Dean said:

Life expectancy has always been increasing and poses no greater threat to the country in the future than it did in the past.

I want to challenge this, based on arithmetic. In the past, life expectancy was not much more than 65, the Social Security retirement age. Thus, each additional year added to the average life expectancy had a realtively small impact on the total liability. In fact, many people did not even LIVE past the retirement age.

When average life expectancy is so much greater than retirement age, it would seem that each additional year added would have a greater impact on the cumulative liability.

Dean - did you see Feldstein's latest WSJ "solution". Seems carve outs generate magic fairy dust high returns! I try to cover this over at EconoSpeak and Mark Thoma had a blog that referenced you.

Fear , Fear , Fear ...

"looming bankruptcy" of Social Security ...

Another in the attacks on the middle and lower class.

Trouble is these nefarious incantations echo through the media and become the "common wisdom" on the subject.

The attack on Social Security also serves to draw atttention away from the Health Care Debate and raising the effective tax rates on the rich and the corporations.

Put people on notice that their program is in trouble and they are less likely to go on the offensive for their other issues.

The Republicans and the corporatocracy have no problem getting the MSM to throw these red herrinngs out there to smoke screen what really needs to be done , raisng the real tax burden on themselves the super rich and powerful companies.

When someone says Social Security is in trouble they need to be laughed at and shown why they are being used.

..
.

Growing Social Security outlays are akin to growing health care costs in that income growth will keep us ahead of both in what we have left to spend _absolutely_.

From 2050 on, Social Security will take no more than 7% of GDP (4% today). 80 years out, medical care will cost 300% of today's GDP -- but we will have 400% of today's GDP to pay for it with. What should be the biggest item on our entitlement agenda?: get that down to 200% of GDP with Medicare for all. :-)

There is no other newspaper with a worse record on Social Security than USA Today. I don't know why this is, generally I have grown to like McPaper, I buy it daily, but on this topic they seem to have blinders on.

Dean

Take a gander at this !

----

We Are In A Bad Fix

By Mathew Maavak

09 October, 2007

http://www.countercurrents.org/maavak091007.htm

Peak Oil , Peak Wheat , Peak Water , Peak Fish and more !

PGL,

i missed the Feldstein piece, but based on your and other comments, I got the drift. It's amazing how they still insist on making up numbers on stock returcks.

Bruce,

I have noticed this USA Today also. they aren't bad on maost other issues.

The following letter is addressed to the millions upon millions of Baby Boomers who are about to retire from their jobs over the next few years. It is written on the behalf of the generations of Americans begotten by the Boomers.

Dear Baby Boomers of America,

At the close of this year and the opening of the next, your generation will officially begin to transform from a generation of working men and women into an older, retired generation. This process is both natural and inevitable for all men who are blessed with the gift of longevity, and you should congratulate yourselves on the decades of hard work that partially contributed to the reward retirement will represent for you.

Before this process of retirement gets underway in earnest, however, we (the younger generations of Americans who owe our existence to your generation), would like to offer this letter of thanks for some of the more important and indelible marks your generation has left on the nation we shortly stand to inherit. These permanent historical marks left by your generation will undoubtedly be recalled by future generations with heartfelt thanks and approbation.

First, we would like to sincerely thank you for your indifference to the national debt over the last thirty years and the housing market over the past fifteen years. You taught us that consumption by your generation today is justifiable no matter that the bill would be footed by our generations and our children’s generations. Don’t bother to deny your role in the magnificent expansion of the national debt over the past thirty years and the astronomical expansion of the recent housing bubble. Your generation, with its massive bulk, played the pivotal role in electing the politicians that kept on expanding the government’s debt, and the bulk of the members of your generation piled personal mortgage debt on credit card debt on home equity debt. Yours is the first true generation of debt, and for this legacy of suffocating debt your generation shall long be remembered by future generations as they are forced to eventually pay it off. Our generations have learned the important lesson that consumption today is all that matters – just leave the bill for whoever follows you, or beg the Fed to lower interest rates to create yet another unsustainable bubble in the market. Three cheers for debt and the Boomers!

