flaws in his arguments. I feel that the letter from the CBO Director supports my position. No doubt I feel more strongly about this than most, because I’m an actuary who takes ethical responsibilities seriously. I’m really good at lying with statistics, but I don’t do it. I’m also skilled at spotting statistical lies, and I don’t like them! Anyhow, admin costs will depend on the type of investment plans adopted. If Bush selects a structure that will cost only 1% over a lifetime, will you support it? ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [August 29, 2001, 6:11pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/235 "2001-08-29T18:11:52Z")
**december:** \*I feel that the letter from the CBO Director supports my position. \* Well, it doesn’t seem to me that you’ve provided any more evidence for that than what we’ve already discussed, and I have nothing to add to what I’ve already said about it, so we will simply remain in disagreement over that one. _Anyhow, admin costs will depend on the type of investment plans adopted. If Bush selects a structure that will cost only 1% over a lifetime, will you support it?_ !! I’m supposed to decide on my support for such a plan based solely on the administrative costs? Not bluggy likely. Please tell me in addition specifically what your hypothetical “structure” will entail in terms of creating and managing privatized accounts, projected rates of return and the specific assumptions underlying the projections, projected levels of risk and the specific assumptions underlying the projections, projected strategies for funding transition costs, expected impact on SS’s redistributive effect, expected impact on non-retirement benefits, strategies for account transfer and annuity conversion, and relation to current economic and demographic projections, and I’ll be happy to study the proposal and give you my opinion. Please get it out of your nut that I’m merely opposed to privatization _per se_ because I’m some kind of worshipper of Big Government and centralized bureaucracy. I **like** private investment and I do as much of it as I can afford. The reason I oppose SS privatization is that all the privatization plans I’ve seen so far have huge gaping economic holes in them, which many of their advocates seem to be trying to gloss over for the sake of promoting a policy change that would be personally advantageous to them. Show me a privatization proposal, **in detail** , that really makes a significant difference in return on investment while coping successfully with all the problems that have been discussed on this thread, and I’ll be glad to support it. But it will take more than a little handwaving about vague estimates to convince me. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [August 29, 2001, 8:00pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/236 "2001-08-29T20:00:10Z")
From the Code of Professional Conduct: > [@](#): > > …An Actuarial Communication prepared by an Actuary may be used by another party in a way that may influence the actions of a third party. The Actuary should recognize the **risks of** misquotation, **misinterpretation** , or other misuse of the Actuarial Communication and should therefore **take reasonable steps to present** the Actuarial Communication **clearly and fairly** … (my emphasis) If I had written Krugman’s column, I’d be up on charges before the Discipline Committee. When I was young, I believe a Princeton Professor or a NY Times columnist would have maintained similar standards. Today, it’s no problem, as long as you’re on the right side (that is, the left side.) BTW there are columnists like Robert Scheer who identify themselves as being on the left. But, Krugman does not do do so, nor does the NY Times. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [August 29, 2001, 8:44pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/237 "2001-08-29T20:44:02Z")
From the Code of Professional Conduct: > [@](#): > > …An Actuarial Communication prepared by an Actuary may be used by another party in a way that may influence the actions of a third party. The Actuary should recognize the **risks of** misquotation, **misinterpretation** , or other misuse of the Actuarial Communication and should therefore **take reasonable steps to present** the Actuarial Communication **clearly and fairly** … (my emphasis) If I had written Krugman’s column, I’d be up on charges before the Discipline Committee. Years ago, a Princeton Professor or a NY Times columnist would have maintained similar standards. Today, there’s no ethical problem, as long as you’re on the right side (that is, the left side.) BTW there are columnists like Robert Scheer who identify themselves as being on the left. But, Krugman does not do do so, nor does the NY Times. They should. ---
