Editore"s Note
Tilting at Windmills

Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

March 18, 2006
By: Kevin Drum

MORE SOCIAL SECURITY DOOM-MONGERING....Over at Slate, Will Saletan has yet another entry in one of journalism's favorite genres: the Social Security doomsday story. It's chock full of the usual grim statistics: we're living longer, we're retiring earlier, there are fewer workers to support each retiree, and the taxes to keep up with all this are going to bankrupt us before long. In short, we're completely screwed.

Please. Can we just stop with this stuff? The financial projections for Social Security really aren't that complicated, and the Social Security trustees take into account all the stuff that Saletan mentions. They know perfectly well that lifespans are increasing and they include that in their models along with a dozen other trends that Saletan doesn't mention. And it turns out that the results aren't really very scary at all.

Here's the deal in three easy steps:

  1. Currently, federal government spending amounts to about 20% of GDP.

  2. Every year, the Social Security trustees make three projections for the future growth of benefits. The middle projection indicates that everything is fine until about 2042, after which we will need to increase taxes by wait for it a whopping 2% of GDP.

  3. However, it turns out that the middle projection hasn't turned out to be the most accurate in the past. The "low cost" projection has. And that projection tells us that Social Security is solvent for at least the next 80 years.

So: even if you're the worrying sort, the pessimistic scenario suggests that we'll need to do no more than gradually increase taxes by about one-tenth starting in a couple of decades. Or perhaps by a twentieth along with a few modest benefit reductions. Not exactly the end of the world. But the most likely scenario is that Social Security is in fine shape and we don't have to do anything at all.

Saletan is right that we can all look forward to longer retirements than our great-grandparents enjoyed. And guess what? There's nothing wrong with that. We're a richer country than we were in 1935 and we can afford it. There are plenty of things to worry about these days, but Social Security isn't one of them. Honest.

Kevin Drum 9:43 PM Permalink | Trackbacks | Comments (85)

Bookmark and Share
 
Comments

Kevin,

Speaking as a 109-year-old man on Social Security -- I believe I am the oldest living man in the Lower 48, and I have all the Dan Fogelberg records -- let me assure you that solvency and Canada Dry (wink wink) don't mix with tangential accusation of fragmentation.

Nice try!

Ed "Weasel" McCune
(1897-?)

Posted by: AntiSocial on March 18, 2006 at 9:46 PM | PERMALINK

The problem is Medicare and Social Security together, just looking at Social Security by itself is very very misleading. If you want to figure out if you need to raise taxes or cut spending, you need to look at all tax revenues and all spending -- just saying one component by itself is under control doesn't suffice.

For instance, citing the trustee report (http://www.ssa.gov/OACT/TRSUM/trsummary.html):

"As we reported last year, Medicare's financial difficulties come sooner--and are much more severe--than those confronting Social Security. While both programs face essentially the same demographic challenge, underlying health care costs per enrollee are projected to rise faster than the wages per worker on which the payroll tax is paid and on which Social Security benefits are based. As a result, while Medicare's annual costs are currently 2.6 percent of GDP, or about 60 percent of Social Security's, they are now projected to surpass Social Security expenditures in 2024 and reach almost 14 percent of GDP in 2079."

Posted by: stefan on March 18, 2006 at 9:59 PM | PERMALINK

So: even if you're the worrying sort, the pessimistic scenario suggests that we'll need to do no more than gradually increase taxes by about one-tenth starting in a couple of decades.

Wrong Kevin. Increasing taxes would make the social security problem even worse because increasing taxes decreases economic growth. The decrease in growth causes tax revenues to go down so the government gets even less tax revenue to pay for social security benefits. So increasing taxes makes the social security debt even bigger.

Posted by: Al on March 18, 2006 at 10:04 PM | PERMALINK

Stefan: If Saletan wants to talk about Medicare, fine. But he's talking about Social Security. And the most likely scenario is that Social Security is already properly funded and has no problems.

Healthcare is a separate issue. I happen to think the answer is full national healthcare, which would indeed require a tax increase. But it would be a tax increase that's well worth it.

Posted by: Kevin Drum on March 18, 2006 at 10:04 PM | PERMALINK

Al is in fine fettle this weekend, isn't he?

Posted by: Kevin Drum on March 18, 2006 at 10:05 PM | PERMALINK

if saletan want to worry he should look at medicare instead. and nice that what, maybe 25% or more of your health care costs go into paperwork, insurance bs and bureaucracy isn't it?

Posted by: supersaurus on March 18, 2006 at 10:07 PM | PERMALINK

Kevin,

I agree: discussing Social Security without discussing Medicare is misleading, for Saletan and for anybody else. At the same time, the current system is going to become infeasible over the next few decades -- borrowing money from the Chinese is only going to work for a while -- and while the best outcome may be a form of federal funding of health care for all age groups, along with the taxes to finances it, there are still huge issues here about who gets what under what conditions, and many of these are linked to classic Social Security and Disability insurance questions: is required to work (i.e. contribute taxes) to receive an entitlement to pension (and health care) benefits, and who can use self-financing (saving and inherited wealth) to buy their way out of having to satify the conditions for access to the public system.

A National Health Care system is going to require large chnages in how Social Security works, since the retirement age now is in large part driven by how you qualify for Medicare (it's complicated, but it something to think about, one of the many things National Health Care will put on the table).

Posted by: stefan on March 18, 2006 at 10:13 PM | PERMALINK

We had this debate last year. Someone tell Saletan to put a fork in it.

Posted by: Ellen1910 on March 18, 2006 at 10:23 PM | PERMALINK

Aiyeee! The only solution is to cut taxes NOW, because some growth thing will happen that will make up for the additional deficit AND make the non-existent Social Security problem go away.

Don't you see? What's wrong with you? Why do you love taxes?

Typical liberal...

Posted by: bleh on March 18, 2006 at 10:24 PM | PERMALINK

The only way to solve the Social Security Crisis is to invade Iran. Now. Right now.

Posted by: lib on March 18, 2006 at 10:34 PM | PERMALINK

Al,

Yes, economic growth certainly faltered after Clinton's tax cut, er, increase.

Posted by: Frieda on March 18, 2006 at 10:47 PM | PERMALINK

I hate to spoil KD's good mood, but Bush supports giving social security to illegal aliens. It's got some very powerful support.

But, wait, there's more: those illegal aliens would get a better deal than U.S. citizens.

I can understand how the Democratic leadership would fall right in line with this scheme, but patriotic Democrats might have different ideas.

Posted by: TLB on March 18, 2006 at 10:48 PM | PERMALINK

"we're living longer, we're retiring earlier, there are fewer workers to support each retiree"

They always leave out the fact that the Baby Boom echo will vastly expand the workforce. We are merely in need of a bridge.

(Cue James Brown...)
.

Posted by: VJ on March 18, 2006 at 10:55 PM | PERMALINK

But, but, but...Al, if we lower taxes then that will encourage economic growth beyond all imagining, and tax revenues will increase toward infinity, and we can fund everything we ever dreamed of!!!!

Just think, a pony in each garage!!! Therefore, if the Bush tax cuts are made permanent, we will have paradise on earth. How can there be a crisis in Social Security?

Not that it matters, given we were all created by an intelligent designer. I've been informed it all ends in 2038 anyway, so why worry?

Go shopping.

Posted by: bobbyp on March 18, 2006 at 11:01 PM | PERMALINK

'Al' posted:

"Increasing taxes would make the social security problem even worse because increasing taxes decreases economic growth."

Nope.

Tax rate cuts decrease economic growth. It's happened EVERY TIME it's been tried. Not to mention they cause federal income tax revenues to plummet, thereby causing massive federal deficits.

One last time for all the RightWingers that are here visiting from Bizarro World:

INCREASING TAX RATES INCREASES TAX REVENUE.
DECREASING TAX RATES DECREASES TAX REVENUE.
.

Posted by: VJ on March 18, 2006 at 11:01 PM | PERMALINK

increasing taxes decreases economic growth

We need taxes to support what makes us a healthy nation -- schools, roads, public health, public safety. The anti-tax movement ignores the needs of our broad community, at our peril.

Without tax-supported services, we are in danger of a very dangerous society -- even if you have a rich enclave and private schools for your kids: avian flu epidemic, measles, mumps and smallpox, illiterate workers, dangerous roads, and more.

In some Latin American countries, the wealthy must build tunnels to go safely from their homes to their place of business. That is because they refuse to invest -- through taxation -- in public health and safety.

Without Social Security, as FDR noticed in the 1940's, old people end up without food or homes or medical care. We need Social Security and we need Medicare.

Is that the society we want to build in the U.S., with services only for the rich, and the rest in danger, on the prowl?

