Here is some video from last month's AEI event on improving fairness encouraging longer work lives through Social Security and Medicare policy. Check out the whole event here.
Tuesday, April 23, 2013
Andrew Biggs: Cut payroll taxes for workers 65 and older
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This isn't directly related to this particular post, but those concerned about its finances should be interested in this critique of its longterm projections from someone used to speculative private business plans for startups who finds it shocking what is "close enough for government work":
http://www.politicsdebunked.com/article-list/ssaestimates
It almost seems like they haven't gotten much outside critique from anyone skeptical of them. For instance their claimed "high cost" scenario is high cost in nominal $.. but *low cost* in real $. The spread they use for forecasting GDP is so overoptimistic it is as if they think they can forecast GDP through 2090 more accurately than other entities can through 2-5 years, and even more accurately than it is measured (given the GDP vs. GDI statistical discrepancy as one indicator). Those are the tip of the iceberg of what a skeptical look turns up.
Unfortunately this is a bit late since the new annual report is presumably due out fairly soon, so unless word is spread it seems likely the report will be as poor quality as their current forecast.
Debunked,
I think you are being confused by terminology. The "High Cost" scenario is really the high NET cost. Since conditions (population increase, inflation) that increase TOTAL cost also increase income, the High Cost scenario is actually the one with the lowest income (and cost). Thus you get the counter-intuitive result that confused you.
re: No. It is the social security folks that are confused. The page shows it is *NOT* an appropriate high net cost scenario. I am from the tech biz world and looked at it like critiquing a business plan, and find it shocking what passes as "close enough for government work". It seems difficult to believe they get away with that sort of report.
First off, GDP is the wrong variable to use with SS-OASI. Both benefits and revenues are not related to GDP.
Second, population growth should have no bearing on SS-OASI at all. the only reason it is mentioned is that the programs costs and revenues can be manipulated by assuming changes over time. It allows SSA to assume higher birth rates no different than a ponzi scheme assuming a higher ROR.
SS-OASI should be cased on cohort life expectancy, taxes paid and an acturally correct benefit formula.
Since SS-OASI benefits are not based on taxes paid, but on wages subjected to the OASI tax, there is a huge disconnect between revenues and expenses.
It is now 2013 and since 1983 "the year of the big Fix" congress and the American worker have buried their head in the sand hoping the problem would go away. People used to say we had 35 years to fix the problem. Guess what it is 2013 and now they say full benefits end in 2031, just 18 years away.
If you were saving for retirement and hoped to retire at age 67, do you think you could start saving at age 49 and be able to? now compound this problem by taking what the worker pays into OASI and paying it out in benefits so there is nothing being set aside today to pay future benefits. Compound this once again that they project the Trust fund to be zero.
It is too late folks.
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