The worst part of that was when he said that everyone agrees. Maddening.

It was a low moment for Brokaw, one of the lowest I can ever remember for him. He seemed to me to be simply spouting a ludicrous cliche he's heard or read (WaPo for example). It was as bad as Charlie Gibson's assertions, as a "moderator," regarding capital gains taxes. I only regret that Obama did not seize the opportunity to: (1) call out Brokaw's misinformation; and (2) note what would be happening to a "privatized" social security --- which McCain has long supported --- in the current economic crisis.

Brokaw... the man is intellectually bankrupt. Trouble is so are both of Wall Street's hand-picked candidates. Would Tommy Boy dare ask the killing question were both hacks running for the highest office in the land not entirely on board? I think not. After all, both did vote "Aye" on the bailout of mortgage securities their beloved free market has already deemed worthless. So, through a brazen question we learn how the theft is to be paid for. Thus the search for change I can believe in continues ... and runs right by the candidate who believes in country before principle.

Well, in Brokaw's defense, he is a TV anchorman, a field in which being dumb as a post with a head filled with conventional beltway 'wisdom' is seen as a hugely ennobling advantage.

Yeah, I can't speak for the rest of the country at large, but this kind of "Social Security is not going to exist tomorrow" is extremely common down here in GA...

plus a very nice man informed me in very colorful terms about the fact that its socialism!

Needless to say when I mentioned the congressional budget office and their report.. well, lets just say that one didn't go over well.

I think i've been blacklisted with local politicos down at the county commission thanks to Beat the Press...

Dean,

You have taught us and complained that reporters are NOT mind-readers. Yes, Brokaw was wrong but you said "even he deliberately said explicit lies."

Ok, that means you read his mind or know his intent and that he knows the truth and made a deliberate lie.

I think it's accurate enough to say he was wrong and giving out false and bad information.

When people spout off about Social Security being socialism I wish somebody would ask them if they drive on the highways, or use the public library or enjoy their local police protection. All of these things, and every other thing we do as a society for the common good are all "socialism".

Do these people want to dissolve our society? Should we just all just roam the land like lone mountain lions hunting and fighting for our turf? Should we do nothing for the common good?

When people dump on Social Security they are basically just saying that they would prefer the wealth of society be directed to other programs that would more directly benefit them.

"If a news reporter deliberately makes a false statement claiming that a private company like Boeing or Microsoft is going broke..."

I think you mean a "deliberately false" statement. The "deliberately makes" formulation only serves to distinguish Brokaw's statement from talking in one's sleep, or the like.

On substance, Social Security is in trouble. The lifespan of retirees is approaching 80; it wasn't even 65 when SS started. At the same time, Americans have less children, leaving less workers to support each retiree.

And there is no reserve; benefits for oldsters are taken solely from new workers. In the private sector, this called a Ponzi Scheme, and land those responsible in jail.

But you American Prospect-ers are fail-based believers in government, so you'll wait for a crash before you admit that maybe SS wasn't solvent.

I just read the transcript of Naomi Klein's interview with Amy Goodman in which she talks about the next bubble being the privatization of infrastructure. It seems quite possible that the rightwing ideologues would push this as a 'solution' to our current crisis.

Whoops.

My last paragraph should read:

"But you American Prospect-ers are faith-based believers in government, so you'll wait for a crash before you admit that maybe SS wasn't solvent."

Anonymous / Brian
Actually the housing bubble is a much better example of a Ponzi scheme. Paying into SS is not an "investment" like buying stock at the stock market, it's more a redistribution mechanism. Society as a whole pays SS to take care of the elders who no longer work. It's social dimension is at least as important as it's economic solvency, which of course is not a matter of "faith" as much as a matter of modelling and calculation. The increase in life expectancy and the demographic trends can be (and probably have been) factored in the model. Unless you have any specific information that they haven't been addressed, your assertions are simply another example of propaganda.

Brokaw's absolutely false assertion was the most shocking part of last night's otherwise bland performance, and not one of the pundit commentators deigned to point this out.

