Don't Fear the Boomers. Despite the scaremongers' attempts to incite generational war, people born between 1946 and 1964 are not going to destroy Social Security. The Baby Boom cohort isn't going to be a crippling financial burden for Generation X, Generation Y, Generation XYY, or any other generation. It may be true that their descendants will be forced to listen to their greatest hits until the sun goes supernova (more cowbell, please!), but economically there's nothing to worry about.
Since I'm one of the dreaded boomers myself I guess I can't be considered objective, so don't take my word for it. Ask an actuary.
Harry C. Ballantyne's biography demonstrates that he's the nation's leading expert in forecasting Social Security trends. His career includes eighteen years as the Chief Actuary for the Social Security Administration (under Reagan, Bush I, and Clinton) and a degree in Physics - but no time whatsoever as the bass player for Jethro Tull. Actuarial certification is extremely hard to receive, and those guys know their stuff. (I know because when I was a young Boomer and numbers guy, my boss offered to finance my actuarial training. But I had small children at home, you gotta take a lot of really hard exams, yada yada yada ... you know how flightly these boomers are.)
What does Harry C. Ballantyne says about all the generational fear being whipped up today? A new report released yesterday by the Economic Policy Institute (EPI), co-authored by Ballantyne with EPI President Lawrence Mishel and economist Monique Morrissey, explains: "Social Security is running a surplus of $77 billion this year and amassing a trust fund large enough to last through the peak retirement years of the Baby Boomers."
Hey, kids! Leave them boomers alone!
"Though modest changes will be needed to put Social Security in Balance over the 75-year planning period," the report adds, "the projected shortfall is less than 1% of Gross Domestic Product." Got that? Military expenditure is 4.7% of GDP. The Bush tax cuts can be reasonably be estimated (based on these figures) to have been at least 2% of GDP. Senescent boomers playing In-a-Gadda-Da-Vida on old Stratocasters? Less than 1% ... and, as the report observes, only "modest changes will be needed to put Social Security in balance."
No less a personage than Alan Greenspan (who probably refers to Boomers as "those young whippersnappers") led the Commission that pretty much fixed the generational problem during the Reagan years, when Ballantyne first became Chief Actuary. That's why we only need minor tweaks today.
Sure, Social Security spending will increase from 4.8% or GDP to 6.1% in 2035. But since Social Security is forbidden from taking money from taxpayer revenues, all the Deficit Commission and AmericaSpeaks propaganda about those figures is only meant to confuse and manipulate. Here's the bottom line: Those numbers don't contribute to the Federal deficit. That's the main point of the EPI paper, which is entitled "Social Security and the Federal Deficit: Not Cause and Effect."
As for the canard that Social Security is "going broke" -- it's not. If changes aren't made, it will run out of assets (trust funds, etc.) in approximately 2037 and would have to cut benefits by 22%. We need to prevent that, but let's put the "going broke" rhetoric in perspective: A lot of jobless Americans today would be thrilled to receive 78% of the income they had before the Great Recession. Anyone who can say that Social Security is "going broke" is lying, or else they ain't never been "really broke." (Or both; the two aren't mutually exclusive.)
So what went wrong? The EPI report explains the real reason for the shortfall (as detailed by Ballantyne and his actuaries back in the 1990's): It's "mostly the result of higher disability take-up, slower wage growth, a growing share of earnings above the taxable earnings cap, and a growing share of compensation going toward health insurance and other untaxed benefits."
Got that? That almost sounds like a four-point plan for fixing Social Security: Improve overall health and occupational safety. Boost wages and employment. Raise the earnings cap (which isn't adjusted for wage inflation). And do more to control runaway health care costs. What isn't necessary is to ship all the boomers off to Antarctica on wooden ships, as desirable some might find that option.
(Speaking of which: These findings won't reduce inter-generational snark like this from blogger Duncan Black, aka Atrios, who remarked upon seeing people older than himself at a gig featuring contemporary bands Arcade Fire and Spoon: "(G)ood for old people who don't live in an endless nostalgia loop. Life goes on after The Eagles reunions end." Whose reunions does he go to -- Flock of Seagulls?)
The worker-to-retiree ratio isn't worse than projected, despite increases in life expectancy, thanks to a growing workforce. That growth is driven largely by increasing numbers of working women and (sorry, Tom Tancredo) immigrants. As for revenue, the EPI paper explains that this "modest shortfall" can be addressed by either raising tax rates or raising the cap on earnings. The latter is preferable because, as the paper says, "the lion's share of increases in both earnings and life expectancy (emphasis mine) has gone to those at the top of the income distribution."
