Russert, Broder keep acting like idiots on Social Security
From the most recent Democratic debate run by Tim Russert on MSNBC, we see that Russert is once again trying to revive his ignorant queries on Social Security, trying to turn what should be seen as a colossal waste of national time and energy into a topic for discussion again. Also not having a clue what he is talking about, David Broder stands with his DC media colleague Russert. Let’s try another way to explain this in a way that even they could understand.
Twenty-four years ago, in 1983, Alan Greenspan, appointed by Ronald Reagan, headed up a special commission that came up with a plan to keep Social Security healthy. They weren’t as stupid as Tim Russert thinks they were: they actually understood that there was a huge Baby Boom growing older – at that point ranging in age from roughly 18 to 38 – which would mean lots of retirements someday, beginning roughly in, oh, about 2007-2010. Flash! “That will be a lot of benefits we will have to pay out! We better do something about that!”
So they adjusted the withholding process to build up a Baby Boom Surplus that would cover tha Baby Boom generation “bulge” before they died off and things went back closer to normal They called it the Social Security Trust Fund. To provide more assurance that Baby Boomers would actually get their Social Security benefits, and that they were not at the whim of some unfriendly Congress that simply would vote the Surplus out of existence, the Trust Fund obligations were put into Treasury Bonds. This would mean that, legally, the payment of Social Security benefits to those people who were making the contributions were backed by the Full Faith and Credit of the United States Government. Sure, the Government could declare a default on those Treasury Bonds and refuse to pay, but imagine the international financial crisis that would result from the U.S. Government being unable to pay its obligations as they came due. Imagine the political fall-out for the Senators and Reps who would vote for the default, and the President who would sign it. A pretty good protection: yes, “Social Security will be there for you,” despite two decades of Republican propaganda trying to drive the fear otherwise into entire generations in order to promote a privatization scheme -- and eliminate a successful and popular government program that is a continuing affront to the anti-government ideology of right wing Republicans.
Let’s see if we can get this straight. It’s not that mysterious. A decade ago, that’s ten years ago in 1997, the Social Security Administration’s “middle” scenario of economic and demographic projections – not too optimistic, not too pessimistic, but just right, said Baby Bear – said we would run out of the Baby Boom Surplus in 32 years – that is, in 2029. At that point, when the Surplus runs out, we would go back to paying for benefits out of current revenues, the way the system was designed. Under that "middle" scenario, however, benefits would have to be cut back somewhat at that point because the revenue projected for 32 years in the future would not be adequate for benefits calculated at the same level as today. Yes, it would still “be there for you,” but the benefits level could be less (in real terms) than people get today.
Each year, SSA re-calculates, the optimistic, pessimistic and middle scenarios, using another year of actual experience. Ten years later, in 2007, that middle scenario said we would run out of the Surplus in 34 years, in 2041. In other words, Doomsday has moved backwards, making it further and further into the future, with each passing year. In 1997, they said the sky will fall in 2029. Ten years later, they said the sky will fall in 2041. That means the “problem” foretold by the middle scenario has been getting smaller and smaller over the last decade. Does that sound like a “crisis” to you?
Not only has it been really tough to make a prediction of events somewhere between 30 and 40 years into the future -- when the Surplus would run out -- but you would think it would be easier to predict when SSA would have to start using the Baby Boom Surplus. Back in 1997, they said it would be in 2013. In other words, SSA would have to start using the surplus for its intended purpose, and it would no longer be growing, as it is now. Ten years later, however, in 2007, they said we will not even start using the Surplus – that is, that revenue coming in will still be more than enough to cover the benefits that have to be paid out – until 2017. So even the start date has been moved back: we won’t have to start using the Surplus for another ten years even though Baby Boomers are starting to retire already! It’s as if you found out your income was high enough that you didn’t have to start tapping into the College Fund until your kid’s sophomore year? What a wonderful windfall!
Not only that, but since in 1997 SSA thought the Surplus would be used up in 2029, that means SSA thought then that the surplus would last for 16 years (2013 to 2029). However, now SSA says the Surplus won’t get used up until 2041, which means they now think it will last for 24 years (2017 to 2041), long after the number of Boomers still alive starts dropping rapidly. (Boomers born in 1945 will be 85 in 2030.) It’s like realizing not only that you don’t need to start using the College fund when you first thought you would, but now you’ve also built it up so much higher than you originally expected that it will cover your kid’s graduate school, too.