I wrote NBC last night demanding Brokaw be fired. There's no defense. Brokaw making, what = $4million/yr. is afraid 'they' will have to pay the money back to social security they borrowed for tax cuts and Iraq.

this is the man who went on bended knee to the mccain campaign when they were angry at obermann and threatened to block brokaw from being the moderator of last night's debate

Suze Orman did the same thing recently with Anderson Cooper on CNN. She was giving practical advice about managing through the storm (good advice, I thought) but then fear mongered about social security. I caught her error because I've been reading this blog but it's still a challenge for me to briefly and clearly explain the reasons why she's wrong. So I'm not saying Dean Baker should explain it to Suze (he has enough to do these days) but it's easier for me to write this post then send emails that SO and AC probably won't be read.

Obviously, Mr. Brokaw does not read BTP.

Mr. Brokaw is however a big fan of the Conservative Nanny State, having procured a Small Business Administration loan of about one million dollars some years ago.

Proper grammar is "If Social Security WERE a private company". You use the subjunctive case for a counterfactual.

Proper grammar is "If Social Security WERE a private company". You use the subjunctive case for a counterfactual.

>And there is no reserve; benefits for oldsters are taken solely from new workers.

That's how the world actually works, dude. Money in the bank really doesn't get it done if everybody sits on it (see Time, Present).

People labor, they produce more fruits than they immediately need, the excess goes to the old and the young so that the young will take care of them when they are old.

Thus it is, was, and shall forever be.

>so you'll wait for a crash before you admit that maybe SS wasn't solvent.

Man, look in a mirror. You have been blathering about "private accounts" like forever, and even with a stock market crash happening right on your TeeVee you persist in your uninformed foolishness.

But you always feel like you have to look down on us. You should figure out why that is and address it.

Not that the CBO has such a great track record of accurate forecasts, but even their report states that the system will be broke by 2049 and that, unless the law is changed, it will be illegal to make any further payments. Obviously, Congress won't allow that to happen, but I don't see why you are being so harsh on Brokaw (who is generally not a friend of conservatives).

Here's a paragraph from the CBO summary:

"Each year, the Social Security trustees (in formal
terms, the Board of Trustees of the Federal Old-Age and
Survivors Insurance and Disability Insurance Trust
Funds) publish long-term projections for the Social Security
program.1 The trustees’ projections differ somewhat
from the Congressional Budget Office’s (CBO’s), but
both organizations conclude that under current law, the
program’s scheduled outlays will exceed its scheduled revenues
during the next 75 years and the program’s annual
deficits will be large and growing over the long term.
Both groups of estimators project that the program’s outlays
will rise to 5.8 percent of gross domestic product
(GDP) in 2082. CBO’s projection of revenues for that
year is 4.7 percent of GDP; the trustees’ projection of revenues
equals 4.4 percent of GDP."

Doesn't sound too healthy to me.

I have yet to see anyone mention that seniors are now working longer because they have mortgages and cannot afford to be off the workforce. So doesn't this change the algorithms?

Did any of you read the CBO report? Here are a few facts:

1) By CBO's own calculations, Social Security expenditures are likely to exceed revenue by 2042, and perhaps as early as 2038.

2) THERE IS NO SOCIAL SECURITY TRUST FUND. As CBO states in their report, the Trust Fund is simply an accounting mechanism. Congress and the Presidents, in their infinite wisdom, have allocated the money that should be in the Social Security Trust funds for use to increase other expenditures, reduce the deficit, or increase the surplus. The Social Security Trust Fund is nothing but IOUs from the US Treasury to the Social Security Trustees.

When expenditures exceed income, where will the money come from? Either Social Security will be forced (by existing law) to reduce benefits, or Congress and a future President will need to increase taxes (or reduce other general expenditures) to fund the IOUs and ensure no decrease in benefits mandated by law (the benefits mandated by law are trumped by Social Security's limit on expenditures).

So I do not feel it is inaccurate for Tom Brokaw to say Social Security is bankrupt. The system is technically bankrupt now, and any private company that used the same "voodoo" accounting methods would have been hammered under US Accounting Standards.