**Author:** ![CyberPundit](https://avatars.discourse-cdn.com/v4/letter/c/76d3ee/32.png) [@CyberPundit](https://boards.straightdope.com/u/CyberPundit)\ **Post date:** [August 29, 2001, 11:03pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/238 "2001-08-29T23:03:23Z")
December, I think I have said repeatedly that in addition to the administrative costs I think there is a problem that the extensive borrowing that privatization will require will reduce the capital stock effectively cancelling the benefits .The more I think about it the less I am really sure if and by how much private accounts will produce a real increase in the capital stock. In addition I am worried about the the distributive implications and the additional risk that private accounts imply. But you are right that if the administrative costs for private accounts are as low as the status quo, one major objection is removed. That still doesn’t mean that there are enough significant benefits to private accounts to warrant the transition. And note that the middle range of the estimates still produce significant costs ie. about 15%. We will just have to wait and see how much those costs are likely to be under the Bush plan. BTW don’t you think it’s strange that the commission report doesn’t produce AFAIK any estimates of those costs. Are they trying to sweep the issue under the carpet? And get off Krugman. His statement is quite accurate as far as it goes and I am not sure quite how you divine that he was seeking to mislead people. It is quite relevant that the costs could go as high as 30% though it would have been a bit better if he had mentioned the range. We don’t even know how much of the report he saw. Anyway a big ethical lapse it ain’t. And he isn’t really a leftist (centre-left perhaps). During the Clinton administration he savaged people like Robert Reich and Ira Magaziner. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [August 29, 2001, 11:33pm UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/239 "2001-08-29T23:33:09Z")
> [@](#): > > \*Originally posted by CyberPundit \* > And get off Krugman. His statement is quite accurate as far as it goes and **I am not sure quite how you divine that he was seeking to mislead people.** It is quite relevant that the costs could go as high as 30% though it would have been a bit better if he had mentioned the range. Look at it this way. PK had seen an earlier CBO report with a lifetime expense rangte of 1% to 30%, depending on the type of plan. As you say, it sure would have been better to mention the range. Figuring about 30 years in a plan, the range is equivalent to 0.03% to 1% per year. PK’s article didn’t say that this was a lifetime cost, so a reader might have assumed that it was an annual cost. In my insurance and investment experience, expense ratios are normally annual. Note that someone who wanted to mislead in the other direction could have written, “The admin expense might be as low as .03%.” > [@](#): > > Anyway a big ethical lapse it ain’t. I’d be in big trouble with my professional society if I had written that article. > [@](#): > > And he isn’t really a leftist (centre-left perhaps). During the Clinton administration he savaged people like Robert Reich and Ira Magaziner. Your second sentence doesn’t necessarily prove the first, but it’s interesting. Do you have any more detail that would help us understand PK’s politics? It’s also possible that he’s suiting his columns to the far left, anti-Bush leanings of the NY Times owner. He wouldn’t be the first writer to kowtow to his boss. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [August 30, 2001, 12:39am UTC](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804/240 "2001-08-30T00:39:51Z")
**december:** \*Look at it this way. PK had seen an earlier CBO report with a lifetime expense rangte of 1% to 30%, depending on the type of plan. As you say, it sure would have been better to mention the range. \* But we have no idea what different kinds of plans were being presented in the report that had such a wide range of estimated administrative costs. Perhaps the plan that would only cost 1% in admin expenses was one that would differ only in trivial ways from the current system, and/or was much less likely to be selected by privatization advocates than the one that would cost 30%. Perhaps not. The point is, we **don’t know** exactly why Krugman didn’t mention the low end of the range of estimated costs in that CBO report, and your assumption that he **must** have been deliberately trying to mislead people because of anti-privatization prejudice (his own or his employer’s) is simply a reflection of your own biases. Face it **december** , you are trying to squeeze a wholesale accusation of professional misconduct out of a single brief and qualified remark by Krugman about one aspect of a report you haven’t read. It isn’t really accomplishing anything except to make you look rather prejudiced and obsessive. My advice is, either come up with some **real** evidence that demonstrates conclusively that Krugman is deliberately trying to misrepresent the facts on this subject, or let it go. [Previous page](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804.md?page=11) [Next page](https://boards.straightdope.com/t/linda-lutton-on-bush-tax-cut/76804.md?page=13)