Related to this, we would also like to thank your generation for finally allowing the United States government to completely sever the tie between the U.S. dollar and gold in the 1970’s. While gold had been used as the primary currency of the civilized world since the dawn of time, your generation presciently saw through that scam and submissively allowed the U.S. government to replace that precious metal with something much more valuable; namely, green paper embossed with solemn looking pictures. Your generation hardly whimpered when the tie between the dollar and gold was finally cut, and for that gracious act of omission our generations have pockets loaded with base metal coins and wallets stuffed with reams of green paper to thank, as well as the current green-paper-created housing bubble and the recession it is about to cause. Your generation was quick to recognize one of the most important economic facts imaginable: the more green paper that enters the American economy via the Fed and the Treasury, the higher will be our standard of living. Green paper equals wealth! You finally put to rest the old bugaboo that wealth comes from real savings and investment, clearing the way for a brave new world of wealth creation simply by printing paper. If only there were even more green paper (e.g., a rate cut by the Fed this year), we would all have bigger and nicer houses! Three cheers for green paper, and three more for the Boomers who passively allowed it to replace gold!

Along a similar vein, we would very much like to thank your generation’s failure to do away with Social Security and the other entitlement programs that make America so great today. Previous generations had claimed that Social Security is nothing more than a ridiculous Ponzi scheme orchestrated by an inept and bankrupt socialist bureau that merely steals from the young in order to give to the old; but your generation, in its wisdom, did nothing to reform or abolish this program. Consequently, the tens of millions of you aging Boomers who are about to retire expect our young generations to meekly submit to the massive taxation that will inexorably be required to fund your Social Security checks. Your generation has taught ours that it is a right for the elderly to take whatever they want from the working young (no matter how irresponsible the elderly have personally been in saving for retirement). You don’t have to worry, we won’t mind working our hands raw to pay your tens of millions of Social Security checks; on the contrary, we can’t wait until we retire ourselves, so that we can take even more from our own grandchildren! Three more cheers for Social Security, the Boomers, and the elderly stealing from the young!

Your generation has done a great deal more than that, moreover, to teach our generations about morality, and for which we are eternally grateful. Your generation has taught ours that abortion, welfare, child support, and alimony are God-given rights (and that we should simply ignore the horrendous effects of these policies on the American family), but smoking tobacco is one of the greatest evils in the history of the world. While some might view your crusade against tobacco as revoltingly hypocritical (since your generation smoked an heroic amount of relatively tax-free tobacco only a few decades ago – among other plants), we, on the contrary, view your paternalistic persecution of us young smokers as a great gift to mankind. Don’t think for a moment that we will forget your beneficence in making tobacco so expensive and socially marginalized through taxation and regulation, for we young smokers will be constantly reminded of this gift as we toil away at our jobs in order to pay your Social Security checks without being able to afford the cigarettes that might make our work for you tolerable. Three more cheers for abortion, alimony, welfare and the Boomers’ gift of smoker persecution!

Your generation is owed even more thanks for its total failure to do away with the war on drugs over the past three decades. Your generation’s monstrous consumption of drugs in the 1960’s is simply too well known to need recounting, but you fortunately came to your senses in the 1980’s and did nothing to stop the government’s merciless persecution of younger generations of drug consumers. Few indeed have been the Boomers who have fought for drug legalization since the 60’s. While this may at first glance appear to be yet another instance of the most vile form of hypocrisy imaginable, we younger generations don’t view your silence and indifference in that way. On the contrary, we thank you for your silence while hundreds of thousands from our generations are carted away to prison for consuming the very same substances your generation grew famous for, because this has given us a giant and glorious police state that is required for these persecutions. If only you had managed to create even more police and prisons! Future generations will undoubtedly thank yours for standing idly by while the government of the United States violently persecuted your own children and your children’s children for doing the same things you did in the 60’s. Three more cheers for the indifferent silence of the reformed druggie Boomers!