There's more in the paper, including a firm rebuttal to some of the misstatements emerging from the Deficit Commission. But the key takeaways are this: Social Security does not contribute to the deficit (which is why the entire AmericaSpeaks exercise was deceptive), and Boomers are not the problem they're made out to be. That's really all there is to say on the subject, except to Duncan Black, to whom I would add:
"On a dark desert highway, cool wind in your hair ..."
_______________________________________________________________
Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Strengthen Social Security campaign. Richard also blogs at A Night Light.
He can be reached at "rjeskow@ourfuture.org."
Website: Eskow and Associates
Follow Richard (RJ) Eskow on Twitter: www.twitter.com/rjeskow
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Social Security is not broken. If we fight the myths and the anti-government lies it will be there for all of us.
If Social Security trust fund has been robbed and all the funds removed, how is it not insolvent? Is this not the point from the Repugs? "Deficits" is the new black using their choice of words and topics. They are taunting us that they pulled a fast one and now it is too late for us to stop them.
The government must honor their pile of IOUs in our trust fund or our whole financial system collapses. We, the taxpayers, will then be obligated to reimburse our own raided retirement accounts with non-existent funds or we, the taxpayers, along with the rest of nation will lose everything else. Is this not part and whole of a plan to control us all?
At what point do we decide to fight the thieves and bullies for what we legally own?
http://www.ssa.gov/OACT/ProgData/fundFAQ.html#n2
I mean, Those Who Know Better are borrowing $.50 of every dollar spent, so they must know better than us, right?
God forbid, I should be able to access the money removed from me, earned by my sweat and talent, and start a business, or invest it the way I see fit.
http://www.c-span.org/Watch/Media/2010/08/06/HP/A/36710/James%20Roosevelt%20Remarks%20on%20the%20Social%20Security.aspx
[see offsite link on www.thenation.com]
http://www.huffingtonpost.com/dave-johnson/what-social-security-repo_b_672225.html
Social Security runs a surplus. Medicare was running a surplus, and still has far more in trust than it is spending. On the flip side, the Trillion dollar "non-discretionary," budget is supposed to be paid for by income taxes and other non-FICA taxes. During the Bush years we took in about 50% of what we were spending.
What is the non-discretionary spending? Well, over half is military...
In the late 2030s, it will start running short of cash, around a 22% shortfall. Critically, it will NOT get worse beyond this point, but actually slightly better, because the baby boomers will be fading out of the system. So yes, the 22% shortfall is a problem, but clearly a solvable one. A reasonable combination of tax increases, benefit cuts, means testing, and increases in the retirement age could fix potential SS shortfalls indefinitely. The sooner we start, the smaller these cuts need to be.
If I have to go some day, that's how I want to go. [g]
-David Crosby
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Slideguy 5 hours ago (4:31 PM)
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Well, that's the problem. Your government, Democrats and Republicans alike, have spent the money on the military-industrial establishment that Eisenhower warned us against, and then on three wars, two of which (Vietnam and Iraq) based on deliberate lies by Lyndon Johnson and George Bush, the third, Afghanistan, is a quagmire brought on by Bush's half-hearted attempt to kill bin Laden. And then there were the Bush tax cuts .
During the Reagan administration, we boomers agreed to have our social secruity taxes raised to insure that there would be money enough to fund our retirement. George Bush, aided and abetted by Alan Greenspan, gave the money away to his rich friends, and now they're telling us we can't afford to pay back the money and will have to have our benefits cut. This is a lie. What we should do is raise taxes on the people who have gotten a free ride for the last 10 years. The top 1% of us. The super rich.
This has been out and out class war, and the poor haven't figured this out yet.
it was run terribly
same effort we put into korea and that thing would have been ended in 2 years!
- Pogo
Biggest con job in history. The super rich have used their think tanks, wingnut talk radio, blogs to dole out disinformation by the truckload to convince millions to vote against their own self interest in favor of theirs.
"You too can be rich if you don't allow the socialists to take it all away from us!"
No, you won't. OECD just released a study showing that the USA is among the worst in providing its citizenry with a path to upward social mobility. The main culprit: lack of education. It takes an edumacation to climb the slippery prosperity pole, in most cases, and we're doing a bang up job of destroying our public school system and making college unaffordable.
Educated minds are important only for those who will lead.