This is why I suggest doing NOTHING about this Soc. Sec. "shortfall"

[Inland]

First, I realize that the actuarial assumptions behind the estimate is that we will have a sharp recession soon followed by economic growth over the next thirty years AVERAGING 1.6% ANNUALLY.

Is 1.6% a low growth rate? The growth of GDP in 2003 was 3.1%. So think of how well you would be living and how you would be drawing down your savings if the country were in that sort of doldrums for thirty years.

Most people would say that it is pretty unlikely our economy is going to tank so dramatically, but that isn't my point.

My point is that if the economy sucks THAT bad for THAT long, our country is going to be going down the tubes in every area of life you can think of. The least of our problems is going to be pensions, and nobody, including me, is going to object to cutting back on the old folk. Why would we save to ensure that old people are the only ones left untouched by the demise of the United States as we know it?

Indeed, no matter how much we save, the fact is that if the US is in a long term period of low growth, we are going to steal the money and use it for other things without much controversy.

The adjustment in that state of the actual emergency of such low growth is "benefits reduced immediately by 22 percent, to make the system whole on a permanent basis.", say Snow, our Secretary of Shill.

Sounds okay to me, since everything, from defense to health to education to the food on the table is going to be reduced for everybody if we get there.

To the extent we avoid the worst case scenario, we avoid and would not want to cut SS benefits. If the economy follows the estimates Bush uses when planning the budget, for example, there will never be a shortfall. If the economy continues the growth of the last thirty years, there will be no shortfall.

And if the economy doesn't, then let the short fall where it may.

The proposed cures are worse than the disease. Do nothing.

[On the Road]

1. Yes, and There is No Way to Get an Honest Compromise

with this set of crooks. Better off simply postponing the solution until a Democrat is in office. Then watch the GOP change sides.

[bemildred]

2. Your point is well taken.

The notion that we know what is going to happen and what the
situation is going to be in 2043 and how to address it NOW is
infantile on it's face. They don't know what the economy will
do next year, as can be easily observed, and the assumption that
the future will be more or less like the past, which underlies
all of these projections, is equally infantile.

[oecher3]

3. if it were clear what the future will bring...

they would have fixed it already, but they keep changing the date of when the crisis will hit to the interim period and why the system is not working.

I agree, wait and see. In case of a crash in the economy, people will be happy to get whatever they can and better more than less.

[stevebreeze]

4. Since THE CIVIL WAR we haves averaged 3% in GDP

There is also the point that today only 85% of income falls below the inflation adjusted SS cap. It used to be that 90% of income was taxed. This is entirely due to the redistribution of wealth to the wealthy. Things that make ALL of us prosper like higher minimum wages, stronger unions, progressive taxation, have all been altered to benefit the wealthy at the expense of the many.

Little noticed in the higher inflation numbers this week is that we do not have a wage price inflation spiral starting, it is price wage that could possibly develop. Wages once again under this fascist regime have declined for the 80% of us who work for a paycheck/

[jmcon007]

5. overstepping....

This Social Security "debate" is a classic case of the neonuts overstepping their boundaries. Like a child pushing the envelope when mama's not watching and when he finally DOES go to an extreme and gets her attention, it's all over.
Americans are famous for scanning headlines and letting others fill in the details for them. The problem is that revealing what Bush is trying to do to SS is basically defined in headlines. "Private Accounts Will Not Help SS" and "Massive borrowing and Less Benefits with Private Accounts"....and so on. And then they read that the above facts are not denied by the administration.
Now here they are twisting in the wind, hanging by their own rope and demanding that Democrats put their plan on the table. Why? They didn't demand our energy PLAN, as I recall, or other plans they rammed through Congress.
They would love nothing more than for a Democratic leader to step up and say we would definitely raise the cap and allow the Repubs to say that all we want to do is raise taxes. Anything to take the heat off them. The Schiavo scheme backfired on them and who knows what they'll do next?

[Name removed]

6. Deleted message

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[ElectricIron Sweeney]

8. You have to believe

because nobody knows. The republicans want people to believe social security won't work and cannot be made t9o work. The money was gone long ago, and there has always been an element of pie in it. Regardless, the money my parent paid in was out of my pocket, and the money I paid in was out of my children's pocket; and the government owes it with interest. They were in a position to see any changes in population, demographics, or statistics and have done nothing to manage the changing situation. Instead they have conspired with business to keep wages low, and taxes on wages high. Those people live like kings, and when it comes time to give some back to those who have paid their way they plead poverty. Let them. I know where the wealth is.

[ElectricIron Sweeney]

7. Bankruptcy

is the beginning of every revolution I know of. Let them admit that those who have benefited most from this country have failed to support it, and have instead burdened labor with the expense for no return. They have the military. They have the police. Why do they need to bother about the sick and old?

[TahitiNut]

9. The 'solution' is simple, but not simple in that way. Allow me.

First, let's focus on the OBVIOUS. Social Security (OASI) is financed by payroll taxes ... and payroll taxes are based on payroll: wages and salaries below the 'cap' of about $90,000 today. That means increases in wages and salaries below that 'cap' will result in a corresponding increase in payroll taxes, but increases in wages and salaries above that 'cap' will result in NO increase in payroll taxes.

But that's the problem, you see. We now have an Enronomy where lower-paid workers are not getting increases to match the 'growth' in the economy and the most highly-paid employees (CEOs and other executives) are getting startlingly high increases. At the same time, those $1-90,000/year jobs are shringking as a percentage of the population. The size of the labor force is shrinking as people lose jobs and get discouraged - removing them from the workforce.

So it makes little difference what rate of growth we have in the economy if that growth is not shared equitably by the least-compensated workers.