It always amazes me the lack of understanding about SS and the TF. SS generates a surplus of funds which is spent everywhere for everthing as taken from the GF. Calling it a ponzi scheme is a lack of understanding that SS is an insurance plan and not an investment plan. The TF grew as a result of increased Withholding Taxes and the surge in economic growth in the nineties.

There is no need to fix SS today as the Withholding Tax Revenues will exceed payouts well into the next decade and probably beyond as the economy grows (again). Even if we had to payout from the General Fund, the first payment under an Intermediate Cost Scenario would be $19 billion (cost dollars as taken from SS reports) in the first year and $350 billion in the last year (2041) from the TF/GF and under the same cost scenario.

There is no need to tax people making >$250,000 today as those excess funds will again go into the GF and be spent for whatever and however. If anything needs to be done, then we should wait until the expected year when payouts exceed witholding tax revenues. It is then we should increase the withholding tax 1 tenth of 1% for both Employers and Employees. If you do so then and the next nine years afterwards, there will be no need to touch the TF. The cost? Maybe $7 per week per employee.

How do we get by with fewer workers? It is a growing economy and productivity increases make that possible and has done so for a long time. The number of workers has little to do with paying for SS and the salary increases resulting from productivity increases does. The CBO projects the same gap between payouts and revenues due to productivity increases well into the future.

Brokaw knew what he was doing . . . pandering to the masses. His statements were deliberate and false.

I am curious if the Treasuries the Treasury is going to be exchanging for Toxic Assets under the Plan are going to be the same Worthless Treasuries George W found in the drawer of the Social Security Trust Fund.

So the Treasury is now planning to help "private" investors purchase the Assets the Treasury buys? Is the simple Plan to Overpay when Buying and Underprice when Selling? Guess that makes it a bailout for New Investors also!

The "there is no trust fund. its not real... a facade." Is quite popular with conservatives. But it seems incoherent...

I try to point out that money, stocks, everything we use to represent wealth aren't real in that sense either. We put faith in them.

Governments were required to form some kind of regulation and stability and token to represent wealth and allow for markets to be held together (for human to trust in equitable exchange) long enough for productivity and technology to be created and expanded

Before that it was rape and pillage anyone and everyone. Then government says no no no... you got it all wrong. We want to kill "them" those folks. ON that inlet, just beyond the hill that our Gods worship on. "They" are the threat... not anyone within our tribe. We rock!
Plus "they" control access to the ocean, have the best fishing locations, and worship the devil.

But back to my point. How does one argue such a position because it seems incoherent to me...

But for fun...
okay... I'll take the bate Jeffrey from Upstate NY...

I can't see the trust fund therefore it doesn't exist. I can't see see that the value of this dollar in my hand is worth that loaf of bread so I'm going to steal it--I might get stabbed to death but at least i'm not getting taken advantage of by liberal media/government fraud.

Stealing the bread may be hard because I will be floating away--I can't see gravity either...

Ellen says: "I have yet to see anyone mention that seniors are now working longer ... So doesn't this change the algorithms?"

Not on the cost side. Once you reach retirement age (like me!) you can collect benefits regardless of income.
If the law were to change by making retirement age later than 65 would there be an effect on the cost side.

If your question is, "won't the funding go up if more people are working longer", then I guess that WOULD have an effect.

In Obama's defense for nodding in agreement: He favors removing the tax cap on Social Security contributions. That's a Good Thing (TM). If done, we could increase benefits now and not run out of money 40 years from now. This is a means to an end. The narrative is "ZOMG social security is in crisis." Obama actually has a plan that addresses the false narrative, while also expanding the potential benefits of social security. That's a great thing in my opinion, even if he has to humor Tom Brokaw (America's Crappiest Debate Moderator).

Both Brokaw and Lehrer made the assumption that spending cuts must match outlays to fund the bailout (oops). This is false. If the economy is going into recession it might be good to increase spending as a stimulus. The CW was that both candidates were lying to cover up the essential spending cuts. The federal government does not to be on-balance for any fiscal year, and, frequently, its bad policy to insist on a balanced budget.