Posted by: MS on March 18, 2006 at 11:09 PM | PERMALINK

"We're living longer, we're retiring earlier, there are fewer workers to support each retiree."

I will agree that we are living longer, but social security is starting later, not earlier. Folks who are retiring earlier obviously feel they have arranged their financial affairs to permit early retirement. If jobs were not bleeding to Asia, early retirement would lead to labor shortages and higher incomes for younger workers. That would lead to higher social security tax revenues. As it is as some 55 year old retires, he is often replaced by an Indian or a Chinese. Good for the Indians and Chinese. Not so good for America.

Anyway, I agree that the real crisis is in medicare. We might need to raise medicare taxes to deal with the problem. The medicare problem could be solved with universal health care.

Posted by: Ron Byers on March 18, 2006 at 11:10 PM | PERMALINK

The problem with liberals is that they see a problem and they think how they can fix it. In the case of Social Security, the problem was poverty among the elderly. Conservtives, on the other hands, don't see problems so much as solutions: tax cuts. One size fits all. Of course, it helps from the outset not to care about things like poverty.

Posted by: walt on March 18, 2006 at 11:14 PM | PERMALINK

"Saletan is right that we can all look forward to longer retirements than our great-grandparents enjoyed. And guess what? There's nothing wrong with that. We're a richer country than we were in 1935 and we can afford it."

Wow, 2066. I'm not worried about Social Security being solvent in 60 years. I am worried about these constant right-wing assaults on government of, by and for the people today. Because of their malice and/or incompetence, I don't expect to enjoy a longer retirement than my great-grandparents. I don't believe in 2066 we will be a richer nation than in 1935. I just hope that I and those I love will be among the lucky ones who will still be free. I hope that we are able to eke out a livelihood from an earth suffering global climate change, oil depletion and the violence that will accompany resource scarcity. Finding the money to fund retirement for geezers like me will be the least of our problems.

Posted by: PTate in MN on March 18, 2006 at 11:30 PM | PERMALINK

But the most likely scenario is that Social Security is in fine shape and we don't have to do anything at all.

Wrong Kevin. Past performance tell us absolutely nothing about what's going to transpire in the future. The fact that the most optimistic predictions have been valid in the past doesn't mean they'll come to pass in the future. It would be prudent to at least plan for the middle scenario, which is where we'll either need modest reductions or the puny little tax 2% of GDP tax increase you mention (just a puny little quarter of a trillion in today's terms). Of course, liberals like you would rather jack taxes up by $250 billion (or whatever ungodly figure will actually be necessary in 2035) than trim the benefits of rich retirees along the lines of the prudent Pozen plan. Heaven forbid the 80-year old Bill Gates need to dip into his (by then) $600 billion fortune to pay for the early bird special.

And remember, even the worst-case scenario is not impossible. Moreover, everybody knows that healthcare alone is almost certainly going to require massive tax increases. Why not make it easier on ourselves by taking the low-hanging, mathematically simple fruit of Social Security reform while it's a relatively simple task? I fault Bush for not being willing to spend more political capital on this fight. But I don't fault him for being wrong on the issue, because he's exactly right.

Posted by: P.B. Almeida on March 18, 2006 at 11:37 PM | PERMALINK

The theory behind the one size fits all tax cut solution is that people will not work as hard if they are paying a large percentage of their income to taxes. It might have been a meaningful idea when the top marginal rate was 70%, but even then only a few very foolish people were really paying that top rate. Avoiding taxes at the highest rate was what tax shelters were all about.

Ronald Reagan's real accomplishment was to cut the guts out of all those wonderful real estate tax shelters we used to buy and sell. No longer was every decision made on the basis of its tax ramifications. When we cut the guts out of tax shelters we had to lower top marginal rates and that is exactly what we did. In the process we nearly destroyed the savings and loan industry and the commerical real estate market. Looking at it from a historical perpective Reagan's tax reforms were probably needed. The previous code had lead us down some really strange paths. The real lesson from Reagan is not that cutting taxes is always good. It is that business decisions should not be based soley on tax considerations.

Posted by: Ron Byers on March 18, 2006 at 11:42 PM | PERMALINK

PB, do we really have to revisit all of last year's greatest hits?

the fact is, if the worst case scenario hits, all that happens, automatically, without anything required by anyone, is that social security benefits will fall to the level of available payroll tax revenues, which will be at a level higher than today's social securitiy benefit.

the bush administration has destroyed any arguemtn for now and all time that we should do anything in advance of the moment of need, should it arise: their position that the debt of the US treasury to the social security trust fund is meaningless and their willingness to transfer the social security surplus to today's upper-income houeholds has poisoned the well so thoroughly that no one in their right mind would possibly touch social security before it has to be touched.

there were some particular flaws with the Pozen plan, but they hardly matter in the broader context: you want to do something about the long-term fiscal issues facing america, you start by balancing the budget, and you continue by addressing medicare. you don't go near a program that has a guaranteed, self-adjusting funding mecahnism whose specific surplus is regarded, by today's republican party, as spoils ripe for plucking.

Posted by: howard on March 19, 2006 at 12:01 AM | PERMALINK

http://www.ecolanguage.net/movieSS.html

nice little graphic presentation about social security

Posted by: Neo on March 19, 2006 at 12:05 AM | PERMALINK

Kevin:

Your assertion that the low-end estimate has in the past turned out to be right, thus that is the one to bet on, sounds familiar. It's kind of similar to the logic of those who told us that the stock market went up 20 percent a year from 95 to 99, therefore we should look at projections of 5 to 25 percent returns in stock market for 2000, but really the higher-end projections have been right more often. Also sounds like those who said CBO always underestimates budget surpluses, as they did from 92 to 00 - oops!

There is a lot we don't know about SS projections that works in both directions. And someone, like yourself, who believes the singularity is right around the corner might be modest about what we can know about these projections. Remember what happens to life expectancy when the singularity happens? You have no idea where life expectancy in the future is going, none. Neither do I. Insurance against this very large unknown might be nice added insurance to our nation's premier social insurance system. Even if the insurance in this case would be for the young and poor instead of the old and rich. Your point about when the SS trust fund might go insolvent is utterly irrelevant, since we'll have to pay for what is "in" the trust fund just as if it wasn't there.

We can afford to have SS take an additional 2 percent out of GDP. But we sure as heck can't afford to have that AND the other burdens on the federal budget that will come from much larger anticipated growth in Medicare and Medicaid. That's the point. And I don't know how you propose to cover that, and the way things actually work, it doesn't really matter. Because if you get your way on this point, what is actually going to happen, is spending on the least politically powerful among us is going to go down so you can prevent - at all costs - relatively modest changes to entitlement spending, much of which will go to the relatively well off. In your dreams, we'll just increase taxes to Swedish levels... in your dreams.

Posted by: lz on March 19, 2006 at 12:12 AM | PERMALINK

'Ron' posted:

"It might have been a meaningful idea when the top marginal rate was 70%"

The two greatest periods of economic prosperity in America in the 20th Century occurred when taxes on the wealthy were at their highest (1960s and 1990s).

.

"Ronald Reagan's real accomplishment was to cut the guts out of all those wonderful real estate tax shelters we used to buy and sell. No longer was every decision made on the basis of its tax ramifications. When we cut the guts out of tax shelters we had to lower top marginal rates and that is exactly what we did."

Myth.

According to former IRS Commissioner Sheldon Cohen (appointed by Reagan):

"the Tax Reforms of the 1980's did not even come close to wiping out all the shelters and loopholes".

.

"Looking at it from a historical perpective Reagan's tax reforms were probably needed."

They were an unmitigated disaster.
.

Posted by: VJ on March 19, 2006 at 12:13 AM | PERMALINK

Wolf Boy crying crisis
--------
bush 'crisis'

"'George W. Bush"+'Crisis'
and you get;
Results about 16,600,000 for "'George W. Bush"+'Crisis'

WoW that's alot of Wolf Crying.
anyway you get the 'crisis' Idea

if this link works [if not copy n paste]
http://www.google.com/search?hs=VH&hl=en&lr=&client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&q=%22%27George+W.+Bush%22%2B%27Crisis%27&btnG=Search
LINK HERE AS WELL

Posted by: Duhbya Doolittle on March 19, 2006 at 12:22 AM | PERMALINK

Don't you see? What's wrong with you? Why do you love taxes?
Typical liberal...
Posted by: bleh on March 18, 2006 at 10:24 PM | PERMALINK

Take a gander at 'backloaded' Taxes under Bush Bleh. BTW no 'Librul' here.

Posted by: Duhbya Doolittle on March 19, 2006 at 12:26 AM | PERMALINK

neo: "...nice little graphic presentation about social security"

That IS a nice little graphic presentation. Thanks for the tip. I'm going to pass it on to others.

