Editore"s Note
Tilting at Windmills

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December 17, 2004
By: Kevin Drum

SOCIAL SECURITY AND ME....Matt Yglesias makes an important point about Social Security framing today:

I'm not sure the older liberals who run the show quite understand how overwhelmingly important it is to keep the "there is no crisis" message front and center in the Social Security debate. Most of the young people I know -- including myself until very recently -- have been taken in by a decades-long effort on behalf of privatizers into believing that Social Security is in "crisis," and that if we do nothing the system will "go bankrupt" before we retire, meaning that the system will somehow collapse and we won't get any benefits.

This is true, and I used to be one of these people too. As a well-informed citizen, I knew that Social Security was unsustainable, that life expectancies were increasing, that fewer workers would be supporting more retirees in the future, and in general, that the program was facing a demographic timebomb that would cause it to go bankrupt within a couple of decades.

This was back in the mid-90s, and for some reason I took an interest in finding out more. So I wrote off for a copy of the trustees report, read up on tax policy and demographic projections, pored through various analyses, and to my surprise learned that the problem was either (a) fairly modest and quite solvable or (b) not a problem at all.

Social Security is going to get more expensive over time, but it's not going to keep getting more expensive forever. Starting in about a decade costs will go up, but then, after about 20 years, they'll flatten out. And the size of the increase, from about 4% of GDP to 6% of GDP, just isn't a crisis. What's more, when you start to study the trustees' projections, you realize that even their "intermediate" projection is pretty conservative. It's quite possible that if we leave the system completely alone it will be fine. And even if it's not, there's plenty of time to make the small tweaks necessary to keep it properly funded.

In other words, after actually studying the issue, I changed my opinion almost 180 degrees. Nothing is going bankrupt, benefits will continue to be paid forever, and future funding problems are both modest in size and not that hard to deal with.

Unfortunately, Bill Clinton, Al Gore, and now George Bush, each for their own reasons, have found it politically convenient to use Social Security as a useful bogeyman for scaring the public. The difference is that, unlike me back in 1995, they all know better. It's too bad they couldn't have figured out some real problems to focus on instead.

Kevin Drum 2:14 PM Permalink | Trackbacks

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