The “problem” is a problem only under a set of assumptions (the middle scenario) that year-after-year have been proved to be unduly conservative. It’s time for Democrats to repeat it over and over and over:
Twenty-four years ago, in 1983, Alan Greenspan, appointed by Ronald Reagan, headed up a special commission that came up with a plan to keep Social Security healthy. They weren’t as stupid as Tim Russert thinks they were: they actually understood that there was a huge Baby Boom growing older – at that point ranging in age from roughly 18 to 38 – which would mean lots of retirements someday, beginning roughly in, oh, about 2007-2010. Flash! “That will be a lot of benefits we will have to pay out! We better do something about that!”
So they adjusted the withholding process to build up a Baby Boom Surplus that would cover tha Baby Boom generation “bulge” before they died off and things went back closer to normal They called it the Social Security Trust Fund. To provide more assurance that Baby Boomers would actually get their Social Security benefits, and that they were not at the whim of some unfriendly Congress that simply would vote the Surplus out of existence, the Trust Fund obligations were put into Treasury Bonds. This would mean that, legally, the payment of Social Security benefits to those people who were making the contributions were backed by the Full Faith and Credit of the United States Government. Sure, the Government could declare a default on those Treasury Bonds and refuse to pay, but imagine the international financial crisis that would result from the U.S. Government being unable to pay its obligations as they came due. Imagine the political fall-out for the Senators and Reps who would vote for the default, and the President who would sign it. A pretty good protection: yes, “Social Security will be there for you,” despite two decades of Republican propaganda trying to drive the fear otherwise into entire generations in order to promote a privatization scheme -- and eliminate a successful and popular government program that is a continuing affront to the anti-government ideology of right wing Republicans.
Let’s see if we can get this straight. It’s not that mysterious. A decade ago, that’s ten years ago in 1997, the Social Security Administration’s “middle” scenario of economic and demographic projections – not too optimistic, not too pessimistic, but just right, said Baby Bear – said we would run out of the Baby Boom Surplus in 32 years – that is, in 2029. At that point, when the Surplus runs out, we would go back to paying for benefits out of current revenues, the way the system was designed. Under that "middle" scenario, however, benefits would have to be cut back somewhat at that point because the revenue projected for 32 years in the future would not be adequate for benefits calculated at the same level as today. Yes, it would still “be there for you,” but the benefits level could be less (in real terms) than people get today.
Each year, SSA re-calculates, the optimistic, pessimistic and middle scenarios, using another year of actual experience. Ten years later, in 2007, that middle scenario said we would run out of the Surplus in 34 years, in 2041. In other words, Doomsday has moved backwards, making it further and further into the future, with each passing year. In 1997, they said the sky will fall in 2029. Ten years later, they said the sky will fall in 2041. That means the “problem” foretold by the middle scenario has been getting smaller and smaller over the last decade. Does that sound like a “crisis” to you?
Not only has it been really tough to make a prediction of events somewhere between 30 and 40 years into the future -- when the Surplus would run out -- but you would think it would be easier to predict when SSA would have to start using the Baby Boom Surplus. Back in 1997, they said it would be in 2013. In other words, SSA would have to start using the surplus for its intended purpose, and it would no longer be growing, as it is now. Ten years later, however, in 2007, they said we will not even start using the Surplus – that is, that revenue coming in will still be more than enough to cover the benefits that have to be paid out – until 2017. So even the start date has been moved back: we won’t have to start using the Surplus for another ten years even though Baby Boomers are starting to retire already! It’s as if you found out your income was high enough that you didn’t have to start tapping into the College Fund until your kid’s sophomore year? What a wonderful windfall!
Not only that, but since in 1997 SSA thought the Surplus would be used up in 2029, that means SSA thought then that the surplus would last for 16 years (2013 to 2029). However, now SSA says the Surplus won’t get used up until 2041, which means they now think it will last for 24 years (2017 to 2041), long after the number of Boomers still alive starts dropping rapidly. (Boomers born in 1945 will be 85 in 2030.) It’s like realizing not only that you don’t need to start using the College fund when you first thought you would, but now you’ve also built it up so much higher than you originally expected that it will cover your kid’s graduate school, too.
The “problem” is a problem only under a set of assumptions (the middle scenario) that year-after-year have been proved to be unduly conservative. It’s time for Democrats to repeat it over and over and over:
SOCIAL SECURITY IS NOT A CRISIS.
IT WILL BE THERE FOR YOU.
It’s not a crisis because using up the Baby Boom Surplus under conservative projections is farther into the future from now than it was 10 years ago. Even starting to use the Baby Boom Surplus is farther into the future than they thought it would be 10 years ago. Anybody who says there is a Social Security “crisis” has no clue what he or she is talking about. It is good to use conservative projections to be careful, just as it is when you are planning to build up the college fund for your kids. Yes, it is something we need to continue to watch, to make sure it does not become a real problem, but it would be irresponsible to try to make changes now. Period.
posted by KISSWeb | 3:17 PM
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