Posted by: PTate in MN on March 19, 2006 at 12:28 AM | PERMALINK

This is Just one day of awarded contracts Bleh..
Heres alot more;
http://www.defenselink.mil/contracts/2006/ct20060317-12667.html
DOD DAILY CONTRACTS
FOR RELEASE AT No. 224-06
5 p.m. ET March 17, 2006
CONTRACTS
AIR FORCE
L3 Communications, Narda Satellite Networks, Corp., Hauppauge, N.Y., is being awarded a $385,611,666 indefinite delivery/indefinite quantity, firm fixed price contract. This action provides for Ground Base Multi-Band Satellite Terminals (GMT). This contractor provides for the purchase of an estimated 174 GMT terminal systems and spares component kits by the Department of Defense agencies over a five-year period. The terminal is a fully deployable satellite communications system capable of operating in common bands and interoperable with existing tactical satellite terminals. The Air Force can issue delivery totaling up to the maximum amount indicated above, although actual requirements may necessitate less than the amount above. At this time, $6,000,000 has been obligated. This work will be complete March 2011. The Headquarters Electronic Systems Center, Hanscom Air Force Base, Mass., is the contracting activity (FA8726-06-D-001).

Boeing Wichita Development and Mod Center, Wichita, Kan., is being awarded a $45,595,120 time and material, firm fixed price contract modification. This effort is scheduled for depot level heavy maintenance on one VC-25A aircraft. Specific inspection and maintenance requirements for this aircraft are identified in the statement of work. There are two VC-25A aircraft, which provide air transportation for the president, vice president, cabinet members, and other dignitaries on a worldwide basis and are assigned to the 89th AW, at Andrews AFB, Md. At this time, $9,800,000 has been obligated. This work will be complete June 2007. The Headquarters Oklahoma City Air Logistics Center, Tinker Air Force Base, Okla., is the contracting activity (FA8106-04-C-0006/P00029).

Lockheed Martin Corp., Manassas, Va., is being awarded a $20,058,763 cost plus fixed fee contract. This action provides for procurement with continuing activities for program risk reduction and design maturation. This action supports the Airborne and Maritime/Fixed Station Joint Tactical Radio System. At this time, $4,033,479 has been obligated. This work will be complete October 2006. The Headquarters Electronic Systems Center, Hanscom Air Force Base, Mass., is the contracting activity (FA8709-04-C-0011).

Kaman Dayron, Orlando, Fla., is being awarded a $19,337,499 firm fixed price contract modification. This action provides for Joint Programmable Fuze (JPF) systems, including FZU-55 initiators, with a quantity of 8,630 each. This action exercises option 3 of the JPF production contract. The JPF is state-of-the art fuze system used with precision weapon systems such as the JDAM. The JPF is equipped with variable delay settings that may be programmed manually or from the cockpit through its in-flight reprogrammability feature. At this time, total funds have been obligated. This work will be complete September 2007. The Headquarter Air Armament Center, Eglin Air Force Base, Fla., is the contracting activity (F08626-98-C-0006/P00064).

Composite Engineering, Inc., Sacramento, Calif., is being awarded a $15,000,785 firm fixed price contract modification. This action provides for Air Force Subscale Aerial Target (AFSAT), exercise of LRIP option for Lot 3 (quantity of 38 AFSATs) and the procurement of Exhibit B-Data. At this time, no funds have been obligated. This work will be complete February 2008. The Headquarters Air Armament Center, Eglin Air Force Base, Fla., is the contracting activity (F08635-02-C-0005/P00032).

McDonnell Douglas, Corp., Long Beach, Calif., is being awarded a $14,607,984 firm fixed price contract modification. This is a modification to the C-17 Globemaster III sustainment partnership contract to incorporate the on-board Inert Gas Generating System (OBIGGS) II Retrofit for C-17 Aircraft P71-P137. At this time, $13,226,828 has been obligated. This work will be complete December 2007. The Headquarters Aeronautical Systems Center, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8614-04-C-2004/P00099).

DEFENSE LOGISTICS AGENCY

Pepco Energy Services, Arlington, Va., is being awarded a maximum $183,840,700 firm fixed price contract for electricity. Using services are Army, Navy, Air Force, and federal civilian agencies. Other locations of performance are various locations throughout Md. There were 79 proposals solicited and 15 responded. Contract funds will not expire at the end of the current fiscal year. Date of performance completion is December 31, 2007. The contracting activity is the Defense Energy Support Center, Fort Belvoir, Va. (SP0600-05-G-8029).

Coastal Pacific Food Distributors, Stockton, Calif., is being awarded a maximum $28,087,972 firm fixed price contract for full line food distributors. Using services are Army, Navy, Air Force, Marine Corps, federal civilian agencies, and U.S. Embassy, Japan. Other locations of performance are Singapore, and Diego Garcia. This is an indefinite delivery/quantity contract exercising option year 3. There were 15 proposals solicited and 4 responded. Contract funds will not expire at the end of the current fiscal year. Date of performance completion is March 17, 2007. The contracting activity is the Defense Supply Center Philadelphia, Philadelphia, Pa. (SPM300-06-3046/3047/3048).

Direct Energy Services, LLC, Bethesda, Md., is being awarded a maximum $7,886,596 firm fixed price contract for electricity. Using services are Army, Navy, Air Force, and federal civilian agencies. Other locations of performance are various locations throughout Md. There were 79 proposals solicited and 15 responded. Contract funds will not expire at the end of the current fiscal year. Date of performance completion is Dec. 31, 2007. The contracting activity is the Defense Energy Support Center, Fort Belvoir, Va. (SP0600-06-D-8008).

ARMY

Lockheed Martin Corp., Grand Prairie, Texas, was awarded on March 14, 2006, a $77,575,200 modification to a firm-fixed-price contract for Full Rate Production of the Guided Multiple Launch Rocket System and Dual Purpose Improved Conventional Munitions. Work will be performed in East Camden, Ark. (80 percent), and Grand Prairie, Texas (20 percent), and is expected to be completed by Nov. 30, 2008. Contract funds will not expire at the end of the current fiscal year. This was a sole source contract initiated on April 30, 2005. The Army Aviation and Missile Command, Redstone Arsenal, Ala., is the contracting activity (W31P4Q-06-C-0002).

AM General L.L.C., South Bend, Ind., was awarded on March 15, 2006, a $58,579,003 modification to a firm-fixed-price contract for Installation of Armor Kits A and B on the M1151P1 and M1152P1 vehicles. Work will be performed in South Bend, Ind., and is expected to be completed by Dec. 31, 2007. Contract funds will not expire at the end of the current fiscal year. This was a sole source contract initiated on July 17, 2000. The Army Tank-Automotive and Armaments Command, Warren, Mich., is the contracting activity (DAAE07-01-C-S001).

Raytheon Co., McKinney, Texas, was awarded on March 10, 2006, a $30,917,513 increment as part of a $429,714,432 firm-fixed-price contract for technical/repair services and procurement of horizontal technology integration second generation Forward Looking Infrared Block 1 Kits A and B, power conditioning units, and spares. Work will be performed in McKinney, Texas, and is expected to be completed by Dec. 31, 2008. Contract funds will not expire at the end of the current fiscal year. This was a sole source contract initiated on Feb. 14, 2006. The Army Communications-Electronics Command, Fort Monmouth, N.J., is the contracting activity (DAAB07-02-C-J204).

PCL Construction Services Inc., Denver, Colo., was awarded on March 15, 2006, a $24,796,381 firm-fixed-price contract for construction of a combined arms collective training facility/urban assault complex. Work will be performed at Fort Carson, Colo., and is expected to be completed by Nov. 15, 2007. Contract funds will not expire at the end of the current fiscal year. There were 26 bids solicited on Oct. 3, 2005, and three bids were received. The Army Corps of Engineers, Omaha, Neb., is the contracting activity (W9128F-06-C-0013).

ATK Thiokol Inc., Corinne, Utah, was awarded on March 9, 2006, a delivery order amount of $24,600,000 as part of a $44,990,000 firm-fixed-price contract for M212 infrared countermeasure flares. Work will be performed in Corinne, Utah, and is expected to be completed by May 31, 2007. Contract funds will not expire at the end of the current fiscal year. This was a sole source contract initiated on Jan. 7, 2003. The Army Tank-Automotive and Armaments Command, Picatinny Arsenal, N.J., is the contracting activity (W15QKN-04-D-1003).

