Social Security: More Sound and Fury; Still Signifying Nothing
Just when you thought the financial meltdown would have ended once and for all the notion of killing off Social Security and handing out its dismembered pieces to brokerage firms eager to get their hands on its cash so they can charge you twenty times the overhead costs on your retirement money, the Washington Post runs this bit of bogosity:
The U.S. recession is wreaking havoc on yet another front: the Social Security trust fund.
With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office. As a result, the trust fund’s annual surplus is forecast to all but vanish next year — nearly a decade ahead of schedule — and deprive the government of billions of dollars it had been counting on to help balance the nation’s books.
Ooooh, scary! And of course all the Usual Conservative Oooh I Wanna Eat Up That Yummy Trust Fund Folks from the American Enterprise Institute are once again singing their old "we must destroy Social Security in order to save it" nonsense.
What the article doesn’t mention is that depletion of the trust fund always happens in a recession. And the one actual side effect here is that the budget deficit’s true size will be revealed. Big whoop. When the economy is righted, the problem goes away.
We’ve been through this before, folks. Here’s the deal: The trustees’ long-range economic growth projections are so low-balled that were they actually to occur, Social Security would be the LEAST of our worries.
For example: Economic growth over the period of 1929 to 2004 — years that include the Great Depression — averaged 3.6%. It only takes a 2.7% average to keep SS fully funded forever. Yet the trustees, in order to achieve their sky-is-falling bullshit numbers, consistently project long-term growth rates of around 1.8%, which means they’re predicting Depression Forever — in which case we’d have much, much bigger things to worry about than SS. Such as total societal collapse and cannibalism.
The whole thing reads like an AEI talking points sheet. But the truly scary thing is that, apparently on its way from the AEI to the WaPo, it stopped by the allegedly-liberal Center for American Progress for some prog-washing to make it look appetizing to non-conservatives:
"This is not a problem for Social Security, it’s a problem for fiscal responsibility," said Christian Waller, a public policy professor at the University of Massachusetts at Boston and a senior fellow at the Center for American Progress. He said the new estimates would force President Obama and his budget director, Peter Orszag, "to stay on track in what they have set out to do, and that is rein in deficits."
Um, no. As Dick Cheney himself said, Reagan proved that deficits don’t matter. The big thing now is to spend and stimulate, and let the rollback of the trillion-dollar Bush tax cuts for the rich do its good work, among other things. As Paul Krugman noted last November, FDR found out the hard way in 1937 that going deficit-hawking during a depression is the last thing one should do.