tag:blogger.com,1999:blog-7334408760351487944.post91999858416010839..comments2023-11-12T06:43:00.060-05:00Comments on Notes on Social Security Reform: Wonk Fight! Munnell vs CRFB on Social Security Myths.Andrew G. Biggshttp://www.blogger.com/profile/16617460431856611873noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7334408760351487944.post-46413930792149326792016-06-03T15:05:56.487-04:002016-06-03T15:05:56.487-04:00I think if you click through to http://crfb.org/bl...I think if you click through to http://crfb.org/blogs/delaying-social-security-changes-ties-policymakers-hands , you will find that she is wrong to say it is about the end of the projection period being different, but right about "the total amount." CRFB says "the cost of waiting is high." But the cost is $10.7T (in 2015 dollars.) Delaying changes the annual cost (per trivial math), but does not change the total.<br /><br />Time value of money does have negligible impact in the analysis of a PAYGO system, but that is not what she was claiming. What she was alluding to was the fact that the increase needed to achieve solvency until 2090 (75 years) does not achieve solvency until 2109. As long as people keep living longer the cost of retirement will keep going up.Arnehttps://www.blogger.com/profile/00796151499106650732noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-66995872887692654852016-06-03T08:09:51.876-04:002016-06-03T08:09:51.876-04:00"But claiming, as the Myth #1 response does, ..."But claiming, as the Myth #1 response does, that postponing a fix raises the total cost of the fix is simply not correct. Figure 2 shows the income and cost rates for Social Security; the shortfall is the difference between these two lines. The total amount of the ultimate required tax increases is not impacted by the timing. The different numbers in the Myth #1 response simply apply to different 75-year projection periods – 2015-2090 versus 2034-2109."<br /><br />She is saying that if we ignore the time value of money and shorten the definition of solvency by 15 years, then they are wrong. JoeTheEconomisthttps://www.blogger.com/profile/15000542138416955049noreply@blogger.com