Terry: "If the law were to change by making retirement age later than 65 would there be an effect on the cost side."

The law already has changed. My retirement age is 67.

If Congress does not appropriate money for defense next year, there is no money for defense.

If Congress does not appropriate money for the FAA, NIH, DOE, etc., those agencies have no money.

But the legislation that keeps Social Security running does not need annual renewal. It just works, year after year, decade after decade. And when the day comes that because of the aging population, the money coming in is less than the commitments out, Social Security goes from being the only pre-funded, externally-funded, self-sufficient program, to being one that partially depends on annual legislation.

Big fucking deal. That's not any more bankrupt than the military, or any other government agency or program.

Social. They need to take the word "Social" out of it. It acts like a dog whistle to the mouth breathers and knuckle draggers. And here is a picture of Charles Ponzi for the mouth breathers and knuckle draggers like Anonymous/Brainamous. Conservatism, the GOP and the Free Market are Ponzi Schemes. Not Social Security.

"Some free-market economists, such as Thomas Sowell, and the Cato Institute[49] have argued that national social security systems, such as the Social Security system in the United States and the National Insurance system in the United Kingdom, are actually large-scale Ponzi schemes. In economic terms, these pension systems are often referred to as "pay-as-you-go" or unfunded national pension plans.

Sowell and others point out that, under these national systems, incoming payments, made up of taxes and/or other kinds of non-voluntary "contributions," are neither saved nor invested. Instead, current contributions (from one set of individuals, due benefits at a later time) are used to pay for current benefits (to another set of individuals). The critics of Social Security say that as North American demographics trend toward more pensioners and fewer workers this "pay-as-you-go" system has begun to show its inherent flaws. Therein lies the basis for the Ponzi scheme metaphor: that the system relies on a steady flow of new contributors, just as a Ponzi scheme relies on a steady flow of new "investors."

Nevertheless, retirement programs run by national governments are significantly different from a typical Ponzi scheme in a number of ways:

* Retirement systems, like Social Security, are not blatantly fraudulent. In a genuine Ponzi scheme, the perpetrators falsely claim that there is some business that generates the promised revenues. In Social Security, people know where the money comes from, and actuaries supply written predictions of future cash in-flows and out-flows.
* Retirement systems promise a stipend to the country's retired persons, not the quick and exorbitant profits to current investors that Ponzi schemes invariably offer.
* Retirement systems rely on the taxing power of the state to ensure continuous funding, as opposed to voluntary investor contributions.
* Retirement systems are in many ways insurance rather than investment systems. A person who dies before retirement gets no money back (regardless of what he/she paid in). Someone who lives to a very old age continues to get payments regardless of the amount of money he/she has paid in.

The U.S. Social Security Administration provides the following response[1] to the "Ponzi scheme" accusation as applied to a pay-as-you-go system like Social Security:

There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go insurance programs in that in both money from later participants goes to pay the benefits of earlier participants. But that is where the similarity ends. A pay-as-you-go system can be visualized as a simple pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end. ... As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever. There is no unsustainable progression driving the mechanism of a pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme.

If the demographics of the population were stable, then a pay-as-you-go system would not have demographically-driven financing ups and downs and no thoughtful person would be tempted to compare it to a Ponzi arrangement. However, since population demographics tend to rise and fall, the balance in pay-as-you-go systems tends to rise and fall as well. ... This vulnerability to demographic ups and downs is one of the problems with pay-as-you-go financing. But this problem has nothing to do with Ponzi schemes, or any other fraudulent form of financing, it is simply the nature of pay-as-you-go systems."

http://en.wikipedia.org/wiki/Ponzi_scheme

"Not that the CBO has such a great track record of accurate forecasts, but even their report states that the system will be broke by 2049 and that, unless the law is changed, it will be illegal to make any further payments."

