Nightline:Experts Consider Social Security Pitch- Rebut Bush's 'Crisis'

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http://abcnews.go.com/Nightline/Business/story?id=467652&page=1

Experts Consider Social Security Pitch
Analysts Rebut Bush's 'Crisis' Claims, Weigh Private Retirement Accounts
Feb. 5, 2005 - <snip>"I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now," Bush said. "The system will be bust. In other words, there won't be anything available for you. I mean, if you're a 20-year-old person and you look at the math, you realize that you'll inherit a bankrupt system."<snip>

Robert Bixby, who runs the bipartisan Concord Coalition, the group founded by leading Republicans and Democrats concerned about the government's finances, said describing Social Security as in crisis is "an exaggeration."

<snip>Peter Orszag, an economist who served in the Clinton administration and directs the tax policy center at the Brookings Institution, said, "There is no immediate crisis with Social Security."<snip>

"It's a long-term challenge," he added. "It's like having termites in the foundation of your house. Better address it sooner rather than later."

But consider the demographic picture presented by the trustees who oversee Social Security. In 1960, the program could count on the paychecks of more than five workers for every beneficiary. Today, three workers support each beneficiary. By 2040, there will be two.

Assuming nothing is done, Social Security will have to begin cashing in all those trust fund IOUs until the program hits the big iceberg in 2042.

"In 2042, under the trustees' assumption, Social Security runs out of treasury bonds," Bixby said. "At that point, it has no more spending authority beyond that which is coming in from the payroll tax."

But that doesn't mean that come 2042, the system is going to be "flat bust" and "bankrupt," as Bush has described.

"Absolutely not," Orszag said. "Even at that point, incoming payroll revenue would still be sufficient to pay for about 70 percent of promised benefits. That's a lot higher than zero. Talk of bankruptcy and flat bust is just exaggerated rhetoric."<snip>



ABC News reporter Chris Bury and producer Peter Dencheck originally reported this story for "Nightline" on Feb. 1.