10-23-2004, 02:09 AM
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#9 (permalink)
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Insane
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Originally Posted by Kalibah
Social Security is going to be a major problem for the up-and coming generation, when baby boomers hit retierment age- i envision all hell breaking loose. Back in highschool, when talking about retirment one of my teachers mentioned that he had to plan as if he was not going to get a dime.
Is that too cynical?
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Yes. It's not that big a deal. Conservative pundits are just running around with their heads chopped off trying to frighten the people into cutting it or privatizing it. We have almost 50 years to figure something out.
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It's not as if the current system is in crisis, either, despite what conservatives claim. The most recent analysis by the Congressional Budget Office found that, even if no changes are made, the program will be able to pay full benefits to its retirees until 2053. If the country can turn its economy around, and wages start growing faster than inflation, than the outlook for Social Security will continue to improve -- since payroll revenue will rise faster than benefit payouts, which are index to the cost of living. With 50 years to go, there should be plenty of time to patch up the program in a fairly painless manner -- Peter Diamond and Peter Orszag outlined one such solution in Boston Review earlier this year.
The CBO's relatively healthy projections haven't stopped the programs critics from spinning the numbers. Most famously, on February 25, Alan Greenspan argued that the massive budget deficits would necessitate deep cuts in Social Security (along with other spending programs.) Of course, as Harry Holzer noted, it was Greenspan himself who, in 1982, advocated a payroll tax increase in order to build up a trust fund to ensure Social Security's solvency. During the 1990s, the government used this surplus to shore up its general budget projections and pay down the deficit. But as a program, Social Security still owns the surplus it built up -- the surplus is simply "owed" to the program by the federal government. Those who claim, as Greenspan does, that Social Security is now running a "deficit" are simply being disingenuous. As the CBO report makes clear, if you count the surplus that Greenspan helped create, Social Security will be solvent for half a century.
Of course, that means the general budget is running a greater deficit than is usually reported. For that, blame the tax cuts, not entitlements. As Jonathan Chait has pointed out in The New Republic, the deficits for Social Security and Medicare combined over the next 75 years amount to 2.2 percent of GDP. At the same time, the Bush tax cuts will cause a revenue loss also equal to 2.2 percent of GDP over that period. Social Security could be easily shored up, if we got our priorities straight. This is not to say we don't need to reform our entitlement programs -- we certainly do -- but it's dishonest to say that the programs are hopelessly bankrupt and drastic measures are needed.
The Folly of Social Security Privatization
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