[Local_activists] The Most Important Social Security Chart Ever, etc.

[Wanda Ballentine]

http://motherjones.com/kevin-drum/2010/10/most-important-social-security-chart

The Most Important Social Security Chart Ever
­ By <http://motherjones.com/authors/kevin-drum>Kevin Drum
| Mon Nov. 1, 2010 6:00 AM PDT

This is apropos of nothing in particular, but I 
guess that Social Security is going to be back in 
the news when the president's deficit commission 
reports back, so I want to take this chance to 
post the single most important chart you'll ever 
see about the finances of Social Security. Here it is:

[]


This is from page 15 of the 
<http://www.socialsecurity.gov/OACT/TR/2010/tr2010.pdf>latest 
trustees report. What's important is that, unlike 
Medicare, Social Security costs don't go upward 
to infinity. They go up through about 2030, as 
the baby boomers retire, and then level out 
forever. And the long-term difference between 
income and outgo is only about 1.5% of GDP.

This is why I keep saying that Social Security is 
a very manageable problem. It doesn't need 
root-and-branch reform. The trust fund makes up 
Social Security's income gap for the next 30 
years, so all it needs is some modest, phased-in 
tweaks that cut payouts by a fraction of a point 
of GDP and increase income a fraction of a point. 
<http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/1926-what-i-told-obamas-fiscal-commission-about-social-security>Here's 
a proposal from Jed Graham that's designed to cut 
benefits a bit for high earners and encourage 
them to retire later, and maybe it's great. I 
haven't looked at it in detail. But the point is 
that the changes he recommends are fairly small. 
Any plan for fixing Social Security requires only 
tiny benefit cuts and tiny revenue increases. It's just not that big a deal.

Report: 104 Republicans in Congress Want to Privatize Social Security
http://www.truth-out.org/report-104-republicans-in-congress-want-to-privatize-social-security64585
  GOP’s strategy on Social Security two-fold. 
First, Republicans deny they are interested in 
privatization. Rep. Kevin McCarthy (R-CA) 
recently told the Wall Street Journal that “no 
one has a proposal up to cut Social Security,” 
(his own book proposes doing so), while 
conservatives in the media have tried to argue 
that Republicans don’t actually want to privatize Social Security.
... second ...  To obfuscate their privatization 
plans by sugarcoating them in flowery, palatable 
language. President Bush’s privatization plan is 
a prime example. In his 2005 State of the Union, 
President Bush said we needed to “save” Social 
Security and give younger workers a “better deal” 
by having “voluntary personal retirement 
accounts,” the poll-tested language for 
privatization. Bush now says his greatest failure 
was not privatizing Social Security. 
http://www.commondreams.org/headline/2010/10/22-3
However, such rhetoric belies their record. A 
thorough review of the voting records and 
statements of Republicans in Congress reveals a 
critical mass of GOPers who have supported 
privatizing Social Security. In total, 47 percent 
of House Republicans and 49 percent of Senate 
Republicans are on record supporting the privatization of Social Security.
They are listed at website

http://www.commondreams.org/headline/2010/10/21-1]
Familiar GOP Plan Lives: Cutting Social Security to 'Save It'
Republican plan to rein in the rising cost of 
Social Security would dramatically reduce 
retirement benefits for middle- and upper-income 
Americans, especially those now younger than 25, 
according to an analysis released Wednesday by the program's chief actuary.

http://blogs.alternet.org/speakeasy/2010/10/12/seniors-feel-social-security-pinch-prepare-to-cut-back-on-food-wall-st-bonuses-increase/
Seniors Feel Social Security Pinch, Prepare to 
Cut Back on Food (Wall St. Bonuses Increase)

http://www.offthechartsblog.org/social-security-sense-and-nonsense/
Social Security Sense and Nonsense

http://www.truth-out.org/keeping-fear-alive-the-deficit-hawks-push-their-agenda64506
Keeping Fear Alive: The Deficit Hawks Push Their Agenda
By Dean Baker
The deficit hawks must believe that they are in 
the home stretch of their drive to cut Social 
Security and Medicare benefits since they seem to 
be pulling out all the stops. The attack on 
Social Security and Medicare is heating up with 
the opponents of these programs going the route 
of straight up xenophobia and racism.

http://www.alternet.org/story/148745/new_york_times_columnist_peter_orszag_joins_the_social_security_fearmongering_crowd
New York Times Columnist Peter Orszag Joins the 
Social Security Fearmongering Crowd
Former OMB Director Peter Orszag writes a 
tin-eared response to the elections, in his NYT 
op-ed, "Saving Social Security."

http://www.offthechartsblog.org/social-security-sense-and-nonsense/
Social Security Sense and Nonsense
by Paul N. Van de Water, Senior Fellow at the 
Center on Budget and Policy Priorities, where he 
specializes in Medicare, Social Security, and health coverage issues.

