October 29, 2010

THE EASY LIFT:

The Big Lie About Social Security (Jeff Madrick, 10/29/10, NY Review of Books)

With the midterm elections days away, Republicans and quite a few Democrats have once again been attacking Social Security for running up the federal deficit. The president’s own deficit commission is likely to make Social Security reform a priority. In view of all the rhetoric, voters may be surprised to find out how little Social Security will actually contribute to the future budget gap. In fact, most would probably be stunned.

The Congressional Budget Office, which produces dry, cautious budget projections, recently reminded Congress that Social Security as a percent of GDP will rise from 5 to 6 percent in 2035 and simply stay at that level for the foreseeable future. In other words, the much decried shortfall amounts to only 1 percent of GDP over three decades. And this may be exaggerated. As some observe, much will depend on the flow of young immigrant workers to America. The more workers contributing to Social Security, the smaller any future deficit will be. And the CBO projections tend to make overly conservative estimates about such immigration in the decades to come. [...]

The president’s 18-member fiscal commission, which must report its recommendations by December 1, will almost certainly use its political ammunition against Social Security. Why? Because its members can’t agree on cuts related to Medicare or Medicaid, or related to health care reform in general, that will have a meaningful effect on future costs. In contrast, after years of denigration by some politicians and economists, Social Security benefits have become a comparatively easy target.


Personal accounts aren't necessary, just good policy.

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Posted by Orrin Judd at October 29, 2010 8:12 AM
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