General Dynamics Land Systems, Sterling Heights, Mich., was awarded on March 10, 2006, a delivery order amount of $23,785,260 as part of an $89,060,488 firm-fixed-price contract for conversion of M1A1 vehicle material sets to full M1A1 vehicles. Work will be performed in Lima, Ohio (78 percent), Scranton, Pa. (15 percent), Sterling Heights, Mich. (5 percent), and Tallahassee, Fla. (2 percent), and is expected to be completed by June 30, 2007. Contract funds will not expire at the end of the current fiscal year. This was a sole source contract initiated on Oct. 17, 2005. The Army Tank-Automotive and Armaments Command, Warren, Mich., is the contracting activity (DAAE07-01-G-N001).

General Dynamics Land Systems, Sterling Heights, Mich., was awarded on March 10, 2006, a delivery order amount of $15,912,942 as part of a $17,665,957 cost-reimbursable contract for conversion of M1A1 vehicle material sets to full M1A1 vehicles. Work will be performed in Lima, Ohio (77 percent), Scranton, Pa. (20 percent), Muskegon, Mich. (3 percent), and is expected to be completed by June 30, 2008. Contract funds will not expire at the end of the current fiscal year. This was a sole source contract initiated on March 6, 2006. The Army Tank-Automotive and Armaments Command, Warren, Mich., is the contracting activity (DAAE07-01-G-N001).

BAE Systems Ordnance Systems Inc., Kingsport, Tenn., was awarded on March 15, 2006, a $7,000,000 modification to a firm-fixed-price contract for the upgrade of steam plant boilers. Work will be performed in Kingsport, Tenn., and is expected to be completed by Dec. 15, 2008. Contract funds will not expire at the end of the current fiscal year. This was a sole source contract initiated on Feb. 6, 2006. The Army Field Support Command, Rock Island, Ill., is the contracting activity (DAAA09-98-E-0006).

Alliant Techsystems, Rocket Center, W.V., was awarded on March 14, 2006, a $6,849,324 modification to a firm-fixed-price contract for M228 practice fuzes. Work will be performed in Rocket Center, W.V., and is expected to be completed by Oct. 31, 2008. Contract funds will not expire at the end of the current fiscal year. There were an unknown number of bids solicited via the World Wide Web on Jan. 14, 2005, and six bids were received. The Army Field Support Command, Rock Island, Ill., is the contracting activity (W52P1J-05-C-0049).

NAVY

McDonnell Douglas Corp., a wholly owned subsidiary of The Boeing Co., St. Louis, Mo., is being awarded a $12,475,584 firm-fixed-price, cost-plus-fixed-fee contract to provide integrated logistics support for the T-45 training system for calendar year 2006. Support to be provided includes acquisition logistics, logistics analysis, technical manuals and technical support of support equipment, production integration testing, and flight test instrumentation system equipment and repair. Work will be performed in St. Louis, Mo. (80 percent); Warton, Lancashire, England (13 percent); and Filton, Bristol, England (7 percent), and is expected to be completed in December 2006. Contract funds will not expire at the end of the current fiscal year. This contract was not competitively procured. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity (N00019-06-C-0309).

DEFENSE ADVANCED RESEARCH PROJECTS AGENCY

Northrop Grumman Systems Corp., Integrated Systems Western Region, El Segundo, Calif., was awarded on March 16, 2006, a $3,800,325 increment of a $10,295,593 other transaction for prototypes agreement to develop a conceptual and preliminary design of an experimental aircraft to demonstrate the feasibility of a supersonic, tailless, oblique flying wing aircraft. Work will be performed in El Segundo, Calif. and will be completed in November 2007. Funds will not expire at the end of this fiscal year. A Federal Business Opportunities solicitation was issued on Aug. 19, 2005, and 3 proposals were received. The Defense Advanced Research Projects Agency is the contracting activity (HR0011-06-9-0005).

Posted by: Duhbya Doolittle n Spendalot on March 19, 2006 at 12:33 AM | PERMALINK

Shorter Saletan: If you keep pointing out what a wanker I am about abortion, I'm going to start complaining about other Democratic policies, even *really* popular ones.

Posted by: Chris on March 19, 2006 at 12:40 AM | PERMALINK

I happen to think the answer is full national healthcare, which would indeed require a tax increase. But it would be a tax increase that's well worth it.

Whoa, what happened to all those countries that supposedly spend less than we do for universal healthcare?

Posted by: digamma on March 19, 2006 at 12:53 AM | PERMALINK

The problem isn't Social Security by itself. The problem is paying for Social Security, and Medicare, and humongous tax cuts, and subsidies for agribusiness, and building giant bridges to small islands in the middle of nowhere, and boondoggle missile defenses, and getting bogged down in middle-eastern countries, and spying on everyone, and ineffective bureaucratic reorganization. Basically, it costs a lot of money to run a corrupt government and also fund Social Security, which is why we need to cut Social Security.
</snark>

Posted by: TomB on March 19, 2006 at 12:55 AM | PERMALINK

The real nasty bits in Social Security start when we start to tap the trust fund in about 10 years.

At the moment Social Security runs a surplus, the fruits of the Greenspan Commission solution to the boomer problem. (Yeah, they could see we were coming way back in 1983.) Social Security runs a yearly surplus in excess of $150 billion currently. This surplus is loaned to the general revenue fund to help cover the deficit. Despite this loan, we still run about a $400 billion deficit every year, thanks to the current administration's incompetence.

Therefore, the Social Security trust fund accumulated since 1983 is a pile of IOUs in our yearly operating budget amounting to something like a trillion dollars. In about 2017 the monies taken in by Social Security (fica and seca) will no longer exceed that paid out in benefits. The difference will need to covered from the trust fund, i.e. the general revenue derived from income taxes. To cover this obligation either income taxes must be raised or more debt sold (taxes raised on your grandkids.)

There is a Medicare trust fund also. We will start to tap that one very, very soon (by 2009, I recall) due to our idiot administration passing the Big Pharma Wealth Enhancement Act, otherwise known as Medicare Part D. I also recall this trust fund nows runs out before 2020, a date accelerated by fealty to Big Pharma.

So when people blather on about Social Security and Medicare there are two dates each to worry about: when the trust fund starts to be used and when the trust fund is exhausted. Kevin's 2042 and beyond scenarios touch on the exhaustion point of the Social Security trust fund, the last of the 4 dates. BUT, Republicans are really concerned with the first milestone, the initial tapping of the trust fund. But they are too gutless to admit it. They want to renege on the deal cut by Greenspan and the Reagan Administration.

As for raising taxes a whopping 2% of GDP in 2042 (the middle projection), that is more than a bit misleading. In 2041 that tax increase will already be there to cover the payments from the Social Security trust fund in the general budget back to Social Security. In 2042 what we really would face is this question: do we give everyone paying income tax a 2% of GDP tax cut and cut every Social Security check by 25% (thereabouts)? Or do we just keep rocking along with the same income tax rates and keep paying retirees what they are due?

This same question (or something very much like it) will need to be answered within the next 12 years or so for the Medicare trust fund.

Posted by: Nat on March 19, 2006 at 1:04 AM | PERMALINK

Don't worry about Social Security. Healthcare? Medicare?

Worry a lot. Worry a HELL of a lot. If we don't bring in some public financing efficiencies soon, the healthcare industry is going to go bankrupt and drag Medicare down with it.

Be very afraid. But not about Social Security.

Posted by: theorajones on March 19, 2006 at 1:04 AM | PERMALINK

Kevin, if I recall correctly, I pointed out that if you examine at the graph for the "optimistic" scenario, then without raising taxes, Social Security is good for, not 80 years, but about 480 years. As I recall, it plotted to be OK until 2492, the 1000th anniversary of Columbus' famous voyage.

Posted by: Joel Rubinstein on March 19, 2006 at 2:20 AM | PERMALINK

From the trustee's actuarial report linked earlier:

Social Security

The annual cost of Social Security benefits represents 4.3 percent of Gross Domestic Product (GDP) today and is projected to rise to 6.4 percent of GDP in 2079. The projected 75-year actuarial deficit in the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds is 1.92 percent of taxable payroll, up slightly from 1.89 percent in last year's report. The program continues to fail our long-range test of close actuarial balance by a wide margin. Projected OASDI tax income will begin to fall short of outlays in 2017 and will be sufficient to finance only 74 percent of scheduled annual benefits by 2041, when the combined OASDI trust fund is projected to be exhausted.

Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 15 percent in the amount of payroll taxes or an immediate reduction in benefits of 13 percent (or some combination of the two). To the extent that changes are delayed or phased in gradually, greater adjustments in scheduled benefits and revenues would be required. Ensuring that the system is solvent on a sustainable basis over the next 75 years and beyond would also require larger changes.

Medicare

As we reported last year, Medicare's financial difficulties come sooner--and are much more severe--than those confronting Social Security. While both programs face essentially the same demographic challenge, underlying health care costs per enrollee are projected to rise faster than the wages per worker on which the payroll tax is paid and on which Social Security benefits are based. As a result, while Medicare's annual costs are currently 2.6 percent of GDP, or about 60 percent of Social Security's, they are now projected to surpass Social Security expenditures in 2024 and reach almost 14 percent of GDP in 2079.

