Again, I am sorry for your inability to analyze the facts but you are simply the next generation of Europeans who allowed fascism to rise because of their deep-seated servility and bigotry.
You are no better and are just as responsible.
You are also even lazier and more servile than I expected. Then again, I always expect too much from the right wing and always receive back so much less. Sad. Karl Rove is right, more education creates more Democrats.
- Reagan raised SS taxes 6 times.
- There is a baby boom through the early 50s followed by a baby bust through the mnid 80s followed by yet another baby boom. This stuff happens, we're not robots when it comes to babies.
- SOCIAL SECURITY surplus: $154 Billion/year now.
1984/85 - under Reagan SOCIAL SECURITY taxes increased and the system has been in surplus ever since.
1984 - 2018: system in surplus
2018: first time more money going out than coming in
2018 - 2052: 100% funded WITH NO CHANGES
Afterwards: 90-75% funded for years WITH NO CHANGES
Clinton: Left some $600 B surplus which Bush immediately turned into deficits as far as the eye can see.
- Watch very carefully the numbers that Bush uses, he tries to create the image of utter bankruptcy by using infinity as the timeline for viewing SS.
- No one says that SS doesn't need tweaking for the boom/bust cycles and increased lifespans. Get rid of the cap on income for contributions to the system, increase the age of beneficiaries, do means testing for beneficiaries and stop letting Bush spend us blithely into bankruptcy.
- Bush's supposed solution is only a huge transfer of funds from hard-working citizens to his campaign contributors.
- The term PRIVATIZATION in the Bush administration is synonymous with STEALING.
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The Iceberg Cometh
By PAUL KRUGMAN
Last week someone leaked a memo written by Peter Wehner, an aide to Karl Rove, about how to sell Social Security privatization. The public, says Mr. Wehner, must be convinced that "the current system is heading for an iceberg."
It's the standard Bush administration tactic: invent a fake crisis to bully people into doing what you want. "For the first time in six decades," the memo says, "the Social Security battle is one we can win." One thing I haven't seen pointed out, however, is the extent to which the White House expects the public and the media to believe two contradictory things.
The administration expects us to believe that drastic change is needed, and needed right away, because of the looming cost of paying for the baby boomers' retirement.
The administration expects us not to notice, however, that the supposed solution would do nothing to reduce that cost. Even with the most favorable assumptions, the benefits of privatization wouldn't kick in until most of the baby boomers were long gone. For the next 45 years, privatization would cost much more money than it saved.
Advocates of privatization almost always pretend that all we have to do is borrow a bit of money up front, and then the system will become self-sustaining. The Wehner memo talks of borrowing $1 trillion to $2 trillion "to cover transition costs." Similar numbers have been widely reported in the news media.
But that's just the borrowing over the next decade. Privatization would cost an additional $3 trillion in its second decade, $5 trillion in the decade after that and another $5 trillion in the decade after that. By the time privatization started to save money, if it ever did, the federal government would have run up around $15 trillion in extra debt.
These numbers are based on a Congressional Budget Office analysis of Plan 2, which was devised by a special presidential commission in 2001 and is widely expected to be the basis for President Bush's plan.
Under Plan 2, payroll taxes would be diverted into private accounts while future benefits would be cut. In the short run, this would worsen the budget deficit. In the long run, if all went well, cutting benefit payments would reduce the deficit.
All wouldn't go well; I'll explain why in another column. But suppose that everything went according to plan. Even in that unlikely case, privatization wouldn't even begin to reduce the budget deficit until 2050. This is supposed to be the answer to an imminent crisis?
While we waited 45 years for something good to happen, there would be a real risk of a crisis - not in Social Security, but in the budget as a whole. And privatization would increase that risk.
We already have a large budget deficit, the result of President Bush's insistence on cutting taxes while waging a war. And it will get worse: a rise in spending on entitlements - mainly because of Medicare, but with a smaller contribution from Medicaid and, in a minor supporting role, Social Security - looks set to sharply increase the deficit after 2010.
Add borrowing for privatization to the mix, and the budget deficit might well exceed 8 percent of G.D.P. at some time during the next decade. That's a deficit that would make Carlos Menem's Argentina look like a model of responsibility. It would be sure to cause a collapse of investor confidence, sending the dollar through the floor, interest rates through the roof and the economy into a tailspin.
