Tuesday, November 23, 2004

A "Spectator's Guide" to Social Security

from The Wall Street Journal
If there's no pain, there's no gain. To fix Social Security without raising taxes, benefits promised for the future must be cut. The president's Commission on Strengthening Social Security found a clever way of doing that. It proposed adjusting the initial benefit given to new recipients each year by the rate of price inflation, instead of by the rate of wage inflation. That enabled the commission to claim correctly that future recipients would receive exactly the same benefit, adjusted for inflation, that today's recipients receive.

7 comments:

J.R. Boyd said...

Unfortunately I can't link to the full article, which I accessed via Proquest (a periodical research database found in libraries.)

Sheryl said...

Sounds a bit like the games they play with unemployment figures or income tax brackets. :(

Have a nice Thanksgiving, Ryan.

J.R. Boyd said...

Instructive: "Strengthening Social Security" means getting rid of it; "fixing" means not funding. Note the presumption that taxes not be raised. Taxes could affect institutions; cutting benefits would only hurt people. The obvious preference is not to burden the wealthy, or close profit margins, but give people less and less.

Sheryl said...

Yeah, you have to wonder what these people are thinking. Do they really want the US to be a third world sewer? Where there are no opportunities. Where people are poor and ignorant and desperate? Is there some sort of romanticism about the Dark Ages that I've missed out on?

Anonymous said...

Would that be tied to a seasonally adjusted CPI or would it be tied to a projected semiseasonally adjusted CPI?

Paul

J.R. Boyd said...

Paul,

I'm not familiar with the terms, so I don't know what you're asking. My impression, however, is that the economics of these things is secondary. Anybody can figure out how much money you need to make a program work. The baby boomers will cost more because there's more of them. That's not a crisis. That means you increase funding for something that's important. The crisis is whether you think it's important. That's not an economic question. That's a political question. How are we going to fund it? Who will pay? Where else can we get money if we think it's unfair to tax working people more to make up the difference? There's plenty of ways to make it work economically. Some aren't very popular with Wall Street. But it's not their choice to make for the majority, even if they would like to enlist us on their side.

Sheryl said...

The CPI is the consumer price index, which gives costs for things. But I think the government has readjusted those standards, like everything else, to the point that those numbers are pretty useless for comparisons as well.

You see, as long as you switch the parameters for measurement, then you fudge the comparisons to previous years and hide a bad economy in bad math.

For example, say that you provide 100% of the population a tax refund and 65% take advantage of it. Then you change the standards the following year and only offer 65% the tax refund, but 100% take advantage of it. And then you say there is a 35% increase in the number of people who take advantage of tax refunds. That's the way government math works. They change parameters and then pretend they have not.

They tell us unemployment is 5%, but to be counted as unemployed you have to meet X,Y, and Z when in the past you only had to register as unemployed. Maybe half as many people are working, but you unemployment figures are down.

If they would follow the same rules for measuring things throughout time, then this could be really useful information, but then they can spin the numbers to make disasters into miracles. :( That's how I see it anyway.