The projected 75-year actuarial deficit in the Hospital Insurance (HI) Trust Fund is now 3.09 percent of taxable payroll, down slightly from 3.12 percent in last year's report due primarily to slightly greater income in 2004, and slightly lower costs, than estimated in last year's report. The fund again fails our test of short-range financial adequacy, as assets drop below the level of the next year's projected expenditures within 10 years--in 2014. The fund also continues to fail our long-range test of close actuarial balance by a wide margin. Though the projected date of HI Trust Fund exhaustion moved back slightly to 2020, from 2019 in last year's report, projected HI tax income falls short of outlays in this and all future years. HI could be brought into actuarial balance over the next 75 years by an immediate 107 percent increase in program income or an immediate 48 percent reduction in program outlays (or some combination of the two). However, as with Social Security, adjustments of far greater magnitude would be necessary to the extent changes are delayed or phased in gradually, or to make the program solvent on a sustainable basis over the next 75 years and beyond.

Part B of the Supplementary Medical Insurance (SMI) Trust Fund, which pays doctors' bills and other outpatient expenses, and the new Part D, which pays for access to prescription drug coverage, are both projected to remain financed into the indefinite future because current law automatically sets financing each year to meet next year's expected costs. However, expected rapid cost increases will result in a rapidly growing amount of general revenue financing--projected to rise from just under 1 percent of GDP today to 6.2 percent in 2079--as well as substantial increases over time in beneficiary premium charges.

But what the hell, they probably don't know what they're talking about. Go back to sleep. Anyway, as we all know, there's no problem on earth that can't be solved by a hefty tax increase.

Posted by: tbrosz on March 19, 2006 at 2:21 AM | PERMALINK

BTW, 2 percent of GDP sounds a lot more trivial than $250 billion, doesn't it?

Posted by: tbrosz on March 19, 2006 at 2:24 AM | PERMALINK

Wow, that's an impressive list of contracts. Tally it all up, adjust for the multi-year ones, and it adds up to about six hours worth of the current annual entitlement budget.

Posted by: tbrosz on March 19, 2006 at 2:34 AM | PERMALINK

To reiterate: in 2041, according to the middle prediction, 74% of Social Security payments will be handled by that year's FICA and SECA taxes and 26% will be funded by income taxes (and all the other revenue sources that make up the US general budget.) That 26% is the last payment of principal from the trust fund.

In 2042 the trust fund is predicted to be exhausted. The stack of IOUs will have been repaid. Assuming tbrosz is correct about the equivalency, at that point there is either a $250 billion/2% of GDP tax cut and retirees get a 26% cut in income OR the system just keeps on as it was in 2041.

(And credit to Max Sawicky to pointing this all out last year.)

And I agree with the point Howard made above: anyone who entrusts this or any similar administration with advance payments like the Social Security trust fund is an idiot. A 15% fica increase will subsidize a tax cut for Bill Gates et. al. and nothing else.

To my mind the 1983 Greenspan Commission may have perpetrated the greatest bank heist of all time. So far 1 trillion has gone into the bank and I am not sure how much of it will actually be repaid. As I said earlier, I think the 2042 date is a red herring and the true goal of Republican efforts is to dodge having to deal with the start of the repayment of the trust fund in 2017.

To my mind, the only sane approach is to fight for the status quo for Social Security. No solution is better than anything these crooks can come up with.

Posted by: Nat on March 19, 2006 at 4:11 AM | PERMALINK

The most chilling thing about tbrosz is that -- despite what you'd hope and assume -- he actually is not the stupidest right-winger in America.

Of course, judged on an absolute rather than relative scale, he is very, very stupid.

Posted by: grh on March 19, 2006 at 5:09 AM | PERMALINK

Saletan's piece also appeared in the WaPo Outlook section this morning. The header read:

Curse of the Young Old
Why Should We Pay Them?

In addition to the fact that we're a richer society that can afford longer retirements, there's a dirty secret that Will Saletan and others in the chattering classes seem to be unaware of: not everyone is like them.

The people who write about such things are educated people. There's nothing wrong with that in itself, but they see a world of people like themselves, people who haven't had to work a physically demanding job since their long-ago summers in high school and college. It's one thing to know one may well live to 95 or 100 because working at a desk takes a low toll out of one's body, and it's another to think that that's what America looks like.

We're still a nation where only about a quarter of the population gets college degrees. Many of the rest still have physically demanding work, work that will shorten their productive lives, work that will necessitate an earlier retirement than I will need. My father-in-law spent most of his working lifetime as an electrician specializing in food refrigeration equipment. It involved a lot of crawling around in and under machinery. He retired just a few years ago at 62, and he needed to. He lacks a single specific disability that would allow him to retire on disability pay, but his body is worn out.

When I am 62, I will likely be in terrific shape. I'll be going on 50-mile bike rides, and hiking the Highline Trail. I'm unlikely to retire that early, and if I did, I can see Saletan's point that the taxpayers really don't need to subsidize my early retirement.

Saletan would deal with people like me by pushing people like my father-in-law back into the workplace beyond their reasonable working lifetimes. That's pretty cold-hearted, even if paying for Social Security were an intractable problem, which it's not.

If Saletan sought a system that would allow my father-in-law to retire at 62, while forcing me to work a few more years, I could go along with that. I don't know how that would be workable, but if it could be done, we could talk. But not everybody is like you, me, and Will Saletan. Most people in this country aren't - but unfortunately, their voices are absent from policy discussions like these.

Posted by: RT on March 19, 2006 at 6:42 AM | PERMALINK

Is Ed McCune real? If so congratulations and thanks for joining the discussion, though your last line went over my head. Thanks Nat for nailing it, twice.

Reagan raised taxes; excise taxes on your phone bill and payroll taxes by 50%. Perhaps others too. The 50% increase (Did Clinton raise *any* tax by 50%?) is the source of IOUs Nat mentioned. The problem for the "Als" of the world is they don't want to honor those IOUs. They want to go on financing government programs like the Empire Defense Fund with the tax on work.

PS. That was a rhetorical question. Clinton raised the rate on the top income bracket by less than 10% using Gore's tie-breaker vote. Gingrich et al predicted disaster. The 90s were so awful we ended up with budget surpluses and on our way to paying off Reagan's debt.

Posted by: dennisS on March 19, 2006 at 7:45 AM | PERMALINK

Why not eliminate all taxes? Then even poor folks could afford to retire.

What, some could never affor to save, you say? Well, whatever.

Posted by: Hedley Lamarr on March 19, 2006 at 7:48 AM | PERMALINK

I think that, if we don't make some changes, the GenXers, after cordially damning our bones, will.

First, that "defense" budget that equals the rest of the world's spending combined- cut it by three-quarters. We've still got those two oceans.

Second, those new nuclear warheads- forget it. The ten thousand old ones will do for a while.

Third, the drug wars- end them. Save $50 billion a year in expense and add hundreds of thousands of workers who were just as productive and safe as anyone else before they were pointlessly arrested.

Fourth- discrimination- yep, you guessed it- END IT. Add tens of millions of productive workers who are currently discriminated against.

Fifth- health care. Reform it, and add about a hundred thousand workers each year who are not killed or disabled by hospital errors or the inability to get care.

And sixth- who says we want to stop working? We want an end to the B-S that pushes us out of the workplace at 50, when nobody with a real job has the strength to deal with the unsafe working conditions, the neoptism and office politics, the surreal scheduling intended to keep paychecks to a minimum, and the antagonism of the GenXers who are naturally enraged at the Reaganoid BS they've put up with for their entire lives.

For anybody who really wants to be more productive or save money, there are lots of places to start, if you're not a Republican.

Posted by: serial catowner on March 19, 2006 at 9:26 AM | PERMALINK

Nice argument from authority there, 'brosz. You have any more logical fallacies for our amusement?

Posted by: bobbyp on March 19, 2006 at 9:42 AM | PERMALINK

Ahh Kevin -- you spent so much of your curiosity trying to figure out when the world will run out of oil (and searching for who "outed" Valerie and trying to PROVE that GWB went AWOL some time in the last century) that the real problem with SS has slipped by you.

The problem is not when or whether the SS "Trustme" Fund will be exhausted -- It's that the payroll taxes collected will cease to cover the immediate benefits paid to SS recipients as we boomers retire.

Right now, payroll taxes exceed benefit payouts and the surplus goes to pay other government expenditures (and are duly recorded as growing the "Trustme" fund). As we boomers retire (starting next year), more immediate monies will be required to pay us old fogies off.