Please. Define 'broke'. As long as FICA payroll tax is being collected Social Security will be able to pay out some level of benefits. Current projections show that Social Security would still be paying out a better benefit in real terms in 2041 (SSA) or 2049 (CBO) than a similarly situated retiree gets today. The idea that it will be "illegal" to make further payments is bogus nonsense. Now per former Deputy Commissioner Biggs ( a strong supporter of personal accounts btw) current law would require some delays in checks after TF depletion as the Commissioner does not have unilateral authority to cut benefit levels or to write checks for which SSA has no funds. Meaning he would have to wait for collections to come in to fund checks going out. So to avoid this confusion Congress would have to make some positive decisions if and when. But the idea that checks simply stop is scaremongering nonsense of the first order.

THERE IS NO NATIONAL DEBT. It's just an accounting device.

Oh, and there is no corporate debt. Those promises to pay a sum on demand or at a date certain are also just accounting devices. Enron wuz framed.

And while we're at it, there are no bank accounts. They, too, are just accounting devices to keep track of how much fictitious "currency" ignorant suckers have deposited.

The only redeeming feature of this point of view is that there are no blog posts; that's just an accounting fiction to track random collections of magnetic domains.

Social Security IS socialism, and I'd have it no other way.

It is important to remember that about on third of its payments go to widows and children that have lost a parent.

"On substance, Social Security is in trouble. The lifespan of retirees is approaching 80; it wasn't even 65 when SS started. At the same time, Americans have less children, leaving less workers to support each retiree."

To follow up on the second Anonymous in less polite terms: IT'S ALL IN THE FRICKING MODELS! In three different versions no less. If someone out there would like to do a detailed numeric analysis of how the professional demographers at SSA somehow missed these demographic changes in constructing Tables V.A1 through V.A4 in terms of life expectancy or covered worker ratio then I can promise you we will put it up at the Angry Bear web-site.

But the reality is that every demographic numbers that Social Security critics tend to cite comes right from the Social Security Reports to begin with. The implied notion that longer lived Boomers and Gen-Xers are are going to present the Office of the Chief Actuary with some unanticipated challenges is itself pure nonsense.

If you have specific quarrels with the particular numbers in the Tables (http://www.ssa.gov/OACT/TR/TR08/trLOT.html) then bring them forth and let them be aired out. But this 'people are living longer' 'covered worker ratio' hysteria is just that.

IT IS ALL BUILT INTO THE MODELS ALREADY. Or show me different.

As long as the FICA tax is restricted to the first $102,000 of salary, we probably will have a deficit eventually. But I've never seen a logical explanation of why only the first $102,000 of one's salary is subject to FICA -- shouldn't the whole salary be subject to it? If we took away that limitation, we'd never have to worry again.

I'm also always astounded by the people who insist that they must have a private retirement account. Haven't you ever heard of an IRA? Doesn't your company offer a 401(k) or similar retirement savings plan? Where's the law that forbids people from saving for their retirement in any way other than through the FICA tax?

To the people who still think SS is a ponzi scheme or that there is some other reason it shouldn't exist, I have to ask, what is the alternative? Either privatizing it or eliminating it. How many retirees on this very day do you think would say that they wish they had been able to invest half of their retirement funds in the stock market? Also, even assuming that they retire in boom times, what happens if their particular investments tank? Either they decide they no longer need food and medicine, or they start looking for work and they have to compete with a younger work force. Hard enough in the good times, impossible in today's market.

Privatization does not have anything to do with the stock market. The entire system can and should be privatized. That is every dollar YOU contribute goes into YOUR account (+ your employer match). This should by law be invested in T-Bills exclusively.

This gives the US taxpayer the same rate other investers get.

It returns the program to what it was intended to be: a enforced retirement savings program and eliminates the huge amount of overpayment and gaming tha has crept in.

The welfare aspects of the program should be funded out of the general fund.

The obligaitons we owe to those who have, against their will, contributed a huge percent of their income to the system for 30 or more years are of a different sort than the charity we'd like to give unfortunates who need our help.

RW. I don't think that's what anybody but you thinks privatization means. And I don't see how it helps at all.