Washington Post Does Cover Up Duty for Republican Plans to Cut Social Security
The Washington Post headlined a piece on a 
Republican 
proposal 
[http://www.washingtonpost.com/wp-dyn/content/article/2010/10/20/AR2010102006052.html]to 
cut Social Security benefits, "GOP Social 
Security plan would cut benefits for higher 
earners." This headline may lead one to believe 
that the plan would only cut benefits for 
relatively affluent workers. In fact, the plan 
would cut benefits for 70 percent of all workers, 
as indicated in the first sentence. The plan also 
raises the retirement age to 70, which amounts to 
an additional benefit cut of roughly 15 percent for all workers.

The table accompanying the article also badly 
understates the impact of the cuts proposed in 
the Republican plan. It compares the benefits 
that a medium earner would get under the 
Republican plan in 2050 with the earnings that a 
medium earner would get today. The more 
appropriate comparison is the currently scheduled 
benefits for a medium earner in 2050. This is 
projected to rise by more than 48 percent to over 
$1,800 a month (in 2010 dollars) by 2050. The 
Republican plan would imply a cut of more than 35 
percent against this scheduled level of benefits.

The article also presents an inaccurate statement 
from a spokesperson for Representative Ryan (the 
author of the Republican plan) without pointing 
out to readers that it is wrong. The spokesperson said that:

"According to the Social Security Administration, 
Congressman Pomeroy's do-nothing plan will impose 
painful, across-the-board benefit cuts on current 
seniors and those nearing retirement."

Actually, the trustees project that the program 
can pay full benefits for through the year 2037 
with no changes whatsoever, at which point it 
would be able to pay 75 percent of scheduled 
benefits. Very few current retirees can expect to live more than 27 years.


[Addendum: Actually, the numbers in the chart 
refers to benefits that are indexed to the 
average wage in the economy. This means that if 
benefits doubled in nominal dollars and the 
average wage doubled, then indexed benefit would 
show no increase. The size of the cuts in the 
plan put forward by Representative Ryan depend on 
the exact point a worker's wages fall in the 
distribution.  If one combines the impact of the 
change in the indexation formula proposed by 
Representative Ryan and his proposed increase in 
the retirement age, it would lead to a 25 percent 
cut 
[http://www.cbpp.org/files/10-20-10socsec.pdf] 
from scheduled benefits for medium wage earner.]

Comments 
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Dumb Comments on CBS Money Watch: The Ratio of 
Government Payments to the Elderly Compared to Payments to the Young

Eric Schurenberg is upset about Social Security 
and Medicare benefits 
[http://moneywatch.bnet.com/retirement-planning/blog/financial-independence/no-social-security-cola-how-unfair-is-that/1060/] 
because the federal government spends 7 times as 
much on each senior as it does on each child. 
This is taken from a paper that came out from the Brookings Institution.

Let's use the Schurenberg-Brookings methodology 
to see the ratio of average federal spending on 
the country's 400 billionaires to spending per 
child. For convenience let's say that federal 
spending averages $5,000 per child.

How much does the federal government spend on 
each billionaire? Most wealthy people hold some 
amount of their wealth in government bonds. Let's 
conservatively assume that our 400 billionaires 
hold an average of $1 billion worth of government 
bonds. Let's assume that these bonds pay an 
average interest rate of 4 percent. This means 
that the government is paying our billionaires an 
average of $40 million a year in interest. This 
is about 8,000 times what we spend on children on 
average. How's that for fairness?

Okay, everyone is jumping up and down saying that 
our billionaires paid for these bonds and this 
interest is just a return on that payment. This 
is true, but guess what? Our seniors paid Social 
Security and Medicare taxes to cover their 
benefits. In other words, they paid for these 
benefits much like the billionaires paid for 
their bonds, except of course that the seniors had no choice in the matter.

Ignoring the fact that Social Security and 
Medicare were paid for with designated taxes is 
dishonest, just as it would be dishonest to 
comment on the interest payments going to the 
billionaires without noting that they had paid 
for their bonds. But hey, this is the state of public debate in Washington.

Comments 
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