Where will this money come from? Out of payroll taxes you say? Come on, Kevin! Even a journalism major like yourself ought to be able to figure out that other taxes will need to rise to replace the diminishing surplus funds from payroll taxes.

The problem doesn't come due in fifty years. It starts tomorrow (next year)! By 2017 (in just eleven years), the SS payouts will EXCEED payroll taxes. Where is this money to come from? By "redeeming" the "Trustme" bonds?

Sure. But where will the money to redeem these bonds come from? From General tax revenues, of course. By the year 2027, the government will somehow have to come up with an extra $200 billion a year to keep the system afloat. By 2033, the annual shortfall will be more than $300 billion a year.

Yeah Kevin, by your lights there is no problem. We can just raise taxes by 10 percent! (Current tax receipts are about 20% of the GDP). And forget about Medicaid (ignore that man behind the curtain).

And you wonder why I think you're a moron?

Posted by: Norman Rogers on March 19, 2006 at 10:20 AM | PERMALINK

We have to bring the troops home now!

Every grunt over there is one less worker over here to support SS!

Every grunt who dies is one less laborer per retiree!

Oh, and cut taxes to zero and revenues will go to infinity!

Logic are fun!

Posted by: Bigby on March 19, 2006 at 10:21 AM | PERMALINK

With the NSA watching over us, why would we need Social Security?

Posted by: t on March 19, 2006 at 10:28 AM | PERMALINK

I thought the worst-case scenario was that our entire economy collapses and there is no money and no work (and therefore nothing to tax).

I no longer believe this is an entirely unrealistic scenario.

That's if all the coastal cities aren't underwater anyway.

I mean, things don't really look all that wonderful right now.

Posted by: Avedon on March 19, 2006 at 10:29 AM | PERMALINK

I'm not too worried about Social Security. The rate at which Bush is decimating social programs, the poor should die off quicker, leaving more money for the rest of us in the economy.

Posted by: PW on March 19, 2006 at 10:52 AM | PERMALINK

It just more 'Bash the Boomers' - soak 'em throughout their working lives - and then pretend that a failure to plan is somehow the Boomers' fault. Only had 50 freakin' years, after all.

If Congress hadn't spent all this time pandering to the Greedy Geezers, treating SS like a giant Ponzi scheme, and plundering the SS surplus - raised by the huge increases in regressive payroll taxes at the behest of Alan Greenspan - this wouldn't even be a drummed up 'crisis'.

The whole point of this, 401(k)'s and the HSA schemes is to prop up Wall Street. The SS 'private accounts' would have fed $12B into Wall Street's gaping maw. And, of course, the real reason that's such a pressing issue is an attempt to bail out the vast underfunding of private/public pensions by artificially inflating stock prices.

Posted by: CFShep on March 19, 2006 at 11:02 AM | PERMALINK

Whether or not there are any long-term funding problems with Social Security, 65 as the age to receive Social Security benefits is way too low, at least if you think of Social Security as Old-Age Social Insurance.

The point of old-age social insurance is to give money to people who live longer than they reasonably expected, so they don't outlive their savings and starve. Some of us will live longer than others, and at least part of that is determined randomly. Since we don't all want to save like we're going to live to 110, we all pay premiums, and those of us who live a really long time get benefits so they don't outlive their savings.

Now, most people, especially those who reach working age and start paying into the system, will reach 65. Therefore, there's no reason to insure against turning 65, because you know that's going to happen. You should be prepared to deal with turning 65 on your own. Insurance is for the unexpected event, like reaching 75 or 80.

You insure against low-probability events that might happen; that's what insurance is for. You prepare for high-probability events.

That's why you buy car insurance for accidents, which are low probability events, and not oil changes, which are expected events.

Basically, Social Security is now mostly just a large transfer to a demographic group rather than social insurance.

From a social insurance point of view, the age at which people receive old-age insurance benefits should be much higher than 65. It should be an age that you don't necessarily expect to reach.

As a result of this mistake in setting the retirement age too low, we're paying too much in premiums for the insurance. It's like we're being forced to buy more insurance than we need.

We should raise the Social Security retirement age to at least 72 (possibly higher) and then set it to the expected lifespan conditional on reaching working age. That would create true social insurance.

As it is now, Social Security is just welfare for a certain age group. If people call Social Security "social insurance" and then they oppose raising the retirement age, then that tells you they're full of crap, since they either don't know what social insurance is or don't care.

Posted by: Keith on March 19, 2006 at 12:02 PM | PERMALINK

Keith,

On Monday I received word that one of my clients, a 62 year old woman who had spent most of her working life on an assembly line, has been found totally disabled and will start receiving social security disability benefits. She applied in late 2003. She was initially turned down because none of her many physical problems were enough bad enough by itself for her to be deemed disabled. It took us 2 1/2 years to convince a social security administrative law judge that her body is just worn out from a lifetime of hard physical work. During those 2 1/2 years she had zero income. Yes, she will get a large lump sum check, but that check didn't pay her bills during the battle.

If we raise the retirement age to 72 or higher as you suggest, how do we deal with the human suffering that will be endured by those senior citizens under 72 who have spent their lives working hard and have by 60 worn out their bodies working hard physical labor.

Posted by: Ron Byers on March 19, 2006 at 12:15 PM | PERMALINK

I should have said 65.

Posted by: Ron Byers on March 19, 2006 at 12:17 PM | PERMALINK

O baloney. The "insurance" part of SS is for disability. SS is also a retirement fund, and if the people of the U.S. want to run a retirement fund they have every right to do so.

Keith has raised the Slithery Dee argument. Whatever you say about his "plan", he will just slither away. Yes, some private funds have shown better gains during the Clinton years- but that is only because the nation has the Social Security funds available, to keep consumers solvent, let young people spend on themselves instead of supporting their parents, and during the emergency periods when Republican presidents spend like drunken sailors, SS is always there to bail them out.

People who invest in SS all their lives have a right to a pension, and a timely one at that. It's just that simple.

Posted by: serial catowner on March 19, 2006 at 12:20 PM | PERMALINK

That Keith is pretty slithery. In one paragraph he tells us SS is "just a large transfer to a demographic group". Not two paragraphs later, he tells us "we're paying too much in premiums".

Well, which is it- is that mysterious "demographic group" paying too much in premiums, or are they the unworthy beneficiaries of a transfer?

I'm guessing that neither answer proposed by Keith is the correct one.

Posted by: serial catowner on March 19, 2006 at 12:26 PM | PERMALINK

And what a great economic system we have- the harder we work, the harder (and longer) we'll have to work.

Back in the bad old days when Communism was still around, they promised us we'd work less and retire sooner. Now, they're going to take off the kid gloves and slap us around a little- back to work, old man! We need your effort to shine our shoes! Service economy blah blah blah.

An issue the Europeans wisely ducked by going socialist.

Posted by: serial catowner on March 19, 2006 at 12:33 PM | PERMALINK

I'll shut up now. I can see all the other "lefties" are at church. Funny thing, that.

Posted by: serial catowner on March 19, 2006 at 12:35 PM | PERMALINK

'tbrosz' posted:

"The projected 75-year actuarial deficit in the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds is 1.92 percent of taxable payroll, up slightly from 1.89 percent in last year's report. The program continues to fail our long-range test of close actuarial balance by a wide margin."

The fundamental problem with those calculations is that they make the assumption that GDP growth over the next 75 years will be HALF of what it was over the last 75 years.

How silly can you get ?

It's a rigged table to provide a rigged outcome. Thats how the Bushies operate.
.

Posted by: VJ on March 19, 2006 at 12:36 PM | PERMALINK

journalism's favorite genres: the Social Security doomsday story - there are plenty of things to worry about these days, but Social Security isn't one of them.

And yet you buy the fear mongering over "terrorism"? When the relevant players - politicians and jounalists - have the EXACT SAME INCENTIVES to lie and exagerrate?

Posted by: luci on March 19, 2006 at 12:49 PM | PERMALINK

Serial Catowner: I hear you. (I am an admirer of both your posts and your moniker...)

Social Security is many things. As vj notes, the name tells the story: it is an insurance program for retirement, the support of children who have lost a parent and for those who are disabled. To be vested you have to have worked for 40 quarters, 10 years.

Assertions that Americans living longer is some sort of surprise is BS. However, Americans have become disabled at a higher rate than predicted. By the way this is an issue in the current undocumented worker/legalization controversy. These individuals lead very physically challenging lives. My guess is they aren't working as CEOs.

(And the usual clarification: the other disability program, SSI, is not Social Security. SSI is part of the general fund.)

As for the marvelous suggestion that we all retire later: well, that was part of the 1983 deal. I am 54 and will be able to retire at age 66+. Check the SSA web site to determine when you will be able to retire.