By the way, what run75441 said above is right and is the answer to most everybody except the guy who thinks that Treasury IOU's are worthless. And that guy is just nuts. Every treasury IOU (we call them bonds, notes or bills) in history has been paid in full, and these will be too. They're part of the US Debt that we pay off as it becomes due, every year. Millions of people hold such "IOU's" and they've never gone bad. This slick talk about them is just trash.

Anybody attempting to predict what might happen in 40 or 50 years may be certifiable. I plan on growing gills and swimming the depths of the ocean chasing mutant tuna and munching kelp in my retirement.

To the lot of you suddenly coming out of the woodwork to agree with Brokaw's ignorance (and I think it is ignorance, not deliberateness), go check out the stuff at Bruce Webb's website on this. There is no need for any hysteria at all on this issue. Brokaw was imitating Bob Schieffer from four years ago (who might well repeat this nonsense for the third debate). Bruce is more accurate than too-cautious Dean, who wishes to retain "credibility" in Washington, so he sticks with the CBO projections.

I think Obama has a very reasonable plan now. Wait and see. If indeed the more pessimistic projections come true, and SS starts running current deficits after 2017 or so, then start fica taxing incomes over $250,000 per year. Very reasonable.

I was sort of disappointed that Obama did not take after McCain's support of privatization, which looks plain looney in the current situation. But then, maybe he figured it was safer just to ignore Brokaw's stupidity and arrogance and focus more on the health side of things, where indeed the problems are worse.

I do not argue that Treasure IOUs are worthless. What I argue is that the government is perpertrating a MAJOR accounting fraud on all of us by masquerading a "Social Social Security Trust Fund" which presumedly holds trillions of dollars to apply towards shortfalls in Social Security in the future, when everyone in the government knows that when those shortfalls begin that the government will suddenly have to start allocating funds from other revenuses (or increase taxes) or cut benefits to ensure that the Social Security can continue to make payments.

Two words: Tire Swing.

agree with Barkley and Bruce (who I learned more than than average person would care to know about the ins and the outs of SS)

Jeffrey, Upstate New York wrote, ...when everyone in the government knows that when those shortfalls begin that the government will suddenly have to start allocating funds from other revenuses (or increase taxes) or cut benefits to ensure that the Social Security can continue to make payments.

But everyone who understands the issues around SS understands that the general fund "owes" SS what's in the trust fund, and that it will have to be paid back sometime. It's quite clear. Anyone who doesn't understand that simply isn't doing their homework. And who said that citizens in a democracy don't have to do any homework?

A similar "fraud," as you put it, is the idea that we can continue funneling hundreds of billions of dollars a year down the military rathole without eventually increasing taxes to pay for it. How come you don't get worked up over that?

Actually, if the famous "low cost scenario" of the SSA comes true, which Dean does not believe, then there will never be a deficit in the system, no 2017, much less any "bankruptcy." The rest of the budget will never have to redeem anything and the SS budget will continue to lend the rest of the government money forever, albeit smaller amounts than in the past, at least up to somewhere between 2030 and 2040 or so.

I do not argue that Treasure IOUs are worthless. What I argue is that the government is perpertrating a MAJOR accounting fraud on all of us by masquerading a "Social Social Security Trust Fund" which presumedly holds trillions of dollars to apply towards shortfalls in Social Security in the future . . .

Sir, you do realize that the your private accounts are in the same situation? Your pension, savings, investments, etc., do not consist of piles of cash in Scrooge McDuck's vault. They exist on paper only, a mix of private and government IOUs. Many of these IOUs are tied to the stock market, which is why your private accounts probably lost up to a quarter of their value over the last year or so. Government bonds are the most secure IOUs in those accounts. This is why most acounts have a mix of private and government securities, because the government bonds provide a stable anchor for the less dependable stocks and securities.

This is a bit of basic investing knowledge everyone who has investments either knows or should no. If someone tries to tell you otherwise, they are trying to con you.

The Social Security trustfund is one of the most stable, safe investments in the world. If what is happening to it frightens you, you should check out your other investments and prepared to be terrified.