Your generation has taught ours even more invaluable lessons with regard to war. During the 1960’s and 1970’s many in your generation succumbed to the ridiculous idea that the Vietnam War was morally illegitimate, as was any pointless war that did not involve actual self-defense against an imminent threat. Fortunately, your generation woke up from this anti-war delusion and remained silent or even cheered while Ronald Reagan invaded a slew of Latin American countries, George Bush Sr. invaded Iraq, Bill Clinton invaded Haiti, Bosnia, and Somalia, and George Bush Jr. invaded Afghanistan and Iraq. (Thankfully, your generation was filled with numerous vociferous defenders of the current Iraq and Afghanistan wars, without whose support Bush Jr. never would have undertaken such pointless and costly invasions). In fact, since the conclusion of the Vietnam War the U.S. has scarcely gone two years without fighting or invading some obscure country or another, and we have the passive acquiescence or open support of the Boomers to thank for it. In short, through your passivity and open support your generation critically assisted in the transformation of America into the grand warmongering and widely despised nation it is today. Future generations shall undeniably be eternally grateful for this as well – assuming that they live through the future wars that are likely to be engendered by your past belligerency. Three more cheers for the post-Vietnam warmongering Boomers!

Fortunately, your generation did not restrict itself to growing the power of the U.S. government through warfare abroad. On the contrary, your generation was instrumental in expanding the power of the U.S. government through wide-ranging gun control at home that has helped to make guns in America much more feared, expensive, and rare over the past thirty years. Indeed, all previous generations of Americans viewed gun ownership as the last, best bulwark against government oppression, but not you Boomers! On the contrary, you scored a double blow on individual liberty by not only helping to grow the size and power of the United States government in every conceivable sphere, but also helped to take away vast numbers of weapons with which our generations might have been able to fight government oppression in the future. How can we express our gratitude for both helping to grow the government into the largest, most powerful, and most dangerous threat to our generations, and also disarming us? Suffice it to say, that it is impossible to thank you enough for these boons, and so we shall never thank you. Three more cheers for disarmed and helpless grandchildren, an ever more powerful and dangerous State, and, of course, the Boomers who made this utopia possible!

You Boomers may be saying to yourselves, "We don’t deserve credit for these glorious advances for the homeland. It was the government that was responsible for these acts, not us. You should be praising the far-seeing and wise government of the United States rather than our generation." This attempt to shift the burden of responsibility onto the government would be wrong for at least two important reasons. First, it was your behemoth generation of Boomers who played the pivotal role in electing the wise and virtuous politicians who have wrought these wondrous changes on America over the last three decades (and who among us can doubt the virtue of the politicians elected by the Boomers over the last thirty years?). If your generation had not flexed its massive numerical muscle in the elections that brought us that cabal of virtuous politicians, these wonderful changes never would have been possible. Second, and even more important, is the fact that you Boomers have almost universally rejected the libertarian principles of individual liberty, peace, and private property that this nation was founded upon and which acted in previous generations as a bulwark against the statist programs just discussed. This country was founded upon two critical and related ideas: 1) that taxation and the State in general are horrendously dangerous threats to individual liberty, peace, and private property, and must be vigilantly battled at all costs, and 2) that private property and individual liberty are the greatest goods in the world – to be defended by force of arms and with our very lives, if necessary. Yet, you Boomers almost universally rejected these principles. You passively accepted whatever new taxes happened to come into existence (there are now too many taxes for us young people to count, thank God!), and you silently accepted the growth of the State in every conceivable direction. If you had not rejected the libertarian principles of individual liberty, peace and private property, your politicians would never have been brazen enough to try the harebrained socialist schemes listed above. In short, because you Boomers did virtually nothing to stop the progression of statism and economic interventionism over the past thirty years, your generation is responsible for the construction of the wonderful America you shall shortly bequeath to us; a debt-ridden, tax-ridden, war-ridden, disarmed, heavily-policed, goldless and green-paper-flooded nation that is currently at war with two others and which is about to plunge into a gut-wrenching recession thanks to your green-paper-created housing bubble. Indeed, your generation continues to do nothing to combat statism, warmongering and economic interventionism even unto today (all of which are nearly perfectly embodied in the warmongering Giuliani and the socialist Clinton; both of whom, if I am not mistaken, are Baby Boomers). The vast, vast majority of Boomers, for example, flatly refuse to support virtuous and principled libertarians like Republican presidential candidate Dr. Ron Paul, and his intention to resurrect the principles of sound money, peace, individual liberty, and much, much, much smaller government.

