About Social Security

I've stayed away from this topic, mostly because it's way more complex than I fully comprehend, and because so many other people have been doing a bangup job on the topic, especially Publius from Legal Fiction here and here.

But this is the most salient point to make about any Social Security discussion, in my view. Whenever Bush says, or even hints at, the idea that Social Security will be bankrupt, he's lying. Lying. Not confused. This is not a difference of opinion. He's lying, pure and simple.

Because anyone who knows the first thing about Social Security knows that it cannot go bankrupt, not unless the Federal government stops collecting payroll taxes. What it can do is reach the point where it can't pay out the full amount of promised benefits, but that's not the same as bankrupt.

Now here's the second most important point: the only way that there's anything resembling a crisis is if the economy does a good bit worse over an extended period of time, namely, between now and 2042. Now, with the way Bush is running the economy, there's certainly a possibility that we'll be faced with just that scenario, but should we come to a crisis of that magnitude, we'll be in such deep shit that the Social Security problem will just be sauce for the goose. I'll let Publius explain it:

All the predictions you’re hearing about Social Security’s long-term health are based on predictions from the annual report by the Social Security Board of Trustees. These predictions are based on a number of assumptions such as average lifespan, economic growth, etc. With respect to SS's long-term fiscal health, the Trustees offered three different scenarios based on three different assumptions about economic growth – one “optimistic”; one “pessimistic”; and one “intermediate.” The “intermediate” assumption is the basis for the claim that Social Security will be “bankrupt” by 2042.

Under the “intermediate” assumption, the economy grows at a rate of about 1.9%, and Social Security will, in 2042, not be able to pay out all of its promised benefits (in other words, there will be a gap under this assumption). But even if this is true, SS can still pay over 70% of its promised benefits, so the “bankruptcy” claim is bogus. However, under the “optimistic” assumption that the economy will grow at 2.6% (not 1.9%), there is no shortage until 2080. But here’s the kicker. The most “optimistic” growth assumption is less than the historical rate of growth. In other words, if the economy grows at the same rate as it always has, there is no crisis at all. Don’t get lost in the numbers, it’s the general principle that counts.

And more importantly, don’t be fooled by the things you will hear such as fewer workers are supporting more people, or that the population is getting older. That’s all true, but it’s already been factored in. If the economy grows the way it always has, there is no crisis even though all this stuff is happening.

Here's the root of it all. The only way there's a crisis is if we have a major-league economic meltdown that we can't pull out of for a decade or longer, or if the government defaults on the loans it has made from the SS trust fund. We still have to beat this thing into the ground to keep the Republicans from making their Wall Street buddies even richer on the backs of the working class, but at the very least, we've got the information necessary to make it happen.

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