I lay a healthy amount of the blame at the feet of Mr. Greenspan. He led the so-called solution in '83 and a few years ago he acquiesced on the tax cuts and Medicare Part D that have jeopardized our fiscal stability. He knew better. He also rigged the deal in '83 that mandated the Social Security surplus be counted as on-budget to mask the true extent of the Reagan deficits. The man is an insufferable partisan punk. But what can you expect from an Ayn Rand acolyte?

Posted by: Nat on March 19, 2006 at 1:39 PM | PERMALINK

Go have a look at a flow-chart movie about Social Security at http://ecolanguage.net. It's all the real facts.

Posted by: ?߬? on March 19, 2006 at 1:51 PM | PERMALINK

BTW, 2 percent of GDP sounds a lot more trivial than $250 billion, doesn't it?

So, even trying to scare us tbrosz points out that the cost of Social Security is LESS than Bush's unprovoked attack on Iraq - the one Tom supports. Once again, billions for death, but fuck those old people Tom needs a tax cut.

Posted by: heavy on March 19, 2006 at 2:00 PM | PERMALINK

Good ol' tbrosz has never been able to deal with Social Security. The fact that it has worked quite well and that it is enormously popular flies in the face of his quasi-religious beliefs about the free market. Since he cannot give up his beliefs, he instead gives up on reality.

Interestingly, he has also never been able to deal with the fact that none of George Bush's half-assed proposals would have even come close to working, even had good ol' Georgie actually decided on a plan of action and formally proposed it -- something that dear little Georgie was far too cowardly to do.

All we are left with after all of Bush's tale told by an idiot, full of sound and fury, signifying nothing, is a manufactured "crisis" that is anything but, while true crises which are far more critical and far more difficult to solve have been ignored.

Posted by: PaulB on March 19, 2006 at 3:27 PM | PERMALINK

Oh, and I see that dear little Normy still has not learned that when you borrow money you have to pay it back. Ah well, perhaps he will one day learn to deal with reality in a grown-up world.

Posted by: PaulB on March 19, 2006 at 3:28 PM | PERMALINK

heavy:

There's one difference. Entitlement costs are forever. That 2 percent, or $250 billion a year, will go on until the U.S. stops making old people. Whatever you say about the war, one way or another it's going to stop costing that much money eventually.

Posted by: tbrosz on March 19, 2006 at 5:04 PM | PERMALINK

bobbyp:

Nice argument from authority there, 'brosz. You have any more logical fallacies for our amusement?

What? Quoting the Social Security trustees on the subject of Social Security is an "argument from authority?"

At least VJ had a valid argument on the numbers. Kevin is correct that the "low cost assumption" projections are stable.

You can judge for yourself how realistic these assumptions are.

Posted by: tbrosz on March 19, 2006 at 5:17 PM | PERMALINK

tbrosz wrote: "That 2 percent, or $250 billion a year, will go on until the U.S. stops making old people."

No, dear, it won't, as even a little thought would show. You are aware of something called "the baby boom," are you not, tbrosz, dear? You do know what that phrase means, right?

Sheesh...can we get some smarter monkeys, please?

Posted by: PaulB on March 19, 2006 at 5:41 PM | PERMALINK

PaulB:

You're welcome to look at the tables yourself. "Baby boom" or not, with increased life expectancy and other issues, I don't see the number of old people going down any time soon. Only in the "low cost" (most optimistic) estimate does the ratio of older to younger people stabilize at all, and even there, it settles out at about three younger people per elderly person, versus the current five.

You'd do a better job bringing more research to the table and fewer adolescent insults. "Dear."

Posted by: tbrosz on March 19, 2006 at 8:06 PM | PERMALINK

tbrosz, what is the current funding deficit for the military? That is, outside of the dedicated military tax, how much is required for the general fund? Oh, that's right; it all comes from the general fund. How about Social Security? What's that? It is now, and has for the past two decades been a source from which the general fund borrows? Oh, well, I guess we need to fix that first.

Here's a modest proposal Tom; we cut the Social Security tax to a rate commensurate with refunding the entire trust fund and raise Income Taxes to a rate that will pay off the debt. What time frame do you want to raise those taxes over? Say 30 years? That means we need to raise an additional $260 Billion (with a B) every year for the next 30 years from income taxes. What do you say? Surely you don't want to saddle your grandchildren with the Reagan/Bush debt do you?

Oh, and look at the mighty coincidence, even over the coincidence - there won't be any need to raise taxes to cover Social Security because there will then be a surplus. Given that Social Security ran one for two decades already it only seems fair that it be allowed to run a deficit for the same time period. Don't you agree? Oh, and you don't get to count it in deficit until it runs out of money it is already owed by the Income Tax filers. After all, fair is fair.

Why look, now, without having to break a sweat I've solved the problem for 50 years. And all it took was the same kind of smoke and mirrors Reagan used to raise taxes on the working class.

Posted by: heavy on March 19, 2006 at 8:35 PM | PERMALINK

Oh, and look at the mighty coincidence, even over the coincidence - there won't be any need to raise taxes to cover Social Security because there will then be a surplus.

Wow. You'd think previewing would prevent such blunders. Obviously the non-italicized section can be eliminated.

Posted by: heavy on March 19, 2006 at 8:43 PM | PERMALINK

'heavy' posted:

"tbrosz, what is the current funding deficit for the military? That is, outside of the dedicated military tax, how much is required for the general fund? Oh, that's right; it all comes from the general fund. How about Social Security? What's that? It is now, and has for the past two decades been a source from which the general fund borrows? Oh, well, I guess we need to fix that first."

Excellent point.

Social Security is more financially sound today than it has been throughout most of its 69-year history. The assessment of the non-partisan Congressional Budget Office (under the control of the Republican Majority since 1995) is that Social Security can pay all promised benefits through the year 2054 with no changes whatsoever, then pay 81% of promised benefits until the Baby Boomers finish exiting the system, then resume 100% of promised benefits.

However, if you look at the present U.S. government outside of Social Security, current revenues only cover about 68% of total government spending. So on the day the Social Security Trust Fund is exhausted, forty-eight years from now, Social Security will be in better financial shape than the rest of the U.S. government is TODAY.

But as you wrote, hey what the hell, let's deal with Social Security FIRST.
.

Posted by: VJ on March 19, 2006 at 9:02 PM | PERMALINK

tbrosz--
Everything you say is bullshit. The aging of the population will be something of a problem (but not a terribly major one) no matter if we have a private or a public retirement system. Whenever the proportion of workers to non-workers goes down, the workers will be paying more for the non-workers. It don't matter if you're in Castro's Cuba or Pinochet's Chile. There ain't nothing shocking about this.

We don't continually "produce" old people. We know pretty well that the elderly population will not always be such a large part of the total population. This is extremely predictable. We also know that if we really ever were to face a serious shortage of working-age people, we would just open up our borders, and voila, the problem would be solved.

You lost this war. Give it up. No one wants to stake their entire retirement on stocks. No one has any desire to behave in that manner, other than your ideological brethren.

There's no point in even arguing with you. You're like a ghost, floating above the fields. You're like those folks that argue to bring back the gold standard. Your ideology is wrecked from coming into too close contact with actual power. Soon its head will be in the basket. Republicans may still keep winning elections for many years to come, but it will be a while before free-market hacks like yourself light the fire in anyone's loins. People seem to understand the real world better these days. I laughed all the way to the bank when those Republican senators proposed a ban on all direct foreign investment in "sensitive" industries. A dumb idea, to be sure, but it just shows how weak the "free market" bug is, even within the GOP. Thank god. No one gives a shit about the "enterprise society". They know very well it's a recycled pack of 1996 lies.

Let 'em all burn, laddie, let 'em all burn!

Posted by: kokblok on March 19, 2006 at 9:55 PM | PERMALINK

tbrosz wrote: "You'd do a better job bringing more research to the table and fewer adolescent insults."

I don't have to, dear heart. You're the one making the silly claims about the solvency, or lack thereof, of Social Security, and the one who insists that we need to make a change, not to mention the one who continues to support George W. Bush, in spite of the absurdity of Bush's pronouncements on this issue and the utter failure of the Bush administration to put forth a coherent plan that actually would work to address the supposed "crisis."

Thus far, you have entirely failed to make your case. You've got nothing, tbrosz, and you know it. Instead of admitting it, instead of squarely facing facts, you continue to live in your own little fantasy world, entirely devoid of anything resembling reality.

When you're prepared to actually defend your position, we'll be right here. Until then, you aren't worth anything more than the occasional passing shot, which I will delight in continuing to give.

Posted by: PaulB on March 19, 2006 at 10:23 PM | PERMALINK

Oh, and tbrosz, dear, has it escaped your notice that you entirely failed to address my point? Do try again, won't you? And next time, take a look at the underlying assumptions behind those tables you are so proud of, particularly the assumptions on immigration. We'll be right here, dear, just waiting for you to wake up and join the real world.

