Friday, March 11, 2005
Social Security: I've got a couple of Social Security related items for today.
First, Paul Krugman has once again opined on Social Security, but we've still not been graced with a "Krugman Plan." [The graphic has been updated.] In today's column, Krugman does offer a hint at his preferred solution -- a combination of a rise in the payroll tax and the retirement age.
By 2004, evidence that the productivity boom that began in the mid-1990's was continuing had led to more optimistic projections: the trust fund was expected to last until 2042. But the caption on the corresponding chart in the 2004 booklet reads, "Current Social Security system is unsustainable in the long run." That's simply false - we can argue about whether it's a good idea to maintain the present system, but there's no question that the basic form of the system could be maintained indefinitely through some combination of tax increases and/or benefit cuts.
If Krugman is right, then why hasn't he and his Democrat allies come out with a Web-based calculator (like this bogus one that they made to bash the President's alleged plan) that allows people to play with a combination of a raised retirement age and raised taxes to "save" Social Security?
If the numbers were as modest as Krugman and the Democrats suggest, then such a calculator would be incredibly persuasive. If Social Security could be saved by raising the retirement age two years and raising the payroll tax 2 percent (1 percent employer/1 percent employee), then Democrats would have an incredibly powerful tool.
The problem, I'm afraid, is that the numbers wouldn't be nearly that modest. Therefore, the Republicans should come out with the aforementioned calculator and use it as a tool to challenge the Democrats.
The problem, as I've said before, is a demographic one. Let's ignore for a moment the 2018 date when Social Security begins redeeming its IOUs. When the trust fund is exhausted, there will be approximately two workers paying into the system for each retiree receiving benefits. The average monthly Social Security check for a single wage earner in 2001 was $1,051. Do the math. For two workers to provide that paycheck, the average monthly FICA tax per worker would be $525.50 -- more actually, because that assumes the bureaucracy to adminster the program costs nothing.
Does that really sound like a program which needs only minor tinkering?
Second, FactCheck.org has done some solid reporting that the mainstream media should have been doing. Some on the left have charged that private Social Security accounts are payback to the GOP's fat cat contributors on Wall Street. According to FactCheck.org, the cats are not fat, but anorexic.
New information turned up by FactCheck.org shows that the type of private Social Security accounts being proposed by President Bush would yield very little profit to the securities industry, contrary to persistent claims of a potentially huge "windfall" to Wall Street.
What we have discovered is that the model for Bush's accounts -- the Federal Thrift Savings Plan for federal workers -- actually paid securities firms a net total of only 16 cents for every $10,000 in workers accounts. The TSP had refused to make that information public -- until now. It shows that fees actually being paid to Wall Street are hundreds of times smaller than some critics had assumed.