[Local_activists] The Most Important Social Security Chart Ever, etc.
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Fri Nov 5 21:03:34 PDT 2010
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
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.
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
GOPs 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 dont actually want to privatize Social Security.
... second ... To obfuscate their privatization
plans by sugarcoating them in flowery, palatable
language. President Bushs 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.
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
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.
Seniors Feel Social Security Pinch, Prepare to
Cut Back on Food (Wall St. Bonuses Increase)
Social Security Sense and Nonsense
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.
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."
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
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
from scheduled benefits for medium wage earner.]
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
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.
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