So, don’t feign humility, and don’t try to shift the "ache of guilt," (to use a phrase from J. Glenn Gray’s excellent book The Warriors), onto the government. It was your giant generation of warmongering, interventionist, statist, and oblivious Baby Boomers that is responsible for the creation of the debt-ridden and warmongering nation we stand to inherit. Our generations have little to offer in remuneration for your final abandonment of the libertarian principles this country was founded upon. (What, indeed, could we do to thank you for the existence of the massive and dangerous state that totally envelops our hapless young generations today?) We can only hope that the billions upon billions of hours of work we will be forced to do over the next ten years, by the government you have foisted on us (in order to involuntarily pay the taxes that will fund your Social Security checks, buy your myriad Medicare-funded "legal" drugs, pay for your myriad and ridiculous welfare programs, pay down your national debt, pay off the bills from your wars, pay to imprison more pot smokers from our generations, pay the police to take away more of our guns, et cetera ad nauseam), will be sufficient to express our gratitude.

Tom Brokaw be damned – yours is truly "The Greatest Generation."

Sincerely,
Generations X, Y, & Etc

bernstein

if you put some numbers to your challenge, you could begin to reason about it.

in fact the Trustees Projection fully considers the rising life expectancy, and with that projection they arrive at the everything is fine until date that Dean gives: about 2041.

after that, if the Trustees are right, the cost of "fixing" SS amounts to a raise in the tax of less than a dollar a week each year during a time when the average worker will be getting a ten dollar a week raise each year.

so it is neither looming, nor is it a crisis. and yes, you will get that dollar a week back.

living longer turns out not to be bad news after all.

now i worry about the USA Today.

all they need to do is tell a lot of people there is a crisis.

the people believe that already from the last time and the time before that.

and then when the congress comes out with a bipartisan compromise that fixes Social Security (the way my dog is fixed) the people will say, "well we certainly are glad that problem is fixed."

and all of us who know better will never have been heard at all.

max crovelli

fortunately your letter was too long to read. so here is a short answer:

you are an idiot.

I've been following the Social Security debate here and other places where Bruce Webb contributes. Bruce is a great guide thru the Trustee's Reports. I sent a letter to the editors at USA Today explaining the article only talked about the high cost scenario and failed to mention there are three scenarios and things look fine in low cost. Somebody from USA Today called me up this morning to talk about my letter. My moment to contribute to the national debate! We pulled up the lastest Trustee's report and the call seemed to go pretty well until I mentioned Bruce's website. As soon as I gave her Bruce's blogspot url I could sense she figured she was talking to some guy in his pajamas. Now I know hard it is to clearly explain the Social Security is not in trouble case. Anyway thanks Bruce, Dean Baker, coberly, pgl for all you've written on this issue. (and I should have thanked max before maxspeak closed up shop).

I'm Kelly not Anonymous. My point about Bruce's website isn't that she's familiar with Bruce's website and thinks he's crazy, my point is she's never heard of Bruce and thinks everything on blogspot is crazy. Why does a random retired guy like me get a shot at the national megaphone and you guys labor in obscurity?

Actually, the dollar is immediately borrowed by the Government and put to use in all the things they do. In a way the Trust Fund is a type of forced savings. The payee eventually gets back the principal with interest when he retires or is disabled. Any kind of retirement savings does the same thing, though private retirement funds obviously invest much more in the private sector.

Bruce is a great guide thru the Trustee's Reports. I sent a letter to the editors at USA Today explaining the article only talked about the high cost scenario and failed to mention there are three scenarios and things look fine in low cost. Somebody from USA Today called me up this morning to talk about my letter. My moment to contribute to the national debate! We pulled up the lastest Trustee's report and the call seemed to go pretty well until I mentioned Bruce's website.