Beyond all the technical financial jargon, Social Security is, and is politically seen as, the last resource of the afflicted and the helpless elderly, a "widows and orphans" fund that happens to be run (very efficiently) by the government. It will not stop making payments to those widows and orphans as long as this democracy stands. If our system collapses to the point that Social Security checks are endangered, figuring out how to balance its books will be the least of the catastrophes that will have befallen us.

i agree with Bruce Webb above, so don't misunderstand the following..

raising the cap is a bad idea because where the cap is currently set even those who earn at the cap their whole lives get back every dime they put into social security with enough "interest" to cover inflation and match the average increase in GDP.

what they don't get is what the could have made with other investments. but as long as the balance is where it is that opportunity cost can be justified as an insurance premium ... it was always possible they might not have done as well a they did.

but raising the cap makes that justification harder to sell and effectively turns social security into welfare which is was very deliberately designed not to be.

social security is a retirement insurance and savings plan for workers paid for by workers and it needs to stay that way. it is not broke. it can never be broke as long as workers understand that what they are doing is paying a small percent of their income while they are working in order to guarantee having at least enough to live on when they are old.

as Bruce often says... the best thing to do about Social Security is NOTHING.

if we all start living longer it would make sense to save a little more by raising the payroll tax... about 2% is what is projected to be needed about 2040, and though there may be a tiny rise after that... it is hard to imagine it would ever reach as much as 3% and indeed does not reach 3% in the IP for the next century.

a surprising number of people posting here seem to know what they are talking about. this has not always been true. perhaps we are learning.

there are those, however (Brokaw) who have heard a few lies, believe them, and free associate from them to construct monsters of their own imagination and then run around telling the people that the sky is falling. we need to find a way to tell people the truth.

This is from the cbo/gov website linked above, isn't this exactly what what Brokaw was referring to? :

Today, Social Security’s revenues each year are greater
than its outlays, but as the baby-boom generation (people
born between 1946 and 1964) continues to age, growth
in the number of Social Security beneficiaries will acceler-
ate, and outlays will grow substantially faster than reve-
nues. CBO projects that outlays will first exceed revenues
in 2019 and that the Social Security trust funds will be
exhausted in 2049.2 If the law remains unchanged, the
Social Security Administration (SSA) will then no longer
have the legal authority to pay full benefits.

Today, Social Security’s revenues each year are greater
than its outlays, but as the baby-boom generation (people
born between 1946 and 1964) continues to age, growth
in the number of Social Security beneficiaries will acceler-
ate, and outlays will grow substantially faster than reve-
nues. CBO projects that outlays will first exceed revenues
in 2019 and that the Social Security trust funds will be
exhausted in 2049.
2 If the law remains unchanged, the
Social Security Administration (SSA) will then no longer
have the legal authority to pay full benefits.

danny

what you say is true enough, but you need to think.

by 2040, when the Trust Fund is fully repaid, if people are living longer...that's where the number of retirees is coming from... it seems reasonable that people would understand they need to save more for their longer retirement. that more will amount to about 20 dollars per week out of an income that is by then 300 dollars a week more than it is today.

what paralyzes your brain, and that of the other doomsayers, is the idea that Social Security can never raise the tax to pay for the fact that people are living longer. That is about as smart as saying you will always spend a fixed percent of your income on groceries no matter how long you live.

The price of everything else changes according to "supply and demand" but we are told that the price of Social Security is not allowed to change even though both the demand... living longer... and the supply... higher incomes are changing.

you need to watch out for words like "accelerate" and "substantially faster".. the changes are tiny. easily affordable, and more than reasonable once you realize it is your own groceries you are paying for.

"Both groups of estimators project that the program’s outlays
will rise to 5.8 percent of gross domestic product
CBO’s projection of revenues for that
year is 4.7 percent of GDP; the trustees’ projection of revenues
equals 4.4 percent of GDP."

Doesn't sound too healthy to me."