And when investors started fleeing because they believed that America had turned into a banana republic, they wouldn't be reassured by claims that someday, in the distant future, privatization would do great things for the budget. Just ask the Argentines: their version of Social Security privatization was also supposed to save money in the long run, but all it did was move forward the date of their crisis.
A responsible administration would reverse course on tax cuts and the botched 2003 Medicare drug bill, both of which pose much greater threats to the government's solvency than the modest financial shortfall of the Social Security system. But Mr. Bush has declared his tax cuts inviolable, and he says that his drug bill will actually save money. (The Medicare trustees say it will cost $8 trillion.)
There's an iceberg in front of us, all right. And Mr. Bush wants us to steam right into it, full speed ahead.
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CBO Finds Social Security Solvent for Fifty Years
By Dean Baker
The Social Security shortfall is half the size of the rise in defense spending since 2000.
The Congressional Budget Office's (CBO) analysis of Social Security shows the program to be considerably stronger than has been indicated in recent reports by the Social Security trustees. The new analysis finds the program will be able to pay full scheduled benefits until 2053 - nearly fifty years into the future - with no changes whatsoever. This means Social Security is far sounder today than it has been through most of its existence. In the past, shortfalls in every decade from the forties to the eighties required frequent tax increases, with the last series of increases ending in 1990.
The new assessment is substantially more optimistic than the Social Security trustees report issued in March. This report projected the program would only be able to pay full benefits until 2042. The size of the shortfall over the seventy-five year planning horizon is also considerably lower in the CBO report. While the trustees report had projected the shortfall as being equal to 0.73 percent of GDP over this period, the new CBO report implies the shortfall will be equal to only approximately 0.37 percent of GDP. By comparison, the recent increase in annual defense spending associated with the wars in Afghanistan and Iraq is equal to 1.0 percent of GDP.
The CBO report does note the Social Security system will be paying out more money in benefits than it receives in taxes as of 2019. This date has absolutely no significance for the Social Security program, since it is projected to have more than $6 trillion of government bonds in the trust fund at the time. It can use the interest and principle from these bonds to pay benefits until the 2053 projected depletion date. Unless the government defaults on its debt, something that no prominent public figure has advocated, there is no reason that the program can't rely on these bonds. (The 2019 date also has no importance for the federal budget [see cepr.net].)
The main reasons for the more optimistic picture in the CBO analysis than in the trustees report are the assumption that the unemployment rate will be lower and productivity growth will be closer to its long-term average, rather than slower rate during the years of 1973-1995. The trustees report assumes that long-term productivity growth will average just 1.6 percent annually, slightly faster than the 1.5 percent rate during the slowdown. By comparison, the CBO report assumes an average rate of productivity growth of 1.9, which is closer to the 2.5 percent average over the longer period 1947 to 2003 for which reliable data exists.
The more rapid pace of productivity growth translates into more rapid wage growth, which in turn leads to more rapid growth in revenue. Since post-retirement benefits are indexed to prices, not wages, more rapid wage growth increases the ratio of revenue to costs.
The assumption of more rapid productivity growth is also important from the standpoint of inter-generational equity. While the trustees' assumptions imply that before-tax hourly wages will be nearly 50.0 percent higher in forty years, the CBO assumptions imply that compensation will have grown by more than 65.0 percent. This means if taxes are raised to sustain benefit levels, future generations of workers will still enjoy far higher standards of living than do workers at present.
This report also clearly identifies longer life expectancies rather than the retirement of the baby boomers as the biggest challenge to the Social Security program. The youngest baby boomer will be age 89 at the date that CBO projects the fund will be depleted.
The CBO report should help counter concerns that Social Security faces any sort of crisis. While even the trustees projections portray a far more optimistic picture than is generally reflected in public debate on Social Security, the CBO report indicates that the date when the program first faces a shortfall is nearly a half century in the future. With compensation projected to nearly double over this period, workers should be able to sustain modest tax increases without serious hardship
cepr.net
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"...According to a story in yesterday's Post, President Bush wants to change the SOCIAL SECURITY indexing formula in a way that will reduce monthly payments by 32.5 percent by 2052 and 45.9 percent by 2075.
Today a retiree receives a SOCIAL SECURITY check that equals 42 percent of the average worker's wage; if Bush's plan is enacted, that check will shrink to just 20 percent of that wage..."
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