Posted by: PaulB on March 19, 2006 at 10:25 PM | PERMALINK

The underlying assumptions vary between the three "low, intermediate, and high" predictions, including immigration numbers (scroll up), but none of them show the number of elderly decreasing significantly as a percentage of the population.

If you've got numbers that say otherwise, cough them up. A long-winded dodge is still a dodge.

In any case, immigration has jack to do with the "baby boom," which was your original point, remember?

Posted by: tbrosz on March 20, 2006 at 2:48 AM | PERMALINK

The bottom line is that there is a POTENTIAL for a SMALL shortfall in the Social Security Trust Fund a HALF A CENTURY from now, whereas we currently have a MASSIVE shortfall in revenue to cover existing government expenditures outside of Social Security, with federal income tax revenues recently plummeting to 1959 levels.
.

Posted by: VJ on March 20, 2006 at 3:52 AM | PERMALINK

The bottom line is that there is a POTENTIAL for a SMALL shortfall in the Social Security Trust Fund a HALF A CENTURY from now, whereas we currently have a MASSIVE shortfall in revenue to cover existing government expenditures outside of Social Security, with federal income tax revenues recently plummeting to 1959 levels.
.
Posted by: VJ

And there is a lot of misdirection going on.

The real crisis is in grossly underfunded PRIVATE and PUBLIC EMPLOYEE pension plans which are about, ala the S&L debacle, to be dumped into the laps of taxpayers to the tune of trillions of $$$.

Keep you eyes on that ball - it's another shell game.

Keep your eyes

Posted by: CFShep on March 20, 2006 at 7:57 AM | PERMALINK

Slate is now a WashingtonPost company and the aim to please Don Graham must be overwhelming Saletan's ability to reason independently.

The problem has previously been noted with Medicare/Medicaid and this drives the costs to what might present major problems. SS is not in danger under the most likely scenario.

Not noted by Saletan is the erosion of the other two legs of the retirement equation.

With the continued "conversion" of well-funded retirement plans to 401k style defined contribution plans (e.g. IBM, others to follow) and the pitiful savings rate amongst workers, the retirement picture truly is bleak. But don't remove the social insurance protections for retirement, strengthen them.

Posted by: WaPoCritic on March 20, 2006 at 10:06 AM | PERMALINK

"A whopping two percent of GDP" -- boy is that a slippery and dishonest way to phrase things. If you're talking about current GDP, that would be something on the order of $240 billion dollars. A helluva of lot of money, no? But it sure sounds smaller when you describe it as 2% of GDP.

I've got an even better idea for you. Why not describe the tax increase in terms of the fraction of a googol? I.e., "We'll only have to increase taxes by a mere 2.4-to-the-minus-90 googol dollars."

Posted by: Niels Jackson on March 20, 2006 at 10:19 AM | PERMALINK

Still unable to defend your position, tbrosz? Pathetic....

Posted by: PaulB on March 20, 2006 at 11:59 AM | PERMALINK

The assessment of the non-partisan Congressional Budget Office (under the control of the Republican Majority since 1995) is that Social Security can pay all promised benefits through the year 2054 with no changes whatsoever, then pay 81% of promised benefits until the Baby Boomers finish exiting the system, then resume 100% of promised benefits.

The above words are an absurdity.

Even if the best-case scenario were to come to pass, FICA tax revenue will no longer cover the current cashflow needs of the system in another 20 years' time; this situation will require, contrary to the words above, a rather big, um, change, in the way the system is financed. Namely, it will require the government to start diverting revenue from the general fund (a reversal of the state of affairs today) to pay the money it "owes" to the Social Security Administration. The positively nonsenical claim that Social Security can be financed with "no changes whatsoever" deliberately distorts the real picture by treating the cash generated by the liquidating of intergovernmental IOUs in the same manner as cash generated by workers' paychecks. But there's a big difference, and that difference is that, in current cash flow terms, Social Security today is self-financing (it's even in surplus) but in a relatively short time, it no longer will be (even if the best case scenario for economic performance holds true - a BIG if).

Liberals are right: relatively modest changes to Social Security will indeed take care of the system's solvency issues. The only problem is, whenever somebody actually proposes modest changes, we're reminded by these same liberals why any changes at all to Social Security will usher in the end of civilization as we know it.

Posted by: P.B. Almeida on March 20, 2006 at 8:24 PM | PERMALINK

P.B. Almeida wrote: "The above words are an absurdity."

Well, no. The words were not quite correct, but they were not that far off the mark. In its June, 2004 report, the CBO projected the system remaining solvent until 2052. It also estimated that the system would be able to pay 80% of the projected benefits after that date. As far as I know, the report says nothing about a return to complete solvency, but it acknowledged the degree of uncertainty in its long-range forecasts.

"Even if the best-case scenario were to come to pass, FICA tax revenue will no longer cover the current cashflow needs of the system in another 20 years' time;"

That depends on you are defining the "cashflow needs of the system." If you include the Social Security trust fund, which both the Social Security trustees and the CBO do, the system is quite capable of meeting its needs until 2052 (or 2042, if you prefer the SS trustees projections). And, if you use figures for economic growth that are based on historic averages, the system never does become insolvent. There is nothing "absurd" about this.

"this situation will require, contrary to the words above, a rather big, um, change, in the way the system is financed."

Not really. It simply requires that we tap the trust fund that was created for precisely this eventuality.

"Namely, it will require the government to start diverting revenue from the general fund (a reversal of the state of affairs today) to pay the money it 'owes' to the Social Security Administration."

There is no reason to place that word in quotes. The money was taken from the trust fund and spent; it now needs to be paid back. It's no more complicated than having to pay out on bonds or any other financial instrument.

"The positively nonsensical claim that Social Security can be financed with 'no changes whatsoever' deliberately distorts the real picture"

Oh, garbage. To pretend that the Social Security trust fund isn't real is the real "deliberate distortion." We don't have a Social Security problem in 20 years; we have a general fund problem. The money was used for the general fund; it will have to be paid back out of the general fund. That the Bush administration and a Republican Congress are trying to renege on this obligation does not make it any less real.

"by treating the cash generated by the liquidating of intergovernmental IOUs in the same manner as cash generated by workers' paychecks."

Change that to "cash generated by investors who bought government bonds" and you'd have a more accurate statement of the situation.

"But there's a big difference, and that difference is that, in current cash flow terms, Social Security today is self-financing (it's even in surplus) but in a relatively short time, it no longer will be (even if the best case scenario for economic performance holds true - a BIG if)."

Again, that depends on which set of economic forecasts you use and how you define your terms. Based on historical numbers, Social Security will remain able to meet its financial obligations in perpetuity. Will it have to tap the trust fund? Of course. Will that money be sufficient to ride out the baby boom retirement era? That depends, but the chances are pretty good that it will. We certainly do not (yet) have any kind of "crisis" that requires immediate action.

"Liberals are right: relatively modest changes to Social Security will indeed take care of the system's solvency issues."

Yup. And we have plenty of time to get a more accurate idea of whether there is a problem and, if so, how large a problem it will be. In fact, given the historic data, we would be well advised to wait a few years to see which set of economic projections is coming closer to reality.

"The only problem is, whenever somebody actually proposes modest changes, we're reminded by these same liberals why any changes at all to Social Security will usher in the end of civilization as we know it."

And yet more garbage. The Bush administration refused to actually put a concrete proposal on the table, as you well know. The two plans that Bush spoke most favorably about did little or nothing to solve the so-called "crisis," as the Bush administration itself was forced to admit.

Put a real proposal on the table that is designed to accurately and honestly deal with a potential funding shortfall and you'd have no problem finding liberals and moderates climbing aboard. But continue to push plans that are not based on reality, do not address the real issues, have very real and quite serious risks of unintended consequences, are based on proposals that have been tried, tested, and failed, elsewhere in the world, and that are based on ideology rather than reality, and you're damn right you're going to get pushback.

Posted by: PaulB on March 21, 2006 at 1:39 AM | PERMALINK

The poster above who claimed that libs/crats oppose even minor changes is wrong: we usually support eliminating the cap on income taxed by social security. But the big worry is that conservatives/repiglicans will try to default on paying out the promised benefits per the claim that 'the money is gone" - despite the error that obligations are based on what you have promised, not what you have with you (you don't get to not pay a loan because of spening the money you borrowed - unless you declare bankruptcy...)

Posted by: !!! on March 21, 2006 at 10:10 AM | PERMALINK




 

 

Read Jonathan Rowe remembrance and articles
Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

Advertise in WM



buy from Amazon and
support the Monthly