Did anyone see Chgo. Trib article re: Social security cuts "inevitable?"

[Southsideirish]

How insidious they are with their lengthy quotes from the Cato Institute and the Heritage Foundation leading uninformed readers to the idea that nothing can be done so just get used to it.

Just one of the reasons why I hate this right wing rag.

Read it if you must but keep a towel nearby as you may have to regurgitate after doing so.



http://www.chicagotribune.com/business/chi-0502130537feb13,1,4987302.story?coll=chi-business-hed

[GoCubsGo05]

1. I didn't read the article....

...but if nothing is done, that is true according to any estimate you will find. Again, that is ONLY if NOTHING is done. The difference in when benefits would need to be cut is like 10-years. I think the debate is between 2042 ans 2052. What will happen (projected) is that the system will need a new funding source because the old funds collected will have been exhausted and the new funds being collected (2042 or 2052) will not be enough to pay out the benfits due. The end result is that benefits will be cut to about 78% of what they are supposed to be.

The assumption that nothing can be done is crazy. It's just that what can be done is painful to those interest groups.

Many suggest raising the retirement age. Many suggest raising the wage base limit. Many suggest rolling back the tax-cuts to the Top 1% of earners.

There are drawbacks to all, obviously.

By raising the retirement age, you hurt laborers whose bodies may not be able to keep going until they are 70, 72 what ever it ends up being.

By raising the wage-base limit, you also raise taxes on employers which they will make up through raising prices or cutting wages and jobs. (And not the high-paying ones if you know what I mean.)

The only problem with rolling back the tax cuts is that that money can't be used for Social Security. Only funds collected for Social Security can be used for Social Security. When the government raids the account, the IOU's (so to speak) are specifically for the funds "borrowed" from the trust that were collected, not for benefits owed. That's how they get around it now.

So that basically leaves options 1 and 2. Both have been used in the past and both have not solved the problem for good. I think we all agree, though I leave room for the possibility that I am wrong, that raising the payroll tax across the board is a bad idea because of the effect it would have on low-income workers.

In any event, it's way too late to try private accounts. MAybe the beginning of the program was the right time, as FDR thought it was, but the effect on the system now would be way to damaging. So what are we going to do?

[papau]

2. Wrong - the projections you cite use 1.6% productivity, 1.8% GDP growth

If reasonable assumptions are made (say 75% of our last 30 years - rather than 50% of those last 30 years that is the 1.6/1.8 -average productivity and GDP annual growth), absolutely nothing needs to be done to Soc Sec - the system is fine forever.

Indeed the fun fact is the if the assumotions for the economy that Bush makes to get private accounts are used for both options, one finds that the overhead of private accounts compared to the current system is made obvious via private accounts providing much less than Social Security.

A wage cap increase or removal - plus ADDON private accounts that do not affect the Soc Sec income flow - and perhaps a one year increase from Reagan age 67 in 2027 to say 68 in 2040 for the retirement age are logical changes in lieu of doing nothing - but doing nothing is also a very logical choice.


NOTHING else is logical.