MyDD :: Social Security is VERY solvent

Social Security is VERY solvent

by Gary Boatwright, Wed Feb 16, 2005 at 05:11:53 PM EST

From the diaries--Chris

I've been following the Social Security story pretty close, but I have not seen this article from The Hill reported or blogged anywhere. Treasury experts split on Social Security plan.

Treasury Department research papers, available to the public at the department's website, show that Social Security benefits for lower-income earners are progressive.

A Treasury Department paper written in 1995 looked at data from Social Security beneficiaries and concluded, "Social Security net returns are strongly progressive." For working males, the rate of return was 5.5 percent. Social Security's rate of return for lower-income males was 6.17 percent and for higher income males, 5.04 percent.

In June 2001, Social Security economists and actuaries wrote a paper, referred to as Note 144, on rates of return for hypothetical workers. They concluded that low-income "two earner couples" born in 1955 will earn a 3.2 percent rate of return, a medium income bracket would earn just a 2.15 percent rate of return, and a high income bracket couple would earn just 1.49 percent.

That's a far higher rate of return than anything I've seen. Has Bush been using combined returns that include the poorer returns of high income people with the superior returns of regular folks? Probably. Maybe Krugman has mentioned those estimates for return on Social Security and I just missed them.

How about this? Confirming once again that Bush is a pathological liar.

Another Social Security Administration paper released in 1999 found that "At ages 65 to 90, black men were not found to have a significantly higher risk of death than men of other races."

Or to use a media phrase for pathological liars, there is a disconnect there.

"I think in general [the research is valuable] when it is being done by professionals, when unconstrained by politics," said Robert Shapiro, an economist and former undersecretary of commerce in the Clinton administration. "To the extent the research begins with political constraints, in terms of pure information, it is useless."

A former Social Security official said, "I don't think there is any question if you look at the estimates that the administration is putting together for long run economic growth and how those tie into the return on private accounts, there is a disconnect there."

The administration is assuming a 4.6 percent return on private accounts. "That's the basic contradiction," said Shapiro. "In order to get that kind of return, the economy would have to be growing fast enough so that most of Social Security's financing problem would have gone away."

Here was the big shocker from Kevin Drum at Political Animal:

Now, Langer has made some incendiary charges of political interference in the forecasting process that have made him pretty unpopular with the Social Security actuaries. Still, his numbers speak for themselves: the low-cost projection is historically the most accurate one, and it shows that the trust fund is not only solvent forever, but runs a huge surplus.

So the low cost projection is more historically accurate than the intermediate cost that is being used to debate structural changes to Social Security? Check out Figure II.D7 Historical Estimated Projection I has been the most accurate in the past. Without a single change Social Security is solvent forever. Does anybody think there is a snowball's chance in hell that anybody in the media will point this out? Not likely.

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An adjustment to reality (3.00 / 1)

Courtesy of Josh Marshall at TPM that is what our Good Old President is calling cuts to Social Security payments. Here is an LTE I just sent to the O.C. Register that will never be printed:

President Bush has been touring the country promoting his stealth plan to do something about problems with Social Security that may not even exist. We're not sure exactly what changes will be implemented by the President's classified plan to reform Social Security, because they are classified. The President has told reporters that the current program is not sustainable, so we have to divert about 1/3 of the payments we make into the Social Security trust fund, to make sure it runs out even quicker.

In addition to fixing the Social Security program by breaking it, President Bush said this about cutting the rate of growth in Social Security payments, which he was careful not to actually support or rule out, "One of the suggestions, for example, is that they grow, but not at a rate as fast as projected," he said. "You can call it anything you want. I would call it an adjustment to reality."

An adjustment to reality. What a kidder our President is! I can't wait until Human Resources managers get a hold of that line. "Mr. Jones, we have good news. You are not being fired, we are going to ask you to make an adjustment to reality." Unfortunately, the President's joke is being played on the American people.

by Gary Boatwright on Wed Feb 16, 2005 at 02:38:52 PM EST

social security terminology (none / 0)

We should stop calling Social Security a government
program. It is a communal program (that is one
set up by the community for its own benefit).
It is administered by the government. That is
there is a department that takes care of collecting
and disbursing the funds.
It also invests in government bonds with it excess
capital. All pension funds are required to make
"prudent" investments with their beneficiaries
funds and most invest a goodly percentage in
government bonds.

By calling it a comunal program we should be able
clarify some of the heated debate.

Until LBJ Social Security was not part of the
federal budget. It was added to disguise the
percent of the real federal budget going towards
the war. If it and Medicare were removed the
actual federal budget would be about 50% devoted
to military/police functions.

---Policies not Politics
Daily Quiet Image

by rdf on Wed Feb 16, 2005 at 02:42:59 PM EST

Its a SOCIAL INSURANCE program.. (none / 0)

Because, as those who lived through the second 'Great Depression' realized.. stocks and bonds are inherently risky.. By spreading the risk.. Social Security ENSURES at least a sub-subsistence level for all.. (even if they might have to move to another country to live on it)

What the GOP want is to ELIMINATE that GUARANTEE...

For almost everybody, it ends up being a ripoff.. Especially if you are under 60 or over 40.. part of the Baby Boom generation.. coincidentally, the same group that is getting shafted on their pensions and healthcare costs.. thanks to the GOPs war on average Americans - for the corporations..

by ultraworld on Thu Feb 17, 2005 at 12:50:45 AM EST
[ Parent ]

NOTICE! MILITARY WILL GO BROKE IN 5 YEARS (none / 0)

If bush dropped dead and the repugs dropped the issue does anyone think we would not fund SS. This entire issue is a red herring.
If I were in charge of the Democratic response team, I would just tell americans, over and over again, The real cause of the SS "crisis" is the Repuglicans are in charge. The Democrats created SS. They can certainly save it when they are in the majority once more!

by eddieb on Wed Feb 16, 2005 at 04:09:41 PM EST

Make no mistake. There is a serious threat to SS! (3.00 / 2)

There truly is a serious threat to the whole Social Security program, a threat that may well cause our children to have zero Social Security awaiting them at retirement. And, this threat needs to be addressed very soon - we can start in 2006 and completely solve the threat in 2008. It won't cost us a dime more in SS tax, require a cut in benefits, or add anything to the budget deficit. The threat, and it is indeed the most serious one ever faced by the Social Security program is called little Georgie and his band of thieves.

by Sacramentohop on Wed Feb 16, 2005 at 07:04:13 PM EST

BUSH's WAR AND GOP TAX CUTS FOR THE RICH (none / 0)

are what is draining away our future..

And thats because of the huge DEFICIT.. not Social Security..

The greedy GOP are just angry that people are living longer and actually enjoying some time in retirement..

(When Social Security was instituted, the average workers lifespan was less than 65, so less than half ever got to enjoy any retirement at all.. they were dead..)

GREED is what is getting us into this mess.. Don't fall for the noise machine's shrill screaming - a diversionary tactic..

by ultraworld on Thu Feb 17, 2005 at 12:44:55 AM EST
[ Parent ]

Denial about trends for the future on jobs.. (none / 0)

Seems to me like the economy was in better shape in 2001 than it is now..

I think that the chance of unemployment going up as more and more jobs are shipped overseas or automated (which is more likely) is pretty high.

I don't know why they aren't figuring that in..

In the 40s, government experts were saying that if trends in improving productivity continued..by 1990, we'd only be working 22 hours a week..

That sounds about like what is happening.. so how about telling the truth.. about the future...

by ultraworld on Thu Feb 17, 2005 at 12:40:14 AM EST

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