Posted by: jb | October 8, 2008 10:38 AM

jb:

that's because you are not thinking. look again at those numbers.. you are talking about a 1% of GDP increase in the cost of Social Security. ONE percent. To feed and house about 50 million people... one of whom will be you.

what do you think money is for? why is 1% of GDP supposed to break your back? can you understand this is money you are paying for your own groceries when you are old, and that it is going up by 1%... or 1/4.7 because you are going to be living about 1/4.7 longer than retirees today. Thats about 3 years longer than the current 15 year life expectancy in retirement.

or is it because you think there is a law from god that says that you can't pay any more for groceries even if you are going to be living longer?

ONE percent! to feed 50 million. including you.

danny,

Sigh...

Out of the last ten years, the Social Security budget has done better than the "low cost" scenario in a majority of the years. Under that secenario, I repeat, 2017 never arrives, the system runs a surplus forever.

So, you were worry about what?

barkley rosser

of course if it runs a surplus forever then the trust fund grows and grows and becomes another kind of problem

better to think of Social Security as fundamentally a pay as you go system with minor corrections in the tax rate as needed. there is no sane reason why a tax rate should be set in gold and the people have their heads chopped off or their legs stretched to fit the tax rate. the price of everything else changes to adjust to changed circumstances. if we do start living longer, it is reasonable that we should pay a little more for our groceries.

but, of course, if the economy grows fast enough to stay ahead of the demographic changes, then we might want to think about cutting the tax.

i think we'd do a lot more good if we could teach the people what they are paying for... what they get... than promising them "no tax increases read my lips" forever.

Someone is missing the key word:

"If the law remains unchanged, the
Social Security Administration (SSA) will then no longer have the legal authority to pay full benefits."

That word is 'full'. We can and coberly and I consistently do argue whether the current schedule of benefits is set at the ideal point. He rather leans to the position that it is and so would openly entertain the minor tax increase current projections would require. Me and Barkley take a somewhat different more dual position. One it is more likely than not that the percentage of full benefits payable will continue to increase (for example under SSA projections that percentage went from 75% in 2007 to 78% in 2008, and CBO projects an even higher percentage.) Two the formula of benefits builds in a better real benefit as time goes on with the result of that 78% of 'full benefits' results in a real benefit about 25% better than today's retirees get.

Which is to say that Social Security can go 'broke' and Millennials still get a better basket of goods than my Mom gets from Social Security today.

I hope and expect that the 78% figure goes up, after all I have nephews and nieces who will be drawing benefits after 2041, and they have children who will be drawing benefits after mid-century. But given that all of the bias is to the upside I refuse to get spooked by crisismongers who actually have not read past the summary of the SS Report (if that).

Bruce

in case it's not clear, i agree with you 100%.

if this were 2040 and there was an argument about whether to keep the 12% tax rate and set benefits at a 30% replacement rate, or to keep the 40% replacement rate and raise the tax to 16%. i'd probably argue for the tax raise.
because to me it makes more sense to save an extra 2% (half of the 4%) while working, out of an income of a thousand dollars a week, than to take a 250 dollar a month cut in a benefit that was only 1000 dollars a month to begin with.

And if you point out that 1000 dollars is more in real value than your grandmother got in 2008, I'd say, why stop there? why not set the replacement rate so that it delivers the same basket of goods as it did in 1950?

but i am willing to save that argument until 2040. because by then we may all be doing so well on the stock market that the smaller soc sec replacement rate will seem perfectly adequate to us... especially if we can rejigger the bend points so the really poor get a larger percent "return" and the better off get less... writing off the difference as a pure insurance cost.

but the stupid thing is to do what the privatizers do: assume that the tax rate can never be raised and the benefit rate will never be lowered and project the "shortfall" to the infinite future and then run around screaming about huge unfunded deficits.

For the record the disagreement between Dean on the one side and me and Bruce Webb on the other is not a matter of him wanting to hang out with his fellow Washington wonks. He really is more pessimistic about the long term growth prospects of the US economy, which means he does expect the SSA to eventually run deficits and so on. However, we all agree that nothing needs to be done now or in the next presidential term. Wait and see, which seems to be the position of Barack Obama, fortunately.