The solution? Income equity. We are long overdue for an increase in the federal minimum wage. We are long overdue in stopping the off-shoring of jobs. We are long overdue in extending the federal minimum wage to agribusiness - requiring agribuisness to pay a living wage for field laborers.

Honor labor!

[Warpy]

10. Well, I AM interested in three cures

FIRST, remove all OASDI overpayments from the general fund. Get Congress's greedy paws off our retirement premiums, make them face us when the real cost of all those tax cuts to the rich and corporate are known, and force them to raise revenues by taxing the sainted rich.

Once OASDI overpayments are OUT of harm's way, raise that laughably low cap on taxable earnings to a million bucks a year. Yes, a million. Consider removing it completely after 5 years.

Raise wages. The best way to increase social security payments is to pay workers a living wage in the first place. Workers paid a living wage will keep the system solvent, period. Socking it to the ultra rich will just pay back what they've stolen from us for the last 40 years.

Neither party is willing to confront this as neither party wants to be stuck with the bill for those insanely reckless tax cuts to the rich.

[ticktockman]

11. Bush plan is wrong but Trustees Report is credible

First, I realize that the actuarial assumptions behind the estimate is that we will have a sharp recession soon followed by economic growth over the next thirty years AVERAGING 1.6% ANNUALLY.

Is 1.6% a low growth rate? The growth of GDP in 2003 was 3.1%. So think of how well you would be living and how you would be drawing down your savings if the country were in that sort of doldrums for thirty years.

What is your source for those assumptions? I believe that you are misinterpreting the 1.6% figure and are simply mistaken about the sharp recession. The following table is from page 6 of the 2005 Annual Report of the Board of Trustees of OASDI (Old-Age, Survivors, and Disability Insurance):

Table II.C1.—Ultimate Values* of Key Demographic and Economic Assumptions
            for the Long-Range (75-year) Projection Period
.
                                                 Inter-    Low   High
Ultimate assumptions                            mediate   Cost   Cost
---------------------------------------------------------------------
Total fertility rate (children per woman).......  1.95     2.2    1.7
Average annual percentage reduction in total
  age-sex-adjusted death rates from 2029 to 2079   .71     .33   1.23
Annual net immigration (in thousands)...........   900   1,300  672.5
Annual percentage change in:
  Productivity (total U.S. economy).............   1.6     1.9    1.3
  Average wage in covered employment............   3.9     3.4    4.4
  Consumer Price Index (CPI)....................   2.8     1.8    3.8
  Real-wage differential (percent)..............   1.1     1.6     .6
  Unemployment rate (percent)...................   5.5     4.5    6.5
  Annual trust fund interest rate (percent).....   5.8     5.5    6.0
---------------------------------------------------------------------
* Ultimate values are assumed to be reached within 5 to 25 years.

Source: 2005 Annual Report of the Board of Trustees of OASDI, page 6

As you can see, the 1.6% figure appears to be for ultimate productivity growth under the intermediate assumptions. This is not the same as real GDP growth. The following is from pages 82-83 of the Trustees Report:

1. Productivity Assumptions

Total U.S. economy productivity is defined as the ratio of real gross domestic product (GDP) to hours worked by all workers. The rate of change in total productivity is a major determinant in the growth of average earnings. For the 40 years from 1963 to 2003, annual increases in total productivity averaged 1.8 percent, the result of average annual increases of 2.5, 1.1, 1.5, and 2.0 percent for the 10-year periods 1963-73, 1973-83, 1983-93, and 1993-2003, respectively.

However, productivity growth can vary substantially within economic cycles. Therefore, it is more useful to consider historical average growth rates for complete economic cycles. The annual increase in total productivity averaged 1.6 percent over the last four complete economic cycles (measured from peak to peak), covering the 34-year period from 1966 to 2000. The annual increase in total productivity averaged 2.2, 1.2, 1.3, and 1.6 percent over the business cycles 1966-73, 1973-78, 1978-89, 1989-2000, respectively. The ultimate annual increases in productivity are assumed to be 1.9, 1.6, and 1.3 percent for the low cost, intermediate, and high cost assumptions, respectively. These are the same as the ultimate rates assumed for the 2004 report.

Hence, 1.6% has been the average annual increase in total productivity over the last four complete economic cycles (1966-2000). In addition, it appears that the intermediate assumptions do not project a sharp recession. The following is from page 82 of the Trustees Report:

The basic economic assumptions are embodied in three alternatives that are designed to provide a reasonable range of effects on Social Security’s financial status. The intermediate assumptions reflect the Trustees’ consensus expectation of moderate economic growth throughout the projection period. The low cost assumptions represent a more optimistic outlook, with relatively strong economic growth. The high cost assumptions represent a relatively pessimistic scenario, with weak economic growth and two recessions in the short-range period.

Hence, the Trustees Report has not become the inaccurate political document that some have implied. Although some of the Trustees may have political leanings, I think that the actuaries who crunch most of the numbers do take their jobs seriously and give an unbiased accounting of the fund. However, I will agree that much of the interpretation of that report is inaccurate and political.

Social Security does have some long-term problems. Part of the cause is the fact that we have the good fortune of an increasing life-expectancy but we insist on continuing to retire at about the same age. We will have to come to grips with our good fortune and come up with a way to pay for it.

However, I do believe that Bush's plan is completely on the wrong track. With more and more companies going from defined-benefit plans (like pensions) to defined-contribution plans (like 401K's), Social Security is the last universal defined-benefit plan that will insure that nobody will outlive their savings. Bush's plan would seriously undermine this.

One last note, as many others have mentioned, the real problem is Medicare, not Social Security. This can be seen the following graph showing the long-run projections for federal outlays:



The numbers and sources are at http://home.att.net/~rdavis2/pro2007.html .